Sirius Minerals reports comfortable cash position ahead of key milestones

Sirius Minerals reported what some analysts described as a comfortable liquidity position at the half-year stage, as the company continued to progress on its plans to develop its North Yorkshire polyhalite project.

The fertilizer-maker reported a loss of £4.1m for the six months ending on 30 June, in comparison to £4.7m of red-ink as of 30 June 2016.

Cash on hand at period-end stood at £16.7m, down from £29.1m at the end of 2015 but well in excess of just £4.2m in current liabilities.

“This should be more than sufficient to take the company through Stage 1 of its two-stage construction financing plan (which we expect will occur in Q3 2016), we believe,” said ShoreCap analyst Yuen Low in a research note sent to clients.

Significantly, during the reporting period Sirius obtained permission from the Department for Transport to build its proposed harbour facilities at Teesside. Furthermore, the window for legal challenges to the decision to be presented was set to expire at the end of August 2016.

In June the company also lowered its estimate of the upfront capital funding requirements from $3.57bn to $2.91bn.

To take note of, the amount of the so-called Stage 1 portion of the requirement was slashed bya third to $1.09bn.

No further funding requirements post-Stage 1?

Commenting on the results, Low labelled them “essentially academic”, emphasising how the company was well-funded at that stage of its development.

What’s more, if all went to plan there would be no further need to raise equity after Stage 1, he said.

The elimination of the risk of dilution would result in greater clarity on potential equity returns, which might trigger a significant re-rating, according to Low.

As of 13:34 BST shares were flat at 36.50p giving the company a market capitalisation of £842.20m.

Over the past two years the shares had been one of the best performers on the FTSE AIM 100, clocking in with a gain of 239.53%.