Sirius’s ‘exceptional progress’ in moors potash mine project

In half year results yesterday the group reported a cash balance of £36.8m which will be used for the drilling programme and feasibility studies.

The bulk of the drilling campaign is complete, with a final hole being drilled at the proposed shaft location on farmland near Sneaton.

Sirius said it is on schedule to complete pre-construction activities by mid-2013.

The group reported a £6.1m post-tax loss in the six months to September 30 as a result of drilling and other project development costs.

This was an increase from a loss of £2.3m in the same period in 2011 and reflects higher levels of drilling.

Sirius chairman Russell Scrimshaw said: “Sirius continues to rapidly advance the York Potash Project.

“We are focussed on the delivery of the key foundations for a long-term, environmentally sustainable, safe and economically attractive fertiliser business. This is an exciting and ground-breaking time.”

Sirius said that high-grade deposits of potash have far exceeded initial estimates.

Tests show the potash seam extends to 2.2bn tonnes of polyhalite, the potash ore which would be targeted in the mining operation and a source of potassium, sulphur, magnesium and calcium. This is 70 per cent more than the previously estimated amount. Drilling work has pinpointed one of the world’s most extensive seams of the mineral, which is a key component in fertiliser.

A planning application for the mine is due to be submitted by the end of the year. The mine is expected to create more than 1,000 jobs and a further 4,000 jobs in the wider economy.

Drilling will start next month to provide additional geological information and geotechnical data for the shaft design and mine plan.

Initial mine designs show the company intends to conceal the mine surface facilities.

“These designs deliver on our long-standing commitment to the local community of a low impact and world-leading mine facility for the York Potash Project,” said Mr Scrimshaw.

He added that extensive public consultation on these plans has resulted in “wide ranging and broad support” for the proposals.

“We received over 1,000 feedback forms and these showed an almost unprecedented level of positive support at 91 per cent, with just one per cent against,” he said.

The group said it has received a positive response from business groups, the regional tourism agency, local councils and MPs.

“The team continues to make exceptional progress as we refine both the detailed engineering design and strategy for the York Potash Project to create the simplest, lowest risk and most sustainable long-term development model,” added Mr Scrimshaw.

Sirius expects to release the findings of a Project Study Update for the initial production of granulated polyhalite early next month.

Mr Scrimshaw said that the finance team is looking at a number of ways to finance the project.

“We believe we have a strong and experienced team confident of obtaining the funding needed to build the York Potash Project,” he said.

Analyst Ash Lazenby, at Liberum Capital, commented: “We anticipate significant reductions in capital expenditure and operating expenditure from previous design proposals, as sale of granular polyhalite would require a simple crushing and screening process, without the more energy-intensive production route.”