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Sirius Minerals (LON:SXX) shares soared on Wednesday after it received the go-ahead to build the proposed York Potash project.
It was announced locally last night that a special committee of the North York Moors National Park Authority approved planning permission. A narrow vote, eight for and seven against, favoured the proposed development.
Chris Fraser, Sirius Minerals chief executive, described it as a “major step forward”.
"This is really just the beginning for the company,” he said in a statement.
"The case for the project has always been compelling because it will not only generate so many jobs and economic benefits, but also because it is accompanied by such extensive mitigations, safeguards and environmentally sensitive design.
“We now look forward to delivering it."
Sirius Minerals shares resumed trading at 8am, following yesterday’s trading suspension, and quickly marked up an 11p, 73%, gain to trade at 26p per share. At this level the AIM quoted firm is now worth more than £500mln.
The company said it will update investors next week on the next steps for York Potash and the milestones on the path to first production.
At the York Potash mine, Sirius aims to produce large volumes of polyhalite, a fertiliser product that is rich in potassium, calcium and magnesium.
The project is forecast to add over £1bn to the UK’s GDP, but, as the mineral deposit is based within a national Park the plans had been scrutinised very carefully.
York Potash will be a huge undertaking with an estimated pre-production capital cost of US$1.7bn. It will be a 13mln tonne per annum operation and the development will involve two phases of construction.
To minimise the impact on the national Park an underground conveyor-based system will be built to transport the fertiliser from the mine-site to port via five 7.5km tunnels.
On AIM, Sirius Minerals shares were up almost 60% trading at 24p at around 2pm.
City analysts were mostly positive about the project’s planning breakthrough.
WH Ireland analyst Paul Smith described the outcome as “great news” for Sirius, its shareholders and the local economy.
The analyst repeated a ‘buy’ recommendation, but put his price target under review while considering the implications of the planning approval. Smith says there is “clear upside” to the prior 37p price target.
Investec, meanwhile, said “clearly the vote was a close run thing” and, with a dash of flippancy, added that Sirius now only had ‘the minor hurdle’ of finding US$3bn for mine development.
Liberum Securities, which later this month takes Sirius on a City ‘road show’, in a note said: “With the key permitting hurdle now overcome, the focus now becomes delivery of the bankable feasibility study and funding the mine.”