Is It Time To Sell Amur Minerals Corporation & Buy Sirius Minerals PLC?

Amur Minerals Corporation (LON:AMC) and Sirius Minerals PLC (LON:SXX) are under the spotlight as their shares come under pressure.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Economist Paul Samuelson once said that investing should be more like watching paint dry or watching grass grow. 

“If you want excitement, take $800 and go to Las Vegas,” he added. 

He may have missed the fun with Sirius Minerals (LSE: SXX) and Amur Minerals (LSE: AMC), both of which have been under pressure in recent days — but for very different reasons.

Sirius Minerals

As it drops, Sirius stock arguably becomes a more appealing buy — it’s as simple as that.

Whether or not it’s a buy now is another matter, however.

As I argued on 26 May, there were at least three reasons why you’d have done well to avoid Sirius at that point in time — the stock is down 18% over the period. 

But has Sirius become cheap enough since? 

As you might know, its valuation hinges on the daily news flow and the possibility that the miner — whose financials do not help in the determination of fair value — will secure planning permissions for a huge potash development that sits right on the edge of the North York Moors National Park (NYMNP).

The Fall 

Its stock plummeted last week as the outcome for its application became even more uncertain.

It ended up trading at 18.25p on 18 June, down 15% on the day; at that price, Sirius was still some 4.75p (about 30%) above the level that it recorded on 8 May (13.5p), when it announced that the NYMNP Authority had confirmed that they intended “to hold a special planning committee meeting on 30 June 2015, with the following day also available if required”.

As a key meeting approaches fast, its stock has lost more ground in recent days, and currently changes hands at 17p.

In spite of that, Sirius still looks expensive — even more so when you consider the terms of the £15m placing that was executed at the end of the first quarter, when 225m of new common stock was placed by bookrunners Liberum Capital and Macquarie Capital at a price of 7 pence per share (WH Ireland Limited ranked lower in the syndicate as a “manager”) — three banks arranged a deal whose net proceeds stood at just about £15m.

One element worth considering was that the placing was not underwritten, which means that the bookrunners did not want to keep any exposure to Sirius on their books in the event that investors had decided not to commit to the deal — not even at a lowly 7p a share. 

Is Amur Any Better?  

Amur is a much simpler investment case, in my opinion. First off, it is one step ahead of Sirius, for instance, having already secured and registered a licence for its benchmark Kun-Manie project.

Nothing new has been reported since 10 June, so its risk profile has not changed much in the last few days.

So why is its stock under pressure? 

While it’s true that its shares are down today (-6.6% at the time of writing), you’d expect some weakness in a stock that has rallied more than 100% in the last month of trade — wouldn’t you? 

Some investors may have simply decided to lock in hefty capital gains, perhaps opting to consider Amur at a later stage. That would be a sensible strategy — we are blind on financials and projections, so its stock remains a highly speculative bet, one for which a “buy and hold” strategy could seriously harm your returns. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alessandro Pasetti has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

photo of Union Jack flags bunting in local street party
Top Stocks

5 quality UK stocks to consider buying for the new ‘British ISA’

In theory, a British ISA would allow investors an additional £5k (on top of the standard £20k allowance) so long…

Read more »

A mixed ethnicity couple shopping for food in a supermarket
Investing Articles

4.24% yield and a P/E of just 12.1! Tesco shares look like a no-brainer buy for me

Harvey Jones thinks Tesco shares look good value after today's solid first-quarter results. He's now saving up to buy the…

Read more »

Market Movers

Why the Raspberry Pi share price is on everyone’s minds right now

Jon Smith reviews the 14% jump in the Raspberry Pi share price today as part of the successful IPO of…

Read more »

Rainbow foil balloon of the number two on pink background
Investing For Beginners

2 UK stocks that could do well out of the general election

Jon Smith runs the rule over two UK stocks that may benefit from higher spending on healthcare, consumer staples and…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

Could this undervalued growth stock be the next big success story in US tech?

Shares of this US technology giant have collapsed almost 50% in 2024, but is the growth stock now an incredibly…

Read more »

Young black woman using a mobile phone in a transport facility
Investing Articles

After soaring 35% this year, is there still value in Barclays shares? Here’s what the charts say!

Barclays has been on a tear in 2024. But where does that leave investors considering buying some shares now? This…

Read more »

Light trails from traffic moving down The Mound in central Edinburgh, Scotland during December
Investing Articles

Nvidia stock has surged 3,450%. This UK investment trust owns loads!

Nvidia's recent amazing price surge has helped boost the value of this investment trust too as the chipmaker is its…

Read more »

Bronze bull and bear figurines
Investing Articles

After the general election what might happen to the FTSE 100?

Our writer’s been looking at the manifestos of the three main political parties to try and understand how the general…

Read more »