Sirius gets green light from Redcar

Redcar and Cleveland Borough Council (RCBC) has approved Sirius Minerals' planning application for a mineral transport system, a crucial decision if the potash hopeful is to get its York potash mine up and running.

"Councillors unanimously resolved to grant permission for the York Potash mine and mineral transport system (MTS) planning application," said Sirius on Thursday.

As the hearing was public, Sirius last night asked for its shares to be suspended at the beginning of trade Thursday morning pending the decision. They were back shortly after 1pm and trading as high as 16.5p - up 27% and the highest since December 2013 - before easing back.

Subject to North York Moors National Park Authority (NYMNPA) approval, the 36.5km underground tunnel will connect the potash mine at Dove's Nest Farm to immediate access shaft sites. Around 6.5 million tonnes of mined output a year (Mtpa) is expected to be transported in phase one, which will be doubled to 13Mtpa in phase two.

"We are delighted with the positive decision from Redcar and Cleveland Borough Council for this substantial part of the project and look forward to further progress with our other applications," said Sirius managing director and chief executive Chris Fraser.

"The application is a significant part of the overall approvals required for the delivery of the project and an important step forward for Sirius."

Sirius now depends on approvals from the NYMNPA for the potash mine and underground tunnel - a decision is expected in May. RCBC also needs to give the go-ahead for a materials handling facility. So, there is still a way to go until the MTS is put into use, but this is a leap in the right direction after the previous planning rejections.

The Planning Inspectorate accepted Sirius' York Potash Harbour Facilities application for a development consent order (DCO) on Tuesday, and will now examine the proposal. A decision is expected in the summer of 2016.

"The positive decision by RCBC represents a major milestone for the project as it is the first planning body to review and pronounce on the project and it should help set the tone for the Park Authority's decision," say analysts at Macquarie, which still think the shares are worth 25p.

"Should the planning application be approved, the company would move swiftly to raise capital to fund phase 1 of the project. In the event the planning applications are rejected, the company would appeal the decision with the Planning Inspectorate - a process which could take 9 months."

Paul Smith at friendly broker WH Ireland says: "We feel that the York Potash project has proved that it in principle it can pass through the high thresholds set by the authorities and the public."

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.