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Is Sirius Minerals PLC On The Brink Of Success?

With mining and commodities-based stocks till in the dumps, it’s good to hear of a smaller UK company dong well, isn’t it?

Sirius Minerals (LSE: SXX) has had a rocky ride, having to surmount environmental objections to its planned York Potash project and dogged by regulatory issues every step of the way. But the latest news adds to the feeling that things are finally going the right way — a feeling that’s bolstered by a near-doubling of the share price since mid-February, to 13.2p.

Plans afoot

We heard on 22 April that plans for harbour facilities on Teeside have taken the next step towards approval, and that the firm’s application for a development consent order will now be taken to the examination phase with a final decision expected by summer 2016.

This comes on top of further positive planning noises a week earlier, so what does it mean for Sirius as an investment? Well, should all the threads of the planning application process lead to a successfully tied knot, the York Potash project would exploit the largest, and highest grade, known deposit of the polyhalite form of potash in the world.

A recent trial of potatoes fed with with polyhalite fertilizer showed very encouraging results, and it comes on top of trials involving barley, cabbages and tomatoes — all of which showed a significant increase in crop yields compared to more conventional potash fertilizers.

A risk, but a reasonable one?

Sirius is still in the net investment phase right now, and there aren’t any profits on the horizon for a few years yet, but it looks like a very nice opportunity for those who want to add a bit of small-cap excitement to their portfolios but with relatively identifiable risk.

There are no meaningful per-share metrics published, but of the three brokers offering recommendations, all are on a Strong Buy stance. And there seems to be little chance of Sirius running out of cash in the medium term, after a recent share placing which raised £15m was, according to chief executive Chris Fraser, “significantly oversubscribed“.

Speculate to win

If you like a speculative punt with a small portion of your investment cash with a very strong potential upside against the (in my opinion, low) chance of losing your shirt, Sirius Minerals just has to be a prime candidate right now. The City certainly seems to want in, and I reckon the City has got it right this time.

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Alan Oscroft 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.