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Sirius Resources Video



 

Stock Of The Day - Sirius Resources (BUY)

Sirius Resources (ASX:SIR) is developing several nickel deposits in Western Australia, wherein its Nova prospects come under the top undeveloped nickel sulphide mines in the world. Based on the company’s recent March operational data, over A$38.0 million was spent during the first quarter of the year, with approximately A$30.0 million used for developing and constructing Nova nickel mine. SIR plans to spend over A$80.1 million for the next quarter which includes A$68.3 million for developing its Nova project. With a cash position of approximately A$210.1 million, as at the end of March 2015 quarter, the Company is self sufficient to fund its capital spending on Nova project. For the mine development, SIR said its excavation of the boxcut is 82% finished and is on schedule. Sirius received final approval for permanently accessing the road to Eyre Highway from its Nova mine site earlier this year, and mining and construction are progressing ahead of the schedule. Meanwhile, GR Engineering Services got the preferred tender status to perform processing plant engineering, procurement and construction (EPC) activities in Nova process plant, and will start the work once the contract is finalized.


EM Conductor at Lake Harris (Source: Company Reports)

For the Baloo gold prospects, top grade initial gold mineralization were intersected at diamond holes with Infill (40 x 20 metres) aircore drillings confirming oxide gold zones, measuring 700 meters in strike and a width up to 100 meters wide. Drill tests for the primary gold zones are going on, while assays expect an additional seven holes. Moreover, from the ground electromagnetic (EM) survey, which was conducted near a copper anomaly at Lake Harris, a huge and strong EM conductor was identified. While drilling, mixed barren sulphide (pyrrhotite) and graphite were found to be intersecting. The drilling results at Baloo have been quite promising.


Plan Projection at Baloo (Source: Company Reports)

With regards to Monsoon updates for the quarter, intermittent mineralization was seen along a 1 kilometer strike length, related to quartz veining and arsenopyrite alteration within a north-northeast trending shear zone on a mafic, from reconnaissance aircore drilling on 80 m by 40 m grid. Results were witnessed for over 129 holes that were drilled during the program.


Plan Projection of Monsoon (Source: Company Reports)

Coming to Nickel Exploration at Crux and Centauri, a presence of magmatic nickel-copper sulphide mineralization was confirmed. This was found to be scattered throughout the Crux intrusion from over 15 reconnaissance diamond holes, which are drilled to test a small area from the Crux and Centauri. Meanwhile, drilling intersected diverse barren sulphide (pyrrhotite) and graphite.
 
With regards to the latest quarter updates, SIR also reported the loss from continuing operations for the quarter ended on 31 March 2015 of about $A34.8 million, as compared to the A$51.8 in the same period last year. The company received other income of A$1.3 million from government research and development scheme. SIR intends to spend A$9.2 million as exploration costs and A$2.6 million as corporate costs. For Eundynie Joint Venture, the Company issued over 200,000 new shares during the quarter. SIR had A$412.2 million fully paid ordinary shares at the end of the quarter. Meanwhile, a total of $17.75 million unlisted options were reported for the same period with 1.9 million 20 cent options, 1.9 million 60 cent options, 0.3 million $2.80 options, 8.75 million worth of $3.17 options, 1.55 million $3.50 options, 0.5 million $3.00 options, 1 million $3.34 options and 2 million $3.51 options.


Sirius Resources Daily Chart (Source - Thomson Reuters)
 
Overall, strong prospects of Nova project (despite lowering nickel prices) are expected to drive the shares of the company going forward. The stock has moved up by about 8% in 12 months ending 30 April 2015. Surge in growth is expected with earnings becoming relevant in couple of years based on revenue flowing in from Nova. Baloo brings another opportunity for growth.

Accordingly, we give a BUY recommendation for this stock at the current price of $2.86.