Sirius Minerals plc isn’t the only stock with a promising future

Paul Summers takes a look at another young mining stock with big ambitions.

| 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.

Thanks to the huge volatility often experienced in the commodities markets, mining stocks aren’t for the faint-hearted. Nevertheless, those willing to take on more capital risk with their investments could see dramatic improvements to their wealth, so long as the companies they choose to buy continue to provide evidence that they are gradually bringing their projects to fruition. 

Thursday’s announcement that Sirius Minerals (LSE: SXX) had signed a ‘take or pay’ offtake agreement for the sale of its POLY4 product to one of the leading agribusinesses in South East Asia is a perfect example of the this.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

Once delivered, PT Chemical Indonesia — a subsidiary of Wilmar Group — will sell the polyhalite into territories such as Indonesia, Malaysia, Thailand and Vietnam, as well as using it within its own farming operations.

Clearly, having such a massive company as a customer won’t do Sirius’s profile any harm at all. The fact that the FTSE 250 miner will now be supplying “one of the fastest growing fertilizer regions in the world” should bring it to the attention of more potential buyers who may be tempted to agree on something similar to the seven-year deal (with the option of a further three years) made with Wilmar.

Having moved sideways for the last few weeks, I’m beginning to think it won’t be long before Sirius’s shares spring to life and get closer to the 60p price target agreed by numerous analysts. True, production is still a long way off but recent construction updates from the company suggest that everything appears to be on schedule and on budget — no small feat for a mining company.

Still a risky bet? Of course. As a stock to tuck away and forget, however, I think Sirius takes some beating.

High grade deposit

Investors looking for more exposure to the mining sector — but sensible enough to diversify their holdings — may wish to take a closer look at £47m-cap Horizonte Minerals (LSE: HZM).

It might be a market minnow, but Horizonte owns 100% of one of the largest and highest grade undeveloped nickel saprolite resources in the world – in the form of its Araguaia project in northern Brazil. When you consider just how much of the metal is likely to be required as electronic vehicles become increasingly common (not to mention the growing use of renewable fuel technologies such as wind turbines), that’s quite an asset to have in your possession.

Last week, the company submitted its application for a mine construction licence to SEMAS (the Par State authority responsible for environmental licencing) — “a major milestone“, according to CEO Jeremy Martin.

With a fully-funded feasibility study of the Araguaia project now due for completion in Q1 next year, it wouldn’t be surprising if Horizonte began to hit more investors’ radars, particularly given the hugely attractive economics of the project. Once in production, it has been suggested the company could be one of the lowest cost producers around, generating $1.3bn in free cash flow over the mine’s 28-year life, based on a nickel price of $12,000 per tonne.

A further positive to Horizonte is the strong institutional backing the company has. With investors including Glencore and JP Morgan, you can be fairly certain that raising finance to construct the mine won’t be an insurmountable obstacle.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Paul Summers owns shares in Sirius Minerals. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Typical street lined with terraced houses and parked cars
Investing Articles

After falling 60%, is the Ocado share price a bargain?

The Ocado share price has fallen heavily in the past year. But our writer is still not buying it for…

Read more »

Hedge shaped as the pound symbol inside a glass piggy bank
Investing Articles

A question investors need to ask about the Woodbois share price

The Woodbois share price has declined a little from its peak in early May. Does that mean I should buy…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

3 value stocks I’d buy right now

Roland Head thinks market conditions could favour value stocks over the coming year. He’s found three he’d like to buy…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

These 5 FTSE 100 shares have crashed in 2022. I’d buy one now

These five FTSE 100 shares have plunged in value over the past six months. But I believe one of these…

Read more »

man in shirt using computer and smiling while working in the office
Investing Articles

Is Scottish Mortgage Investment Trust now a bargain growth stock?

The Scottish Mortgage Investment Trust share price has plummeted nearly 50% from its 52-week high. Is this a great opportunity…

Read more »

A couple celebrating moving in to a new home
Investing Articles

2 key stock picks for reliable passive income

I’m looking at stocks that can deliver reliable passive income to complement my growth picks, and I think I’ve found…

Read more »

A Rolls-Royce employee works on an engine
Investing Articles

In penny stock territory, is the Rolls-Royce share price set to soar?

The Rolls-Royce share price has sunk recently, falling into penny stock territory. But with flying hours recovering, is it too…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

As the stock market recovery stalls, should I wait to buy?

Has the stock market recovery run out of steam? If so, what does that mean for our writer's portfolio? Here…

Read more »