Buy into mineral firm led by a miner celebrity

THE annual conference of the International Fertilizer Association may not be everyone’s idea of fun, but it is one of the most important events in the industry calendar.

Held last week in Berlin, it provides 1,300 delegates with the chance to meet, greet and make deals. That includes Yorkshire-based

Sirius Minerals. During the conference, Sirius announced a seven-year contract to supply 2.4 million tons of POLY4, its fertiliser product, in West Africa.

Midas first recommended Sirius shares in 2011, when the stock was 10½p. Today it is 31½p. The shares have yo-yoed, but at the current price there is considerable potential for long-term investors with a dash of derring-do. And there are plenty of those, it seems.

Sirius has more than 22,000 individual shareholders. Chief executive Chris Fraser is recognised in bars, restaurants, even petrol stations across Scarborough, near the Sirius mine site. That location is home to the largest and highest-grade polyhalite resource in the world. Polyhalite contains potassium, magnesium, sulphur and calcium and the combination of four beneficial minerals in one product, without any restrictive side effects, is highly attractive – so much so that Fraser has already agreed to sell 4.4 million tons of POLY4 a year, once Sirius moves into production.

According to detailed assessments, POLY4 will cost $30 (£23) a ton to produce and future customers have already agreed to pay $145 a ton.

The company is hoping to produce at least ten million tons a year so the profit potential is huge. Construction has started but Fraser still needs to secure around $3 billion (£2.3 billion) in debt finance to finish the site. Talks with banks are ongoing and Fraser hopes to reach an agreement by year-end. Midas verdict: Sirius Minerals is not expected to move into commercial production until at least 2022 and there are considerable hurdles to overcome. Momentum is building, however, and Sirius is hoping to deliver a world-class mine. At 31½p a share, that is an ambition worth buying into for both new and existing shareholders.