Sirius Minerals' North Yorkshire mine makes good progress

Sirius Minerals, the firm behind the £3.2bn polyhalite mine in Whitby, said 2018 was a year of significant progress across all its construction sites.

The Red Arrows flying over Sirius Minerals exploration drilling rig at its North Yorkshire polyhalite project

The company said more than 800 people are now employed on the project, demonstrating “the transformational potential for jobs and growth in the local area”.

It also said that stage 2 financing is making progress towards obtaining commitments from lenders.

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Chris Fraser, managing director and CEO of Sirius, said: “2018 was a year of significant progress for the company.

“Completion of procurement to support the stage 2 financing and the signing of an additional 4.8 Mtpa of take-or-pay supply agreements, have been substantial achievements.”

He said that executing the stage 2 financing plan remains the priority.

“We continue to make progress towards obtaining stage 2 financing commitments and are working constructively with all relevant parties to achieve this,” he added.

“The process with the lenders is continuing this quarter as we work through the due diligence reports with the lending group and progress discussions on the revised debt structure.”

The company’s cash balance at the end of 2018 was £290m, of which £230m is unrestricted. Sirius said this provides sufficient liquidity to fund project progress in line with the current schedule into the second quarter of 2019.

Analyst Paul Smith at WH Ireland said: “Progress is tangible and with several significant areas of construction underway we expect ongoing, positive news from the North Yorkshire project over the coming months.

“Key to all of this and to investor interest is the completion of the Stage 2 funding. The project is a key infrastructure and regeneration project in northern England and an important component of the Northern Powerhouse. We expect the Stage 2 funding to be finalised in the time scales indicated.”

Analyst Yuen Low at Shore Capital added: “While Sirius is currently at development stage and still some years from becoming a cash-generating company, we remain of the belief that an investment in Sirius should become progressively de-risked and enjoy significant value uplift as it advances towards production.”

Sirius said it is on track to achieve first polyhalite and commercial production on time and in line with the cost schedule announced in September.

Mr Fraser said that considerable progress has been made at the company’s construction sites in the quarter. At the Woodsmith Mine site, the service shaft foreshaft excavation is now complete to 44m and is expected to reach the final depth of 45m this month.

Production at the mine, which is situated underneath the North York Moors National Park, is due to start in 2021.

The service shaft winder house basement is complete, with the connecting walls to the shaft and upper floor currently being installed.

The Vertical Sinking Machine to construct the Mineral Transport System access shaft was launched in October, in line with the company’s milestone for 2018.

Sirius said it is holding key commercial discussions across the world. Negotiations in Europe are well advanced and concluding a European take-or-pay supply agreement is the main priority.

Recent trials have confirmed that the mine’s POLY4 mineral increases crop yields compared with existing fertilisers. The total number of trials established by the company now stands at 382 on 42 crops in 28 different countries.