The revelation was made in the analysts conference call in the wake of this morning's half-year results announcement, in which the key takeaway, in the view of Liberum's mining team, was the completion of the shaft sinking agreement.
Sirius's shares rose 2% to 27.71p on the results, but Liberum thinks they are worth 60p, which is equivalent to 60% of the York potash project's fully diluted net present value on a per share basis.
“The shaft sinking contract with AMC has been finalised with costs expected to be within the allocated budget of c.$730m (75% of the $977m mine site development costs) and the completion timeline also in line with expectations. There is some new information regarding the currency exposures of these costs, which will be 30% in EUR, 15% in CAD and 55% in GBP – this compares to current cash holdings of 55% GBP, 45% USD and 5% EUR. The currency exposure mismatch is in the process of being mitigated by management.”Liberum reported.
Although there were no new details in the interim results on off-take agreements, discussions are ongoing.
The broker sees the signing of further off-take agreements as the most likely source of a share price catalyst, as they will boost the group's chances of securing a good deal in the second round of funding for the ambitious polyhalite project.
“The company has continued to invest in its sales force over the first half of the year and noted on the conference call it is targeting incremental off-take by year-end. Existing take or pay agreements sit at 3.6mt, which needs to lift to 7mt to ensure the stage 2 financing,” Liberum said as it reiterated its 'buy' recommendation.