Analyst Richard Knights, in a note, highlighted that the UK miner’s share price is presently trading at a significant discount of 70% to the Liberum valuation of 110p because of the remaining risks to the project – such as marketing risk, financing risk and construction risk.
Knights does, however, expect those valuation discounts will unwind as the project advances.
“The company is in a strong position to largely eliminate two of these three risks in the next 6 months,” Knights said.
“Signposts that it on the right path, such as bank syndicate commitment letters, indications of government participation and/or offtake agreements could be even more imminent.”
The Liberum analyst has a ‘buy’ recommendation and has a 60p per share target, suggesting major upside to the current price of 34.52p.
Closing the Phase 2 financing is seen by Knights as the major catalyst which he believes will trigger the re-rating that will narrow the discount to 50%.
“Sirius expects bank commitment letters in June, which will then be compiled into a final document in July. Positive newsflow around interest levels could de-risk,” he added.
“The company has noted that Europe and Brazil are most advanced in terms of new offtake.
“Finance will be conditional on offtake hitting 6-7mt, but offtake not a roadblock to getting conditional commitments from banks.”