TIDMSXX
RNS Number : 6607Y
Sirius Minerals Plc
19 May 2016
19 May 2016
Sirius Minerals Plc
De-icing salt opportunity
-- Scoping study identifies de-icing salt as an additional
product line
-- 550 million tonnes JORC compliant Inferred Mineral Resource
of high grade de-icing salt
-- Salt production could be used to utilise excess
infrastructure capacity as polyhalite production levels vary
according to the Company's price and volume strategy
-- US$29m capital investment required to facilitate additional
infrastructure capable of producing at a rate of 2 Mtpa
-- Disruptive influence as a low cost salt producer, ideally
located to serve major markets of Europe and North America as a
swing supplier
Sirius Minerals Plc (AIM: SXX, OTCQX: SRUXY) ("Sirius" or the
"Company") provides an update on its high grade de-icing salt
opportunity.
A JORC compliant Inferred Mineral Resource ("the Resource") of
halite (salt) of 550 million tonnes has been delineated at the
Company's North Yorkshire polyhalite project (the "Project"). The
Resource is within the immediate polyhalite mining area and will be
accessible from the planned underground mining infrastructure for
the Project and has an in situ mean grade greater than 93% NaCl,
which is suitable for consumption in the de-icing salt market. It
also includes 210 million tonnes of higher grade halite with a mean
grade greater than 95% NaCl.
With the majority of the key infrastructure (shafts and tunnel)
at the Project able to extract 20 million tonnes per annum ("Mtpa")
of ore, salt could also be extracted as polyhalite production
levels vary according to the Company's price and volume strategy.
The Company's salt scoping study shows that it could extract up to
2 Mtpa for an investment of up to US$29 million as an optional
bolt-on to the existing polyhalite mine plan. The assumed capital
and operating estimates are based on a +/- 25% accuracy level and
have been reviewed by SRK Consulting (UK) Ltd.
It would adopt an opportunistic approach, bringing on supply
when market demand for salt was strong, although not at the expense
of its polyhalite production. The Company's Project and its port is
centrally located and able to readily access the two primary target
markets of Western Europe and North America which, depending on the
winter weather conditions, are between 10 to 15 Mtpa and 20 to 30
Mtpa in size respectively.
Chris Fraser, Managing Director and CEO of Sirius, comments:
"Our clear priority is the rapid development of the world`s
largest and highest grade polyhalite resource but the increased
optionality of our significant additional resource of high grade
salt is an exciting future business opportunity. The bolt-on to the
core infrastructure could allow us to make an opportunistic entry
into a commoditised global market, generating an additional
valuable revenue stream."
Resource
Through a combination of data from historical exploration and
that conducted as part of Sirius' own exploration programme, a JORC
compliant Inferred Mineral Resource of halite (salt) of 550 million
tonnes - all of which is within the currently planned polyhalite
mining area - has been delineated by FWS Consultants Limited
("FWS"). Further, if the mine infrastructure is extended as mining
progresses and more polyhalite is demonstrated to be present (as
the Company believes) then this will access more halite and so is
highly likely to increase the Inferred Mineral Resource presented
here which remains open in all directions.
Accessibility of the resource
The salt would be readily accessible from the polyhalite
workings via the driving of twin ramps into the halite seam that
could be constructed within a 12 month period. The salt would be
mined using conventional methods utilising the same mining
equipment planned for use in polyhalite mining with over 2 Mtpa
achievable from a single production unit. While additional
approvals would be required to extract salt, the Company is
confident that given the minimal above-surface infrastructure
required, that it would be granted as required.
The Project's seaboard location is strategically placed to
access the main de-icing salt markets in North America, Europe and
the UK.
The market
Independent research conducted by Roskill Consulting Group has
confirmed that Sirius' projected FOB costs are below that of major
competitors in Europe and North America. The combined annual
consumption of de-icing salt in these markets is between 30 and 45
million tonnes per annum dependent on weather conditions.
The investment required to unlock an annual production of 2 Mtpa
is low at under US$30 million. Production costs of US$22/t FOB are
estimated and in a severe winter this strategy could add between
US$32 million and US$104 million of EBITDA, depending on the nature
of the industry response. In mild winters the potential EBITDA
contribution could range from US$14 million to US$54 million, again
depending on the nature of the industry response.
A short webcast providing further commentary on the opportunity
is available on the Company's website.
For further information, please contact:
Sirius Minerals Plc
Investor Relations Email: ir@siriusminerals.com Tel: +44 845
524 0247
------------------------- ------------------------------- ---------------
Joint Brokers
Liberum Capital Limited Neil Elliot, Tel: +44 20
(NOMAD) Clayton Bush, 3100 2222
Jill Li
J.P. Morgan Cazenove Ben Davies, Jamie Tel: +44 20
Riddell 7742 4000
WH Ireland Adrian Hadden Tel: +44 20
7220 1666
------------------------- ------------------------------- ---------------
Media Enquiries Jos Simson, Mike Tel: +44 20
Tavistock Bartlett, 7920 3150
Emily Fenton
------------------------- ------------------------------- ---------------
About Sirius Minerals Plc
Sirius Minerals is the fertilizer development company focused on
the development of its North Yorkshire polyhalite project, the
United Kingdom. It 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.
Qualified Persons
The information in this Stock Exchange Announcement that relates
to Mineral Resources, together with any related assessments and
interpretations, has been verified by and approved for release by
Dr Frederick W. Smith FIMMM., CEng, CSci., a qualified geologist
and full-time employee of FWS Consultants Limited ("FWS"),
Environmental and Geological Consultants. Dr Smith, who is a Fellow
of the Institute of Materials, Minerals and Mining (IMMM), has
sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person
for the purposes of the AIM Rules. Dr Smith and FWS consent to the
inclusion of the information contained in this announcement and the
respective references to them in the form and context in which they
appear.
Graham Clarke, Operations Director for Sirius Minerals Plc, who
has reviewed this Stock Exchange Announcement, has over 26 years'
experience in the potash mining industry. He has a Degree in Mining
Engineering from the University of Nottingham, is a Fellow of the
Institute of Materials, Minerals and Mining (IMMM) and extensive
operational experience gained at Cleveland Potash Limited in the
mining of the Boulby Potash seam and the exploration and
development of the upper Fordon Polyhalite seam.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCLLFSRESITLIR
(END) Dow Jones Newswires
May 19, 2016 02:01 ET (06:01 GMT)
Sirius Minerals (LSE:SXX)
Historical Stock Chart
From Aug 2024 to Sep 2024
Sirius Minerals (LSE:SXX)
Historical Stock Chart
From Sep 2023 to Sep 2024
