Sirius to start construction after raising £1bn
THE biggest planned economic project in Yorkshire is expected to start on site in January after Sirius Minerals raised £1bn in its first stage of fundraising.
Sirius is behind the planned potash mine under the North Yorkshire Moors which is positioned as a 100-year project that will “move the dial” on the national GDP data.
The project received final planning approval last year, enabling the company to move to secure funding.
It has now raised £370m in a share offer and a further $400m (£330m) through a convertible bond offering, subject to approval from shareholders on November 24. Both were fully underwritten by JP Morgan.
Last week it confirmed it had raised $300m (£250m) through a royalty agreement with Australian group Hancock Prospecting.
Sirius Minerals’ managing director Chris Fraser said: “The completion of the convertible bond and equity placing is great news for the company, and delivers the financing that allows us to start construction of our North Yorkshire polyhalite project.
“It is important to thank existing shareholders for their continued support and the new investors that took part in this capital raising.”
Sirius Minerals’ Definitive Feasibility Study (DFS) valued the fertiliser business at more than £10bn, rising to £19bn when production starts.
The scheme is forecast to see 3bn tonnes of polyhalite – a mineral which is used as a fertiliser – mined for more than 100 years. Sirius believes it will have the capacity to produce 20m tonnes a year and make an annual contribution to UK GDP of £2.3bn.
It requires a shaft to be dug a mile into the moors, near Whitby, to reach polyhalite. A 23-mile tunnel containing underground conveyor belts would then link the mining site to a processing plant in Teesside.
WH Ireland in Leeds were the co-lead managers on the share placing.
“This has been talked about as one of the key projects of the Northern Powerhouse, said Dr Paul Smith, mining analyst at WH Ireland.
“The management team has done a really good job in taking it through all the stages.
“There was a lot of confidence in it, which is why JP Morgan has underwritten it.”
He added: “The Stage One financing takes us most of the way there, then there will be a stage two financing, which will be all debt.”
Sirius has $700m (£570m) put up by mandated banks, with the potential for some of the money to be backed by a government guarantee. It is seeking $2.6bn (£2.1bn) in total in the second stage.
