Sirius Minerals, the firm behind the £1.7bn York Potash Project, cheered shareholders this morning with the news it has signed a major deal with a Chinese fertiliser import business.
The news comes hot on the heels of planning approval for the mine from the North York Moors National Park Authority.
Sirius said it has signed a seven year deal with Huaken International, which will import polyhalite, a multi-nutrient form of potash found at the mine, to China once the mine is up and running.
Chris Fraser, managing director and CEO of Sirius, said: "We are delighted to sign this important agreement with our partners in China and we look forward to working very closely with them for the long-term.
"Polyhalite's multi nutrient qualities have useful soil conditioning properties and it can assist in helping countries like China restore agricultural productivity and maintain food security for future generations."
Analyst Paul Smith at WH Ireland said the polyhalite will help China to reduce soil erosion and improve productivity.
"The deal will see the off-take tonnage increase in proportion to the ramp up schedule from the mine – reaching 500,000 tonnes in year seven," said Mr Smith.
"Pricing is not quoted but is in line with other take-or-pay deals - which we believe to be in the $150 (£101) per tonne range.
"This is further testament to the demand in the market place for multi-nutrient fertilisers of which polyhalite is a naturally occurring variant.
"Sirius ends the year on a high note with some more assured contract tonnages which will certainly help during the critical period early next year when the company tries to tie down its first phase funding."
Mr Smith is maintaining his "buy" recommendation on the shares and set a new price target of 50p per share.
Sirius said that Huaken is one of a restricted number of companies in China with the right to import potassium fertiliser.
It added that studies have demonstrated that, in addition to its proven role as a multi nutrient fertiliser, high quality polyhalite can also play a valuable role as a soil conditioner.
Earlier this week Sirius announced a loss of £4.7m for the six months to September 30 although this was expected following its heavy investment in the project.
The result was an improvement on the £6.7m loss the previous year.
Sirius chairman Russell Scrimshaw told shareholders: "The progress we have made during this period on securing the key approvals for the York Potash Project, increasing bankable customer contracts and developing the long-term financing strategy has been significant and hard-earned.
"In my view, they will prove to be both a defining part of the company’s history and the start of an even more exciting chapter ahead."
Mr Scrimshaw said the project has always been about much more than the substantial financial returns it can generate for shareholders ,many of whom are from the local region.
"It is about a project that can deliver strong returns whilst creating jobs and prosperity in a region that desperately needs more opportunity. It is also about a mining and infrastructure project that is uniquely sensitive to the environment and has not been done before. And it is about a British company set on breaking down the barriers to become a global leader in a product and industry that the world will rely upon to successfully feed its growing population.
"I know this is a key reason why we have so much support for what we are delivering and on behalf of our whole team I thank all of our supporters for their continued backing."