Blackfriar: A topsy turvy time for shareholders in Sirius Minerals

Sirius Minerals, the company behind the proposed mine in the North York Moors National Park, said on Monday that it won’t be submitting formal planning proposals until the summer of next year – delaying the project by a year.

The news comes amid growing concerns over the project’s impact on the environment.

Sirius is now planning to submit its application for the proposed mine, which will be based near Whitby, next year to ensure environmental information for the entire project – including the proposed mine, pipeline, materials handling plant and port – is all available at the same time.

The North York Moors National Park Authority had been due to consider a planning application in July this year but Sirius Minerals said that it was not in a position to proceed and now it needs more time to address issues relating to European habitat legislation and deal with questions on environmental assessments.

The company said that its new approach will provide the decision-making bodies with greater information on the project’s impact on the environment.

Additional information to support the planning application for the mine will now be submitted to the North York Moors National Park Authority in July 2014 when environmental study work for all four key elements of the project is available.

Sirius is up against some tough opponents.

The Campaign for National Parks claims that York Potash has not provided sufficient evidence to demonstrate why the mine head cannot be located outside the confines of the park.

In addition, concerns have been raised that the applications are too fragmented.

York Potash fervently hopes that the revised timetable will offer a “more holistic approach”.

While holistic approaches may appeal to the North York Moors National Park Authority, they certainly won’t appeal to Sirius’s shareholders, who include a number of local people who are desperately keen to see the mine get the go-ahead.

Following the news of the delay on Monday, the shares closed down 20 per cent to 9.82p, their lowest level for two years.

Some £30m was wiped off the value of the company overnight, leaving it with a market cap of £135m.

However, news out yesterday that the mine contains tip top polyhalite, the potash mineral present under the park, saw a revival in the shares, which closed up seven per cent at 10p.

Yesterday York Potash said the mine could contain 250 million tonnes of minerals with an average grade of 87.8 per cent polyhalite, a key component in fertiliser to boost crop yields.

Chris Fraser, CEO of Sirius, said: “The scale and quality of the York Potash polyhalite deposit has now been confirmed as truly exceptional.

“Our exploration programme has delivered a number of world firsts – the world’s largest and highest grade polyhalite resource, and now the world’s thickest and highest grade polyhalite ore reserve.”

He said that the York Potash Project will deliver significant value to Sirius’s shareholders and can make an exceptional contribution to the UK and local economies.

He added that defining such a significant high quality ore reserve is a vitally important step in the financing and development of the project. “While the additional time required for the approvals process is frustrating for our many supporters, a potential mine life of over 100 years hopefully puts that into some perspective.”

Some analysts were thrilled with the news.

Liberum Capital said that an average grade of 87.8 per cent makes it the thickest and highest grade polyhalite ore reserve in the world.

It is recommending that investors buy the shares and say that 33p is a fair value for them.

But analysts at Investec said in a note: “This is positive news following the disappointing news on Monday over delaying the permitting process, however, until all permitting has been secured and agreed, unlocking value from the reserve will obviously not be possible.

“Thereafter, the company will need to find means of funding the US$1.9bn development.”

Sirius has claimed the mine could create more than 1,000 jobs and a further 4,000 jobs in the wider economy.

For local people a lot is riding on this mine, especially for those who saw it as a done deal and ploughed their savings into Sirius shares.

The problem is that we simply don’t know which way the planning decisions will go and chances are we won’t be any the wiser before this time next year.

Unless you’re already stuck with the shares, Blackfriar would advise caution.

Sirius is not a stock for the faint-hearted.