Sirius Minerals can still triple

Iron out the lumps and bumps and Sirius Minerals shares have been on an upward trajectory since the lows in January and February low of around 10-10.5p. The company is worth twice as much now and, following yesterday's green light from the government for its harbour facilities at Teesside, the house broker is, predictably, getting excited.

As expected, transport Secretary Chris Grayling met the deadline, imposed in April, to either approve or reject the proposed development. But, given the Brexit vote has triggered an even greater focus on the domestic economy, this should have been a foregone conclusion.

It was, and Sirius has now received all major approvals for its huge potash mine near Whitby in North Yorkshire.

"The company now has a fully permitted project with an optimised Feasibility Study and a blue print (and set of confident costings) to build a mine and associated facilities," writes WH Ireland analyst Paul Smith.

"Funding is now the next milestone for Phase One of the project - shaft sinking and driving the mineral transport system. We maintain our 'buy' recommendation and 60p target price as Sirius moves into the final stage before construction can begin."

Now, focus shifts to that funding issue. Clearly, the terms of any capital raise will be crucial, and Sirius said on 24 June - a day to bury bad news not good news, one would have thought - that the total capital funding requirement would be 18% less than first thought at $2.9 billion (£2.2 billion). For phase one it's 33% less at $1.1 billion.

"Following a review of the detailed contractor design proposals, a reduction in the total capital funding requirement for the project of $490 million has been made possible," explained Sirius. Biggest savings were made by optimising the shaft design and construction.

These changes now give a net present value for the project after tax and debt free of $15.2 billion and an updated after-tax and debt-free internal rate of return of 28%.

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.