Shore Capital’s Yuen Low applauded moves by the company to make amendments to plans for the giant Woodsmith polyhalite fertiliser project in North Yorkshire that should simplify construction and reduce the environmental impact of work.
“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, we believe,” said Low in a note to clients.
Using a ‘risked’ net present value calculation he thinks the shares, currently changing hands for 33p, are worth between 65p and 82.5p.
Sirius says site preparation is “well advanced”
Earlier, Sirius in its quarterly update said said mine enabling work is complete, site preparation is “well advanced” and construction of a diaphragm wall that sits at the head of the pit shaft will get underway in the third quarter.
Though still very early in the development phase, the project remains on time and on budget, Sirius said.
It is currently looking for opportunities to accelerate components of the shaft and tunnel spend.
“Our understanding was that consideration was being given to eliminating the service decline and 45-metre bank level: the enlarged diameters of the diaphragm walls would enable access to the shafts by additional men-and-materials conveyances (lifts and high-angle conveyors),” said Low in his note.
“These potential changes of plan were not discussed in today’s quarterly update, but from information on Sirius’s website, it appears that these changes have essentially been confirmed (pending regulatory approval – Sirius would need to obtain permission from the planning authorities for these amendments, which we do not expect to prove problematic).”