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Why The Sirius Minerals PLC Share Price Really Doesn’t Matter

In recent weeks I’ve read plenty of debate over Sirius Minerals (LSE: SXX), the company sitting on a huge high-quality potash deposit beneath the North York Moors, particularly over whether its current share price represents good value.

Then, on Thursday, the stock lost 15% to 18.25p after the latest report on its mining application from the North York Moors National Park Authority Planning Committee opined that “the application has a clear and fundamental conflict with both local and national policies”. Overall, the report was pretty non-committal, and it looks like the Park Authority is, very sensibly, punting the decision upwards.

Get in now?

But as I write today the Sirius price is down a further 6% to 17p, so does that perhaps give us a buying opportunity? Or is it set to fall further?

In my view, the actual share price today really doesn’t matter much at all, and whether it’s 10p, 20p, 30p or whatever, in the longer term I can only see one of two things happening — we’re facing one of those rare binary investing decisions, and Sirius is surely either going to turn into a multibagger or it’s going to crash to zero.

Of course, things can go more subtly wrong, like there’s the chance that early investors could be squeezed out if delays lead to declining finances, or the expected demand doesn’t actually arrive (even though Chinese firms are already lining up to buy the stuff). But for me they fill a significantly lower-probability middle-ground than the two extremes I’ve already suggested.

So what happens next?

Big decision soon

If you listen to the talk, you’ll probably come away with the idea that it will all be decided by the Special Planning Committee when it meets on 30 June. And almost for sure, if Sirius gets a green light on the day I’d expect the share price to spike impressively. And if the thumbs are down the price will almost equally certainly slump, but that won’t be the end — Sirius has already said it will appeal to the Secretary of State in a process expected to take around nine months.

But you know what? I reckon there’s at least an evens chance that the Committee will refer it upwards to the Secretary anyway, even though there is strong local support for the project. After all, it’s a matter of significant national importance which could set a precedence for future national park proposals.

Forget the price

Whatever happens, I think we’re likely to see a zig-zagging share price for some time, and there’s no point chasing it up and down before making a decision. For me the way to look at it is this: If you’re considering investing, say, £1,000, think of it as a chance to turn that into several thousand pounds but with a risk of losing it all — and those are the most likely outcomes regardless of daily movements, even ones as big as 25%.

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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.