Sirius Minerals progressing well and still worth double

Potash miner Sirius Minerals continues to keep investors abreast of progress at its flagship North Yorkshire potash project, which it says "remains on time and on budget". And, despite a hiccup Thursday, experts tip the share price to go much better.

Last time we heard from Sirius, the advice was "buy, buy, buy", with three analysts who cover the stock calling it up to 60p. Well, it's half-way there, even after a fall of as much as 5% Thursday.

Sirius says it's still looking at ways to speed up spend on components of the shaft and tunnel and shorten the project schedule. Options to bring tunnelling activities forward are being discussed with its contractor.

"It has been a productive quarter with timely progress made on site preparation works in advance of shaft sinking commencing in quarter three," said Chris Fraser, managing director and chief executive.

At a capital markets day last month, broker WH Ireland noted that Sirius has "hit the ground running", having "wasted no time… bringing the project into reality". Analyst Paul Smith concluded he was "very encouraged by what we saw and heard" from management.

Elsewhere, the firm is now focusing on a second round of financing, having secured its place in the FTSE 250 index. The extra funding will help with completion of the mine, with first production due to begin in 2021 and first cash flow due in 2022.

Broker Shore Capital reckons that, after this stage two debt commitment, Sirius's risked net present value will be in a range of 65p-82.5p.

"While Sirius is currently at development stage and still some years from becoming a cash flow-generating company, an investment in Sirius should become progressively de-risked and enjoy significant value uplift as it advances towards production," ShoreCap added.

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.