Sirius set to fundraise $3.8bn for North Yorkshire mine
Sirius Minerals, the listed fertiliser company, is set to raise up to $3.8bn to fund its plans to mine potash from beneath the North York Moors.
The FTSE250 company is looking for billions in debt and private equity in its stage two funding.
It said it would raise £310m ($400m) through a share placing, and that it had committed to a $2.5bn (£1.9bn) revolving credit facility. The rest would be raised through the offering of convertible and guaranteed bonds.
Chris Fraser, managing director and chief executive officer of Sirius, said: “In March we paused discussions with prospective lenders to work on an alternative financing proposal with J.P. Morgan Cazenove.
“Today we are pleased to announce that, as a result of that work, we are launching a comprehensive markets-led solution for our funding requirements which will enable Sirius Minerals to complete the development of its mine and unlock what we believe to be the world’s largest known high-grade polyhalite deposit.
“The funding package will bring together equity, convertible bonds, high yield debt, and a US$2.5bn revolving credit facility in a multi-stage, flexible structure that balances the availability of capital with the needs of the project.”
He said the announcement provided a clear pathway to a fully financed project in the months ahead and progress construction on site “at full speed”.
At the same time, it announced its preliminary results for the year to 31 December 2018. During 2018 the group made a total loss of £12.5m compared to a loss of £78.9m in 2017, and it spent £391.2m in progressing the potash project.
Mr Fraser commented: “It has been another year of exceptional progress for the business as we continue to increase our customer base around the world and develop the Woodsmith Mine and its associated infrastructure.
“The ongoing development of our world class project will see Sirius become a major global producer of our multi-nutrient fertilizer product POLY4 and the launch of our stage two financing transaction today sets the pathway for delivering our polyhalite Project.”
It is tapping up existing investors for the funding, which include Gina Rinehart, the Australian mining magnate behind mineral extraction and exploration firm Hancock Prospecting.
The company is looking to tap into what is thought to be the world’s largest deposit of polyhalite beneath the Yorkshire Moors National Park. It already has a mine near Whitby in North Yorkshire. However it will be a difficult and complex extraction process to extract the estimated 2.66 tonnes of multi-nutrient fertiliser.
If operations begin by 2021 as Sirius has suggested, two mine shafts will be used to help extract the potash, which will then be transported outside the National Park to Teeside via an underground tunnel for processing.
Sirius will ramp up production from 2021 when it plans to complete its Woodsmith Mine, the only deep mine to be sunk in Britain for the past 40 years. It says it is aiming for a production capacity of 10 million tonnes per year, up to 20 million tonnes per annum at its height. It has reportedly already agreed deals to deliver 8 million tonnes per year.
Permission was granted for mining to go ahead by the North York Moors National Park Authority in October 2015, but since then it has faced high costs getting the project off the ground. Last year Sirius announced it would need up to a further $600m to complete development of the project.
Earlier this year, Sirius announced that a “major global financial institution” had made an offer to fund the second phase of the Woodsmith Mine project.
