Sirius Minerals (LSE:SXX)
Historical Stock Chart

From Apr 2019 to Apr 2024

TIDMSXX

RNS Number : 6810S

Sirius Minerals Plc

10 July 2015

10 July 2015

Sirius Minerals Plc

Status update following key approvals

-- Approvals close out work ongoing during government call-in window

-- Final decision notices for key approvals expected by end of September 2015

-- DFS being finalised with input from approvals and key contract tenders

-- DFS results expected to be published during Q4 2015

-- Financing to focus principally on debt provision, split into two stages

-- Stage one financing expected to be completed by end of Q1 2016

-- Good progress continuing to be made on polyhalite sales to support financings

The Directors of Sirius Minerals Plc (AIM: SXX, OTCQX: SRUXY) ("Sirius" or the "Company") provide an update on the progress and the next stages of the development of the York Potash Project ("the Project").

Following the positive decision by members of the North York Moors National Park Authority ("NYMNPA") to resolve to grant permission for the Project's mine and mineral transport system ("MTS") a number of work streams are currently underway and outlined below.

Chris Fraser, Managing Director and CEO of Sirius, comments:

"After our recent approvals success we are now rapidly moving to the next phases of financing and construction of the York Potash Project.

"With the underlying strength of our business model, unique product and sector fundamentals I believe we are only at the beginning of a very steep value curve as we move towards becoming a major multi-nutrient fertilizer producer."

Approvals

Following positive resolutions to grant approval for the key planning applications for the Project, there remain a number of steps to take before the final decision notices are issued to the Company. For clarity, these decisions are for the mine and MTS from both the NYMNPA and Redcar and Cleveland Borough Council ("RCBC"), for the materials handling facility ("MHF") from RCBC, and for the temporary construction accommodation and a park and ride facility from Scarborough Borough Council ("SBC").

As is common for major projects of this nature, most of these applications are 'departures' from the relevant local determining authority's 'Development Plan' and the applications have therefore been advertised as such. The Secretary of State for Communities and Local Government currently has the option to 'call-in' the applications and hold a public inquiry if he so chooses. The Company does not believe such a course of action is necessary and awaits the notification from the local authorities as to government's decision on this matter.

In the meantime, other remaining matters are being progressed to conclusion as a normal part of the planning process before decision notices can be issued:

-- Construction park and ride (SBC) - Planning conditions are being finalised and agreed between the Company and planning officers at the local authority.

-- MHF (RCBC) - The section 106 legal agreement is being finalised between the authority and the Company.

-- Mine and MTS (RCBC) - The planning conditions and the section 106 legal agreement are being finalised and agreed between the Company and planning officers at the local authority.

-- Mine and MTS (NYMNPA) - The planning conditions and the section 106 legal agreement are being finalised and agreed between the Company and planning officers at the local authority. Additional conditions will relate to design improvements to the proposed mine buildings and energy efficiency improvements to the proposed welfare building at the mine. Further technical assessment of details relating to the proposed water discharge borehole will also be provided.

The Company expects all remaining issues to be dealt with in a timely fashion in order to enable all of the decision notices to be issued before the end of September 2015.

As per the announcement of 22 April 2015, the proposed development consent order for Harbour Facilities at Teesside has been accepted for examination by the Planning Inspectorate. The preliminary hearing will be on 21 July 2015 and a final decision is due to be made by the Secretary of State for Transport no later than summer 2016. This is in line with Company expectations and this element of the Project is not on the critical path for construction.

Definitive Feasibility Study

The preparation of the Definitive Feasibility Study ("DFS") has been ongoing while the relevant approvals have been secured and is expected to be finalised during Q4 2015. The finalisation process is now being completed and includes input from the approvals, value engineering and optimisation, and input from the key construction contract tenders.

With the final parameters of the approval conditions now being defined, a process of value engineering to refine and optimise the Project is being undertaken to complete the DFS. This work is looking at ways of increasing the initial installed infrastructure capacity from 6.5 million tonnes per annum up to 10 million tonnes per annum, and securing the ability to potentially double the infrastructure capacity to 20 million tonnes per annum. The focus is on reducing the impacts of construction (below the levels assessed in the approval process and set in the conditions) while maximising the capital efficiency of the infrastructure installation.

The final cost estimates in the DFS will be informed by the final tenders for the key construction contract packages: site preparation; tunnel construction; and shaft sinking. This process is now in the final stages with the two leading tenderers for each package currently being selected.

Financing strategy and timing

The Company has always maintained that the Project will require multiple financings and these will be carried out when required, when opportunities present themselves and always with the best value to shareholders in mind. The stated and ongoing strategy is to access debt markets for the majority of the Project construction because the underlying economics of the Project business model lend themselves to high leverage and because that should be in the best long term interests of shareholders. Similarly, significant investment partners would need to be aligned to the long term strategy of the Company - to construct the Project and become a major supplier of multi-nutrient fertilizer products, outside of the existing supply structure.

The Company currently intends to split the financing of the project into two stages. Stage one will focus on the initial construction period where the perceived risks are higher. This is likely to take the form of a mixture of development equity, including cornerstone investors, and structured debt. This financing would advance the construction of the Project to a point where construction risk (primarily tunnelling and shaft excavation) is reduced and lower cost sources of debt are available.

The Company has been working with advisers since January 2015 to arrange structured debt capital for the stage one financing. A number of cornerstone debt investors are ready to commence due diligence and the financing is expected to conclude during Q1 2016.

Stage two financing will account for the majority of the financing requirement of the development. The Company's aim is for this stage to be 100% debt based. Advisers were engaged in early 2015 to advise on structuring and arranging senior debt for this phase, which could ultimately be secured from either the bank or debt capital markets or from a combination of both.

At the same time, other initiatives are being explored to support the phase two financing. Government backed credit agencies can provide valuable liquidity for the stage two financing and dialogue is ongoing with Infrastructure UK and with various export credit agencies from around the world. Aspects of the Project are also well suited to lease finance and discussions with equipment providers and infrastructure developers are under way.

The underlying ethos of the Company's financing strategy is that any transactions needed to complete construction of the Project are ultimately stepping stones to the long-term capital structure. Once material cashflows from the Project commence the Company can put in place a low-cost long term capital structure. This will then allow dividends and increased value to be returned to shareholders.

Customer engagement

The Company's extensive engagement with current and potential customers continues to progress well. Discussions are ongoing with a range of partners all around the world and, following successful outcomes to recent approvals decisions, the Company expects further progress to be made with polyhalite offtake agreements.

The Company's crop study and agronomy programme also continues at locations and establishments all around the world. These efforts support the wider market understanding of polyhalite, its value in use for the benefit of customers and a number of in-country product registration processes.

The Company looks forward to issuing further updates as the Project moves through the next phases.

For further information, please contact:

 
 Sirius Minerals Plc 
  Investor Relations            Email: ir@siriusminerals.com     Tel: +44 845 
                                                                     524 0247 
---------------------------  -------------------------------  --------------- 
 Joint Brokers 
  Liberum Capital Limited       Clayton Bush                      Tel: +44 20 
                                                                    3100 2222 
 Macquarie Capital (Europe)   Ken Fleming,                        Tel: +44 20 
  Limited (NOMAD)              Nick Harland,                        3037 2000 
                               Nick Stamp 
 WH Ireland                   Adrian Hadden                       Tel: +44 20 
                                                                    7220 1666 
---------------------------  -------------------------------  --------------- 
 Media Enquiries              Jos Simson, Mike                    Tel: +44 20 
  Tavistock                    Bartlett,                            7920 3150 
                               Emily Fenton 
---------------------------  -------------------------------  --------------- 
 Warrant Trading Enquiries 
  Liberum Capital Limited       Simon Smith                       Tel: +44 20 
                                                                    3100 2171 
---------------------------  -------------------------------  --------------- 
 

About Sirius Minerals Plc

Sirius Minerals is the potash development company focused on the development of the York Potash Project in the United Kingdom, which has the world's largest and highest grade deposit of polyhalite, a multi-nutrient form of potash containing potassium, sulphur, magnesium and calcium. Incorporated in 2003, Sirius Minerals' shares are traded on the London Stock Exchange's AIM market. Its shares are also traded in the United States on the OTCQX through a sponsored ADR facility. Further information on the Company can be found at: www.siriusminerals.com.

This information is provided by RNS

The company news service from the London Stock Exchange

END

MSCDBGDRUUGBGUC