Sirius Minerals launches $3.8bn fundraiser for potash mine

Shares have dived at mining firm Sirius Minerals after it announced a £2.9bn financing to fund its major fertiliser project in North Yorkshire.
160818     Graham Clark Operations Director for   Sirius Minerals  at the Woodsmith site near Whitby .  For Business .160818     Graham Clark Operations Director for   Sirius Minerals  at the Woodsmith site near Whitby .  For Business .
160818 Graham Clark Operations Director for Sirius Minerals at the Woodsmith site near Whitby . For Business .

US banking giant JP Morgan has backed the financing package, which will be used to build a giant polyhalite mine under the North Yorkshire moors, a project which could bring a multi-million pound boon to the region.

The announcement sent shares in the FTSE 250 company down by 18 per cent to 17.9p in early trading, after it said the project would cost more than previously planned.

Hide Ad
Hide Ad

Polyhalite can be used as a fertiliser and has other industrial uses.

The mine had been expected to cost £2.3bn, but last year Sirius revised this up to £2.8bn amid a rise in construction costs.

This figure has now been revised upwards again to £2.9bn.

The equity will be raised through a £310m share placing, launched on Tuesday, as well as a £1.9bn revolving credit facility from JP Morgan.

Chris Fraser, managing director and chief executive, said: “In March, we paused discussions with prospective lenders to work on an alternative financing proposal with J.P. Morgan Cazenove.

Hide Ad
Hide Ad

“Today we are pleased to announce that, as a result of that work, we are launching a comprehensive markets-led solution for our funding requirements which will enable Sirius Minerals to complete the development of its mine and unlock what we believe to be the world’s largest known high-grade polyhalite deposit.

“The funding package will bring together equity, convertible bonds, high yield debt, and a $2.5bn revolving credit facility in a multi-stage, flexible structure that balances the availability of capital with the needs of the project.

“Today’s announcement provides a clear pathway to a fully financed project in the months ahead, while enabling us to progress construction at full speed.”

Bosses at Sirius Minerals believe the new mine in North Yorkshire will have a transformational impact on the region’s economy and help to improve global food security.

Hide Ad
Hide Ad

The deposit – nearly a mile (1,500m) below the ground – is among the world’s largest, the company said.

The Woodsmith mine, near Whitby, is set for completion in 2021 and is the first to be sunk in Britain for 40 years.

The mining giant estimates the site holds sufficient polyhalite to support more than 1,000 jobs in the area.

Sirius has secured fertiliser supply deals in Europe, South America, China and Africa.

Related topics: