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Sirius reveals revised plan for UK fertiliser mine

11th November 2019

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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London-listed Sirius Minerals has unveiled a new development plan for its fertiliser mine project, in North Yorkshire, sending the UK project developer’s share price surging.

The initial phase of one-million tonnes a year will require an investor or debt financing for $600-million by the end of March next year, to fund the shaft construction to take the Woodsmith mine to first polyhalite production.

The deferred scope contemplates up to $2.5-billion of capital expenditure, which will fund the project to ten-million tonne a year installed and ramped-up capacity.

The capital costs of the deferred scope will be committed to once the full financing of the project had been secured, Sirius said in a statement on Monday, noting that it would target full financing 12 months to 24 months from the start of the initial scope.

The new development plan comes as Sirius in September reduced the rate of development, after it failed to secure funding for the project.

“We are in discussions with potential strategic partners and debt investors with the aim of securing the best route to finance our revised initial scope of work and will update the market and our stakeholders on the progress of those when appropriate,” said MD and CEO Chris Fraser.

The primary objective remained to access first polyhalite as quickly and as efficiently as possible, thereby removing the greatest perceived construction risk associated with deep shaft construction.

“This will then enable us to explore a wider and cheaper range of debt financing options to fund the development of the remaining project infrastructure.”

Analysts at SP Angel commented that they still believed there was “considerable risk” in the Woodsmith project, owing to the risk of placing polyhalite in the market, potential price variance for polyhalite and the technical risk of shaft sinking into the polyhalite deposit.

“De-risking any project and reducing its initial capital outlay is normally a good idea but is often only come to after management fail to achieve their grand ambitions.

We wish management well with the raising of $600-million for the project. While this is still significant funding for a mining project it may be easier to pull together than the previous multibillion dollar estimated shortfall,” the analysts say.

Sirius’ share price surged 37% to an intra-day high of 4.40p each, from Friday’s closing price of 3.20p each. By 12:20 GMT, the company’s stock traded at 3.50p a share.

Edited by Creamer Media Reporter

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