Back in December, I reflected on a transformative year for AIM-listedSirius Minerals (LSE: SXX). In 2016, the company managed to complete a two-year feasibility study, obtain all necessary planning permission and gather the all-important cash neededto begin buildingits polyhalite mine in North Yorkshire.
Based on a recent update on current activities in and around the site, I think we can expect 2017 to be another hugely busyyear from the 750m cap.
On your marks
According to Sirius, highway works focused on improving site accessroads are scheduled to begin on 30 January and end in the first week of April. As far as the actual mine is concerned, an additional drilling rig to gather more detailed information for the upcoming shaft sinking is now expected on-site by the end of February. It follows on from the further geotechnical studies undertaken since the end of 2016.Sirius also commented that a significant amount of detailed engineering, design and commercial work was in progress and that, in accordance with the companys plans, the full site preparation phase willcommence in the second quarter of this year. So far, so good.
Perhaps the most interesting part of last Thursdays announcement for shareholders, however, was the companys declaration that it wouldrelease general development and construction updates to the market on a quarterly basis. That means three times this year, in the final weeks of March, June and Septemberwitha break for Christmas and a further update in week two 2018.
So, if this is when we expect to hear from the company over the next 12 months, what might happen its shares?
On the up?
Now that investors both existing and prospective have a better insight into when the company will update the market, sentiment towards Sirius shouldbegin to shift. Although undeniably brief, last weeks newsprovided investors withthekind of transparencythey were craving during in H22016. It may even be enough to convinceone-time holders, dismayed at the pricing of the open offer conducted last November, to return.
Clearly, considerable moves in the share price whenever a (positive) update on progress is released are likely. Given the complexity of the task ahead of the company, however, theres always the potential for at least some of these updates to be disappointing. Setbacks are common in this industry and highly probablefor a project of this scale, despite the capability and experience of themanagement team and their confidence in those hired to help build the mine.
Although I fully expect the share price to be substantially higher bythe time it comes into operationin five years time (and Sirius has moved away from AIM),some volatility between now and then should be assumed.Thats even more soif, thanks to Trump, Brexit or some other factor, changes in the macro-economic environment motivate some investors to become less risk-tolerant. This is why I continue to regard Sirius as the sort of company built only for patient investors with long investing horizons.
At just above 18p each the same level they were last June, long before funding for the mine had been secured Im optimistic that shares in the company have now reached theirnadir. For Sirius, 2017 should mark the end of the beginning. Time to get digging.
Another opportunity
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Paul Summers owns shares in Sirius Minerals. 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.