Onwards and upwards as minnow's market cap tops $1b
Another round of encouraging drill results extended Sirius's amazing eight-month rally and appeared to support theories that a series of discoveries were part of one large geological system in Western Australia's Fraser Range.
News that Sirius had confirmed there were minerals more than 100 metres south of last month's Bollinger discovery sent its shares racing by almost 20 per cent in early trading as investors considered a much bigger deposit than first thought.
An afternoon bout of profit-taking saw the stock finish the day only 5 per cent higher at $4.40; a fairly modest result for a company that has more than doubled in value over the past fortnight.
But the day was notable for being the first time Sirius's market capitalisation has passed - albeit temporarily - $1 billion; an amazing feat for a stock that was worth barely $12 million last July.
Both RBC Capital Markets and Patersons Securities insisted the best was yet to come for Sirius, with RBC saying the stock could climb to $5 in the immediate future, and Patersons predicting a longer-term "potential value" of more than $10 per share.
The market's enthusiasm for Sirius comes despite nickel being regarded as a laggard commodity with low prices ensuring that even big companies like BHP Billiton struggle to make money out of nickel. The optimism surrounding Sirius lies in the fact that nickel has been found in geological formations that are atypical for Australia, and are likely to deliver multiple clusters of high-grade nickel that will be economic and efficient for mining.
RBC analyst Geoff Breen said between Sirius' two main discoveries - the Nova and Bollinger deposits - there was undoubtedly enough to warrant a mine.
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Sirius Resources' market capitalisation reached $1 billion for the first time after another round of encouraging drill results. Those results extended an eight-month rally and supported growing investor belief that multiple discoveries in Western Australia's Fraser Range could be part of one large, economic nickel system.
The rally was sparked when Sirius confirmed there were nickel-bearing minerals more than 100 metres south of last month's Bollinger discovery. That news suggested a much bigger deposit than initially thought and boosted optimism about the extent of the Fraser Range system.
Sirius shares jumped almost 20% in early trading on the news, although an afternoon bout of profit-taking saw the stock finish about 5% higher at $4.40. The company had more than doubled in value over the prior fortnight.
RBC Capital Markets suggested the stock could climb to about $5 in the immediate future, while Patersons Securities predicted a longer-term "potential value" of more than $10 per share, reflecting strong analyst optimism based on the discoveries.
Market enthusiasm centers on the geology: nickel has been found in atypical Australian formations in the Fraser Range that are expected to deliver multiple clusters of high-grade nickel. Those high grades could make mining more economic and efficient even when overall nickel prices are subdued.
Nova and Bollinger are Sirius' two main discoveries in the Fraser Range. RBC analyst Geoff Breen said that, between those two deposits, there appears to be enough resource potential to warrant a mine—making them central to the company's value proposition.
The change has been dramatic: Sirius was worth barely $12 million last July, and within months its market capitalisation climbed to the $1 billion mark, reflecting the impact of ongoing discoveries and investor interest.
The stock's intraday swing—from an almost 20% surge to a 5% close—illustrates how news-driven exploration stocks can be highly volatile. Everyday investors should be aware that drill results, profit-taking and analyst commentary can cause rapid price moves in such companies.
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