Sirius seals deal to supply US agri-giant with potash

The AIM-listed miner did not identify the buyer, but said it was a Fortune 500 agri-business.

Analysts said the deal is the company’s most significant offtake agreement to date.

Sirius Minerals, which has been struggling to get permission to mine polyhalite beneath the national park in North Yorkshire, said last week that it would re-apply for fresh planning approvals by July.

A large portion of the company’s £1bn project sits under the national park in North York- shire.

Chris Fraser, managing director and CEO of Sirius, said: “There can be no greater endorsement of the market for polyhalite or importance of the Yorkshire Coast to the world’s fertiliser industry than a multi-year take or pay-off take agreement with such a significant global agri-businesses.”

The polyhalite will be sold to customers in North America, Africa, South East Asia and Central America. The company said the pricing of the deal was based on the market price of nutrients contained in polyhalite and in line with previous guidance.

Sirius Minerals said it had agreed to sell at least 500,000 tonnes per year of polyhalite – a form of fertiliser ingredient in potash – for five years with a possible renewal for a further five years.

The deal would take sales commitments for phase 1 of the project to 4.8 million tonnes per year, just shy of its five million tonne production target.

The US-based buyer could take up to an additional 500,000 tonnes per annum.

Liberum analyst Richard Knights said: “We consider this the company’s most significant offtake agreement to date, taking total offtake agreements to 96 per cent of Phase 1 capacity and likely increasing pressure on other offtakers to firm up existing agreements to a similar standard, crucial to ensuring the project’s bankability come funding time.

“Sirius is our top small cap pick in the sector for 2014.”

Analyst Yuen Low, at Shore Capital, said: “Sirius had good news. The company has won another polyhalite take-or-pay offtake agreement for its York potash project.

“In total, Sirius now has total commitments for 4.8 million tonnes per year – essentially all of the Phase 1 production target of five million tonnes per year.

“Although these take various forms (some with certain pre-conditions), they should nonetheless go a long way towards answering doubts voiced by certain parties about the market for Sirius’ product.”

The company has signed an agreement to supply 500,000 tonnes per year of polyhalite to Sichuan Agricultural Means Group.