Sirius Minerals completes procurement of ‘major’ tunnelling contract
Sirius Minerals has expanded its existing mineral transport system (MTS) tunnelling contract with STRABAG AG to include the engineering, procurement and construction of the fit-out of the company’s MTS.
The MTS fit-out contract includes the fit-out of; the MTS conveyor, the maintenance railway, electrical and communications infrastructure, and all other services in the tunnel essential to the operation of the MTS.
The value of the MTS fit-out is in line with the Scarborough-based firm’s capital re-estimate announced on 6 September. More than 50% of the MTS fit-out price is on a fixed rates or lump sum basis.
The proposed schedule for the MTS fit-out is in line with the company’s overall Project schedule.
Sirius Minerals has now completed its procurement for the construction packages related to the stage two senior debt financing process, which represents a significant milestone for the Project.
The MTS will carry the company’s mined polyhalite from 360 meters underground at the Woodsmith mine site to the materials handling facility at Wilton, Teesside, on a 37km underground conveyor system.
The tunnel will be constructed by three tunnel boring machines. The conveyor system in the MTS will be designed to handle 20 Mtpa of throughput. The tunnel will also contain maintenance rail and services, including a 66kV power feeder from Wilton International industrial complex.
Chris Fraser, Managing Director and CEO of Sirius, said: “Procurement of the mineral transport system fit-out marks the completion of our major construction procurement programme to support our stage two senior debt financing process and is a significant milestone for the Company.
“Our efforts are now focussed on the successful execution of our financing plan to fully finance the construction of our world-class, long-life polyhalite project.”
The MTS contract, which is the final procurement contract for Sirius Minerals’ stage two senior debt financing process, will now be provided to the stage two lenders for review by the lenders’ independent technical consultant.
Once the procurement contract review is completed, the company and its lenders will assess the required capital contingency levels for the project to determine the overall capital funding required.
Sirius Minerals expects the capital funding requirement of the project to be $3.4bn – $3.6bn. The company believes that a $3bn senior debt financing is the appropriate level of debt and will not seek to increase this amount.
The final lender commitment letters are expected to be received in December 2018 and January 2019. The company is targeting financial close of stage two financing in Q1 2019.
