Takeover from Anglo American is only viable pathway forward, says CEO of Sirius Minerals

THE chief executive of Sirius Minerals, the company behind a giant mine in North Yorkshire, today said that a planned takeover from Anglo American was the only viable pathway forward for the company.

The Sirius Minerals project could support thousands of jobs

Although he understood shareholders' disappointment with the planned offer from Anglo American, Chris Fraser warned that, if the takeover does not go ahead there is a "high probability" that Sirius will go into administration.

In response to questions from The Yorkshire Post, Mr Fraser said: "It is really very important that all shareholders fully understand all the facts and implications of voting for or against the acquisition.

Sign up to our Business newsletter

Sign up to our Business newsletter

"As part of this, as always I urge shareholders to ensure they take proper financial advice before deciding what to do. The board unanimously recommends shareholders vote in favour of the acquisition at the shareholder meeting on March 3."

Chris Fraser

Last month, Anglo American officially submitted a £405m rescue bid for Sirius which has been struggling to raise financing for the project near Whitby which will support thousands of jobs in the region.

Last month, the boss of Anglo American said his firm had the capacity to take Sirius Minerals' products around the world and he wants the firm to be “part of the future of Yorkshire”.

Mark Cutifani, chief executive of Anglo American, said that he and his firm saw huge potential in the Sirius mining project which aims to extract polyhalite from a mile below the North York Moors to use as fertiliser. He also said that his firm had the capacity, connections and personnel to take the product into global markets.

Responding to questions from The Yorkshire Post, Mr Fraser said that, since Sirius launched its strategic review in September last year, it has undertaken an extensive global search for a partner to join Sirius in "our world class project".

He added: "This included large mining and fertilizer companies and many other providers of capital.

"The only committed firm proposal that has come from this process is the one received from Anglo American. Unfortunately, Anglo decided to proceed only on the basis of a full acquisition of Sirius and not to become a project partner with us. So as we stand today this is the only viable pathway for the company."

Anglo has bid 5.5p per share for Sirius, which is less than a quarter of the 22.4p valuation just a year ago.

Responding to shareholder concerns that Sirius should have held out for a higher offer, Mr Fraser added: "Our chairman has already summed it up well by acknowledging that the returns offered by the offer are not what either our shareholders or the board had previously hoped for.

"I completely understand that shareholders will be disappointed - as a shareholder so am I.

"But the board has made its recommendation in favour of the bid based on all of the information in front of it at the time. The reality is there is now a stark choice because we haven't been able to deliver the complete stage two financing.

"That means that if the takeover does not complete there is a high probability that Sirius will go into administration.

"In turn, that is likely to mean shareholders would lose all of their investment.

He added: "I see some people saying they want to vote no to hold out for a better deal, but I would urge these people to read the board's recommendations carefully and to seek professional financial advice.

"I also see people saying they want to vote against the acquisition to punish me and my team.

"This project stopping would be devastating for the people that work on sites from Teesside to Scarborough and also for the people and businesses that they in turn support.

"As disappointing as the price is, the acquisition by Anglo is the only pathway forward that safeguards the project and should see all the multi-generational benefits of this world class project being unlocked for the region and for the UK.

Mr Fraser, who has worked to deliver the project for a decade, also said he had "legitimate concerns" about the lack of regulation of investment blogs, some of which had claimed that a sale to Anglo was always "part of the plan".

He said: "This is an outrageous and completely fabricated accusation."

Mr Fraser said the failure to deliver the stage two financing had been down to a combination of factors, and Sirius had left no stone unturned in trying to deliver it.

He said US and China trade wars, political leadership uncertainty, Brexit, project construction risks and fertilizer market uncertainty all contributed in some way.

He added: "The project has already created many jobs throughout the region. Obviously, it was devastating to see around half the wider contractor team go when we announced the strategic review, but it was our only credible option."

The company estimates that the project will create 1,000 direct jobs at full production and thousands more indirect jobs. There are also thousands of jobs created through the construction period, he added.

Mr Fraser added: "Anglo has said it does not intend to initiate any material headcount reductions at Sirius and intends to maintain our Scarborough office. That can only be a good thing for the local area."