The wait is finally over for shareholders ofSirius Minerals(LSE: SXX).
Yesterday, theNorth York Moors National Park Authority gave the green light for the company to go ahead with the construction of the worlds largest potash mine. This means that the first major, and perhaps the most difficult, milestone for Sirius is now complete and out of the way.
However, Sirius still has its work cut out before production can begin. The company intends to provide a separate update next week,which will include a full run-down of the mines progress. Additionally, next weeks report will detail the companys next steps and milestones on the way to reaching first production.
Out of the frying pan
While the planning ruling is undoubtedly a huge positive for Sirius, the company is really only just at the beginning of its journey.
The next stages of the companys life will be tougher than ever, as it seeks to secure financing for the mine and bring the project online, on time and onbudget.
And the biggest hurdle the company now faces is securing finance for construction. Its estimated that the mine will cost a total of 1.7bn to build. At the last tally, Sirius had 27m in the bank enough to keep the lights on for around 12 months.
Finding finance
Still, now that the project has been approved by planning authorities, Sirius should find it easier to seek out the finance it needs.
The company has already stated that it is looking to raise the case for the first stage of the project around 600m from amixture of bonds, bank debt and possibly private equity. All of these options will have different advantages/disadvantages for the company, but by using several different methods to fund the project, it should be easier for Sirius to raise the cash it needs.
Another possible option could be a takeover or joint venture. Over the long-term, global potash demand will only increase and one of Sirius larger peers, with deeper pockets, could swoop on the company looking to buy up additional reserves at a rock-bottom price.
Last weeks 5.1bn deal between Potash Corp of Saskatchewan and its German rival K + S showed that theres plenty of desire for deal-making in the sector.
Whats next?
So, how should investors reactdo followingyesterdays planning decision?
Well, at pixeltime, Sirius shares have jumped nearly 90% on the news. But the company is yet to arrange finance for the mine, and theres plenty that could go wrong between now and initial production.
With this being the case, Sirius is still a high risk, high reward play. Investors should be prepared for volatility over the next few weeks and months.
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Rupert Hargreaves 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.