Large mining projects often take a long time and huge amounts of investment before they finally come to fruition and actually start producing the raw material and a revenue stream. During that time the share price can experience a lot of volatility and I remain to be convinced that the majority of PIs have the patience to invest long term in this type of company, and in some cases there is an argument for buying in closer to production once everything has been sorted out and financing has been finalised...
When investing in a company long term it is all about getting in at a good price, rather than having to buy right at the bottom of any temporary dips along the way, as long as things go to plan for the business.
Sometimes investing takes a lot of patience, but if you are in at a fairly early stage and are prepared to hold long term, then you can reap the rewards whilst others are left wondering why they never bought any shares whilst the price was still relatively cheap.
If only to annoy Lucian Miers who must count his short of Sirius Minerals (SXX) and his betting on Crooked Hillary as among his two worst trades of 2016, I bring you the latest thoughts of broker Shore Cap. As ever all the usual disclaimers apply, that it is to say most brokers talk cock but maybe on this occassion Shore Cap does not. Over to the talkers of cock:
Sirius Minerals (SXX) is a company that I’ve watched closely since 2010, and it has now reached a stage where a large proportion of the risk associated with its fertiliser project has been offset.
Sirius Minerals (SXX) has made good progress with its polyhalite fertiliser project so far and ultimately it will also be of benefit to the UK economy, but I struggle to see the share price going much higher in the shorter term.
Sirius Minerals (SXX), the ambitious company seeking to exploit the world’s largest and highest-grade deposit of the high-nutrient agricultural fertiliser Polyhalite, has withdrawn one of its planning applications for the project, in the North York Moors National Park, for ‘re-tweaking’ and re-submission. But managing director Chris Fraser is still pushing ahead with off-take deals to help fund the £1 billion-plus York Potash project and the company, which hopes to be in production by 2018 if all now goes well, insists it could have the green light by May and then be on its way from a quote on AIM with a £182 million stockmarket value to membership of the FTSE 100 share index of the most heavily-capitalised companies in Britain.
This morning, Sirius Minerals (SXX) announced that its Chairman, Russell Scrimshaw, yesterday bought 2.1million shares on the open market at an average price of 11.75p. Worth £246,750, this is another impressive show of faith by Mr Scrimshaw, who also participated in March’s 12p placement. In total he now has an indirect interest in Sirius of 39.4million shares, roughly 2.1% of the company’s issued share capital. The question now is, is Sirius a buy?
A lot of the large mineral deposits we hear about are in some far-flung, politically unstable, corrupt and unsafe part of the world. To the extent that we often forget what we have on our own doorstep, and in the case of Sirius Minerals (SXX) that is a highly significant potash deposit located between Whitby and Scarborough.