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City broker digs out new positives for Sirius Minerals ahead of market move

Shore Capital repeated a ‘buy’ recommendation, and the company continues to digest the prospectus.

POLY4, the polyhalite product that will be made from the the new mine in North Yorkshire.
Sirius Minerals moves to London's main market this week

Shore Capital analyst Yuen low has delved into Sirius Minerals PLC’s (LON:SXX) newly published prospectus and has dug out some meaningful positives.

“On skimming the prospectus, we discovered that the budget for 2017 has now been set at £269m - substantially higher than the total cash outflow of £163m that we had originally modelled.

“Consistent with Sirius’s explanation, the ‘vast majority of the difference’ was in the bringing forward and acceleration of the AMC minesite development scope, with no change to the overall construction budget.”

READ: As it steps up is it time to put Sirius Minerals in the ISA?

Shore Capital repeated a ‘buy’ recommendation, though the broker’s valuation was suspended as it “digests” the prospectus and updates its model.

Low added: “as we have noted before, any (significant) work that can be brought forward should have a positive de-risking impact, in that it would hopefully add to the ‘time buffers’ available to cater for potential over-runs.”

Almost moving day for Sirius Minerals

Sirius yesterday published the prospectus for its move up from the AIM market up to London’s main market.

At the same time, the company also confirmed the anticipated timeline for the share’s transfer.

The British miner’s shares last trading day on AIM will be on Thursday April 27, with the switch following on Friday April 28.

Sirius confirmed its intention to move up in March, alongside a project update.

It said the move would also provide a “more appropriate platform for its growth and is in keeping with the nationally significant nature of the company's project and its market capitalisation”.

FTSE 250 bound

Earlier this month, stockbroker Shore Capital said that Sirius is well positioned to become a FTSE 250 company and highlighted that there are signs that ‘basket’ investors are already buying the shares.

“Assuming its market cap remains at around the current level, Sirius should be well positioned to be considered for inclusion in the FTSE 250 index during the June 2017 rebalancing process,” Shore Capital analyst Yuen Low said in a note.

“That said, we note that even inclusion in the All Share index would result in the relevant tracker funds being obligated to invest in the company.

“We believe that Sirius is already benefiting: we think that the recent sharp rise in the share price is occurring in anticipation.”


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Quick facts: Sirius Minerals PLC

Price: 5.4907 GBX

Market: LSE
Market Cap: £385.41 m

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