The broker said that despite the good progress made on key areas of the project, “there undoubtedly remains a considerable amount of work to be done over the summer to hit the internal target for Stage 2 financing”.
Stage 1 financing provides the company with enough money to last it until about the mid-point of next year; as a result, the broker will be keeping an eagle-eye on the potash project developer’s progress in securing additional procurement contracts and off-take agreements, which will be key to securing the next round of financing.
Day one of the analysts’ visit to the polyhalite project in North Yorkshire included a financing overview, marketing & agronomy updates and a visit to the Woodsmith mine site.
JPMorgan revealed that stage 2 financing is still targeted for completion by year-end and the company is working hard to lock in remaining procurement items and additional off-take contracts over the next couple of quarters.
The focus regions are Europe, Brazil, Africa & India with JT Starzecki, the chief marketing officer, noting that the most receptive market to POLY4 was in Europe, followed by Brazil.
“Interestingly, India as a target market appears to have moved up the pecking order following FCO (‘fertiliser control order’) pre-approval,” JPM noted.
“On a practical level, a concern we've had was SXX's capability to negotiate new deals across multiple jurisdictions and to what extent this may impede the targeted off-take; however, management believes they now have built-out sufficient personnel in the right geographies to deliver the additional volumes required,” the broker said.
At the Woodsmith mine, JPM said the mine developer appears to have picked up the pace on diaphragm walling, with the run rate increasing to 0.3 panels a day over the last month from the first quarter run-rate of around 0.15.
“Based on the current run-rate, we expect d-walling on the first fore-shaft to be completed by late June,” the broker said.
Shares in Sirius were up 0.8% at 31.76p in lunchtime trading.