Mining company Sirius Minerals (LSE:SXX) has had a rough year at the stock markets this year, to say the very least. Its share price has dwindled to 3.5p at the time of writing, almost 90% less than its average last year.
The polyhalite miner’s future is now hanging in the balance while it tries to get funding to continue operations beyond March. And for those of us who are invested in the stock, that’s really the only question waiting to be answered – will SXX get the required funding this time?
Multiple options to consider
There’s no clear-cut answer to this question, of course. But there are a few ways in which Sirius could secure the future of its operations. One, a white knight investor saves the day for this currently distressed but potentially game-changing company by providing the necessary funding. Two, it gets acquired by a company with strategic interests in the business. Three, it gets the government funding that it has so far been unable to obtain. And finally, it can try yet another public fund raise, which it has abandoned twice.
Stability opens new doors
Let’s look at the last option. Sirius Minerals pointed to market conditions as a reason for abandoning the debt financing it had been seeking. But the financial markets are in a much more stable place now.
With the Tory majority, the next steps for the government are clear, and investor relief is evident across financial markets. The FTSE 250, for instance, of which Sirius Minerals was a part until not very long ago, touched all-time highs after the election results were announced. Earlier this week, the FTSE 100 also breached 7,500 for the first time since August.
Globally as well, the market situation appears poised for better times as the US and China reach phase one of a trade deal. Their trade dispute has kept the world on tenterhooks for some time now. There’s nothing to stop SXX from going back to the market now and taking another shot at a fund raise now that we are in better times.
Besides this, the other options remain open in any case. There’s definitely a possibility of a strategic investor or acquiree stepping into the fray. Also, post-election, as Prime Minister Boris Johnson has come into power once again and with more support from the Yorkshire region, it would be worth watching what he has in store for it and if there are any spillovers for SXX in the process.
That said of course there are still huge risks involved for SXX. In October, the company’s CEO, Chris Fraser, is reported to have said that the compay could go off the stock market all together, though a company spokesperson has denied that.
I reckon that the times have changed dramatically in the past few days. And that’s not all bad for Sirius Minerals. I think there are more positives than negatives in store for the company going into 2020.
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Manika Premsingh owns shares of 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.