Shares of Sirius Resources [ASX:SIR] fell 2.32% to $3.79 today. After the company announced the conversion of unlisted options earlier this week, the share price fell slightly today. It seems that the market is adjusting to the near 10% share register dilution.
Sirius Resources owns the world-class nickel-copper Nova-Bollinger project in Western Australia.
Last month, Sirius announced that it raised $189 million. It now has enough money to fund the development of the Nova Nickel project. The market is beginning to add value to the share price for meeting its capital requirement needs to develop the Nova nickel project.
Nova requires mining approval before it can move to the next stage of development. This is likely to be approved shortly.
Nova is a high grade mine with a life of more than 10 years. This is a once in a lifetime resource. It’s cheap to build, and will give the company large cash flows in the future.
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Nova’s definitive feasibility study showed that it’s likely to be one the lowest-cost nickel mines in the world. The company expects to be in production by 2017.
Hopefully by this time, the nickel price is still high.
Nonetheless, shareholders should keep in mind that production is years away. In this case, it’s likely that Sirius will need to raise capital again from shareholders. The company has plans to explore a recent conductor found at Nova. And it recently found positive results at its Polar Bear project.
I believe Sirius has no plans to slow down its exploration program any time soon.
Additional good results at Crux, Nova, Bollinger and Polar Bear should see a higher share price for Sirius.
Jason Stevenson+
Resources Analyst, Money Morning
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