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To howls of abuse I suggested that Sirius Minerals (LSE:SXX) was a slam dunk sell at 27.75p on the day it submitted planning applications for its Potash project on the North York Moors. My reasons were multiple. Its ability to gain planning permission was a side issue although an RNS last week makes for interesting reading. The shares are now 24p.
It seems that the North York Moors Planning Authority has asked for extra information in order that it can determine the planning application. Sirius will provide this with a view to still getting a decision by May 21st. But there is another potential fly or two in the ointment: Sirius states:
The Company has also been made aware of a ‘holding objection’ by the Ministry of Defence (“MoD”) in relation to RAF Fylingdales, which is adjacent to the area of interest of the York Potash Project. The Company is in ongoing dialogue with the MoD and is confident that it can provide the necessary technical information required to demonstrate that there will be no impact on this important facility.
As part of the NYMNPA’s statutory consultation period for the determination of the application it has received responses from a range of statutory consultees. A response to this consultation from the Environment Agency was forwarded to the Company on 13 March 2013. This response requests additional information on aspects of the submitted Environmental Statement, particularly on hydrological issues. The Company is in the process of reviewing this and is confident it can provide the information requested. “
The company says this is all normal and that it can meet its deadlines. As it happens I suspect that the company is correct in this. I note the comments made by Roger Bade of Whitman Howard, a dry and humorous old coot who writes:
Yesterday’s Yorkshire Post reported that the Ministry of Defence (MOD) has submitted formal objections to York Potash’ plans for an underground mine on the North York moors. According to the article, these concerns hinge around the potential for subsidence. This might upset sensitive monitoring equipment at their nearby Fylingdales radar and monitoring facility. Presumably Sirius will re-plan their mining sequence to reduce this impact, the polyhalite is after all found at a depth of around 1,500 metres.
One remembers participating in Boulby Potash‘s subsidence surveys in 1982, very accurate levelling using very expensive survey poles. The article goes on to indicate that objections have also been lodged by the Environment Agency, who are concerned about water supply to Whitby and Scarborough and Natural England, who as expected, are concerned about the pipeline’s impact on moorland.
Presumably more detailed hydrological studies and analysis should help sort out the Environment Agency, while as we noted previously, Sirius’ environmental survey didn’t find much of interest on the moorland, certainly nightjar were not mentioned, so Natural England are probably being too sensitive. It continues to be debateable whether there are enough special species in this area to justify the National Park designation in the first place.
Will Sirius get the nod on May 21st? I suspect it is 99% certain that the answer is yes. If it is no then the shares will crash and given how little cash Sirius will have left by then this will be a write-off. But the odds are heavily against that. None the less the shares remain overvalued ahead of the looming cash call ( my guess is that the next fund raiser will start on or around the clock hitting 9 in the morning on 22nd May) for a variety of reasons that are explained in detail HERE
Tom Winnifrith writes for 10 USA and UK websites. You can get access to all of his material via www.TomWinnifrith.com and you can also follow him on twitter @tomwinnifrith
Apart from the share price concerns, this is exactly the sort of business Britain needs if it is to earn its way in the world.
A lot of people seem to think that all industry is a ‘bad thing’ and that the world would be better of if no one was ever allowed to drill or mine or refine anything. These self same people being more than happy to demand the fruits of those evil activities.