Sirius Minerals PLC (LON:SXX) (SXX.L) has risen by around 50% over the last four months, with investor sentiment picking up on the back of further positive news flow from the company.
Looking ahead, it wouldn’t surprise me if the performance of the company’s shares becomes increasingly volatile. I have been following the stock for a number of years, and it has often experienced significant price movements in short periods during that time. Therefore, the robust growth of the last few months is not guaranteed to continue in future months in my opinion.
That said, I remain optimistic about the long-term prospects for the Sirius Minerals share price. I feel that the company has put in place a solid strategy which could yield impressive financial performance over the coming years.
It is on track with that strategy according to recent updates. Encouragingly, it has been able to make progress with offtake agreements, with the latest one being an offtake agreement in Nigeria. Further deals could be ahead for the company over the medium term according to its recent update, while progress on its financing is due to take place in the current year.
Therefore, I think that the stock could generate further growth over the next few years. I wouldn’t be surprised if it gradually moved higher between now and first production, which is expected to take place sometime in 2021. This could even happen up to six months earlier after a change in contractor.
With Sirius Minerals having an NPV of around 230p per share versus a share price of 33p, I think it could still offer a margin of safety. As a result, I believe it could deliver capital growth potential over the long run. Due to this, I remain upbeat about its investment potential – but only over a multi-year time period.