Sirius Minerals (LSE: SXX) is a stock that splits investment analysts. Ive just read one expert claiming this is onethe surest small cap plays in the UK today, while another urges investors to steer well clear.
That is what you can expect when analysing a company that hasnt actually delivered a product to market yet, and wont do so for at least three or four years.
Sirius Minerals is little more than a hole in the ground, and one it hasntgotpermission to dig yet.
If Sirius doesget permission it can help itself tothe highest grain deposit of polyhalite potash identified in the world, right here in Yorkshire.
Its locationis also aproblem. If it was in the arid Australian outback or a lonely North American Prairie, the drilling would have begun by now. But it is below the North York Moors National Park, a beautiful regionin acountry with possibly the toughest planning laws on the planet.
So first, investors are betting that Sirius gets the planning green light, and second, that it can get the potash to market before the money runs out.
Redcar, Green Light
There was good news on the planning front when councillors at Redcar and Cleveland Borough Council gave it the thumbs up last week.
It helps that 97% of locals are in favour of the plans, with Sirius offering a zero harm pledge. No Nimbys here, this is more a case of in my backyard, please!, with excited locals said to be loading up on the companys stock.
Its shares leapt 7.7% on the news, and havesoaredalmost 75% in thelast month alone.
There is still another planning hurdle to jump, because Sirius must alsoconvince the park authority that mining 6.5 million tonnes of potash is commercially viable. Given recent encouraging results for polyhalite fertilizer on potato, cabbage, barley and tomato yields, I would hope for a positive outcome.
Even then, the Secretary of State for Transport us to sign off an application for harbour facilities at nearby Teeside, and we wont know the answer until next summer.
Considering the potential 1.2bn annual boost to the UKs current account balance, and the extra 1,000 jobs it is expected to create, I couldnt imagine central government contradicting positive local sentiment (not in your backyard).
But dont invest beforeacquainting yourself with all the risks.
Last week, Sirius moved another step closer to success. It still has several big steps ahead of it, and must still find a viable market for its product, but progress so far looks highly promising.
I am firmly in the pro camp.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.