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Sirius and Sound burnish credentials with news market has been waiting for

Sirius Minerals concluded a fundraising, while Sound made a significant gas find

Sirius is developing a giant fertIliser mine in the UK

We’ll kick the report off this week with two of the AIM market’s largest and most widely followed stocks – Sirius Minerals PLC (LON:SXX) and Sound Energy PLC (LON:SOU).

Both had news out that should help catapult them further along the road to success.

Sirius first: It concluded a fundraising of just under £1bn that will help it build a giant mine in North Yorkshire capable of churning out 10mln tonnes of a fertiliser called polyhalite each year.

Investors have conditionally agreed to put up £370mln of that cash.

It is fairly extraordinary to see a company listed on the junior market raise that sort of cash – so we at Proactive doff our caps to boss Chris Fraser, whose dogged determination has got Sirius this far.

A convertible bond issue will provide a second chunk of financing, while an offshoot of Hancock Prospecting will chip in too.

The Aussie mining investing house is interesting on a number of levels, not least because it is controlled by one of the world’s richest women, the formidable Gina Rinehart.

Under her stewardship, Hancock has brokered a number of agriculture-focused deals; so having a stake in a world-class supplier of fertiliser makes sense.

The shares were down around 30% this week – although this was more of a technical issue related to the issue of new equity than being reflective of Sirius’ fundamentals, which just improved.

Sound Energy, meanwhile, appears to have found a globally significant accumulation of gas on its Tendrara licence in Morocco.

Not just that, it's close to infrastructure such as a pipeline, while there is a ready demand for the fuel in the country. There is also an export route to Spain and Portugal.

The latest update from Sound came as it began testing its second well on Tendrara, where the flow rates were significantly higher than anticipated.

The plan now is to carry out an extended test before then embarking on further drilling.

Profit-taking was the order of the week as the shares drifted down around 6%. However, investors have more than quadrupled their money since the start of the year.

The market turmoil was felt at the lower end with the AIM All-Share down 3.3%. It was a little more resilient than the FTSE 100, which has reversed 4.2% this week.

For those who jumped on board Andrew Benitz’s Jersey Oil & Gas plc (LON:JOG), the investment has been a financially rewarding one.

In the year to date the stock is up almost 700%. The driver? A deal with Norwegian giant Statoil, which is going to drill Jersey’s North Sea licence area. In fact we heard last week that a vessel is already in place carrying out a survey – news that propelled the stock a further 30% higher this week.

A recent spate of announcements reveal one of the company’s major investors has been trimming his holding a little. That said, there appears to be a ready demand for any stock that comes onto the market.

Shares in Proteome Sciences plc (LON:PRM) were among AIM’s biggest losers this week after it announced plans to issue equity at a heavy discount in a bid to raised £3.3mln. It is hoped the money will get the biomarker specialist to break-even. 

It was a tough week too for Motif Bio Plc (LON:MTFB) (down 30%) but for positive reasons – the phase III clinical trial of its next-generation antibiotic is actually running ahead of schedule. That does leave the company in a tight spot financially, although it seems fairly confident it can find the cash.

Followers of the company will remember it is planning a listing on the US tech exchange NADAQ, which is being supported by the giant asset manager Invesco. That should give access to cash, although it also has other options, including private finance of rescheduling the costs.

The broker Beaufort said: “The reality is that cash is being burnt at such a pace precisely because the trial results are so exceptional, exceeding expectations to the extent that REVIVE-1 data readout is now expected as early as the second quarter of next year.”

REVIVE is the name of the clinical trial of Motif’s drug iclaprim. Beaufort believes the company could be worth £800mln (US$1bn) two years from now if the clinical progress continues at the current pace.

Quick facts: Sirius Minerals PLC

Price: 5.49 GBX

Market: LSE
Market Cap: £385.41 m

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