TIDMSXX
RNS Number : 6758A
Sirius Minerals Plc
28 March 2017
28 March 2017
Sirius Minerals Plc
Financial results 2016
Sirius Minerals Plc (AIM: SXX, OTCQX: SRUXY) ("Sirius" or the
"Company") announces the results for Sirius and its subsidiaries
("the Group") for the year ended 31 December 2016.
Key highlights
-- Completion of Stage 1 Financing by securing funding of US$1.2
billion required to begin the construction of the Company's
polyhalite project in North Yorkshire.
-- Progressing Stage 2 Financing through mandating a group of
six financial institutions ("MLAs").
-- The receipt of the final major planning approval for the
Company's North Yorkshire polyhalite project - a development
consent order for the harbour facilities.
-- Increase of the Company's polyhalite probable reserve to 280
million tonnes of polyhalite at an average grade of 88.4%.
-- Completion of the definitive feasibility study and the publication of its material findings.
-- Selection of preferred contractors for the Woodsmith Mine and
mineral transport system works.
-- Ongoing progress with customer engagement regarding product
sales and further positive crop study results for the Company's
POLY4 product.
Post-balance sheet events
-- Commencement of construction enabling works in the vicinity of the Woodsmith Mine.
-- Appointment of Thomas Staley to the role of Finance Director
and Executive Board Director in February 2017.
Financials
Cash resources at the end of December 2016 were GBP665.3 million
(liquid funds including investments and restricted cash) compared
to GBP29.1 million as at 31 December 2015.
During the financial year ended 31 December 2016 the Group made
a consolidated loss of GBP23.0 million compared to a loss of GBP7.0
million for the nine-month period to 31 December 2015.
The Group's net assets at 31 December 2016 were GBP496.3 million
compared to GBP165.2 million at 31 December 2015.
Annual report and accounts
The annual report and accounts for the year ended 31 December
2016 have now been published on the Company's website:
www.siriusminerals.com. The hard copy of the annual report and
accounts will also be posted to shareholders shortly.
The Company's annual general meeting will be held at 1.00pm on
Thursday 29 June 2017 at the Royal York Hotel, Station Road, York,
YO24 1AA. The Notice of Meeting will be issued to shareholders in
due course.
Investor conference call
Sirius Minerals' Chief Financial Officer, Thomas Staley, will
host a conference call for investors and analysts at 9.00 am today.
Any analysts wishing to ask questions on the call can receive dial
in details by emailing sirius@tavistock.co.uk.
The call can be listened to live at:
http://event.onlineseminarsolutions.com/wcc/r/1391936-1/6AA91F73112E78BB991EE5447D8D1B10?partnerref=rss-events
and a replay will be available on the Company's website in due
course.
For further information, please contact:
Sirius Minerals Plc Tristan Pottas
Investor Relations Email: ir@siriusminerals.com Tel: +44 845
Manager 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 Plc is the fertilizer development company
focused on the construction and development of its North Yorkshire
polyhalite project in the United Kingdom. It believes the Project
represents the world's largest high-grade known 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 (AIM: SXX). 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.
CHAIRMAN'S STATEMENT
Dear Shareholders,
Welcome to 2016 annual report which covers the period from 1
January to 31 December.
Some five years ago, in my first Chairman's overview, I
commented that Sirius Minerals is one of the world's most exciting
resource development companies. For me nothing has changed in terms
of the sentiment, although clearly we have made significant
progress towards reaching our goals.
If 2015 was principally about securing key approvals, until that
time seen by the market as the major barrier to our progress, then
2016 was the year we cleared the second major hurdle - stage 1
financing. As long-term shareholders will know, the completion of
our stage 1 financing in November 2016 was the culmination of much
hard work in the preceding years including resource exploration and
definition, the signing of several bankable sales contracts and the
securing of key planning approvals.
In 2016 we published the key findings of our definitive
feasibility study (DFS). The study was essentially prepared over
two years, with input from the results of planning approvals and
contributions from a wide range of experienced consultancies. The
DFS defined a business that has the potential to be a world leader
in the fertilizer industry, with expected low operating costs,
healthy margins and a very long asset life.
In the period around and immediately after the DFS announcement
we had been running competitive tender processes for both the
construction of the mine shafts and the mineral transport system,
and subsequently we announced our preferred contractors.
This, together with the receipt of the final major planning
approval - the harbour facilities - and the update on stage 2
financing progress, provided the ideal spring board that we needed
to execute the stage 1 financing. I can assure all shareholders
that we undertook a tremendous amount of detailed work with a
number of financing and consulting parties in the run up to the
announcement of the Royalty Financing Agreement with Hancock
British Holdings Ltd in October 2016.
Hancock Prospecting Chairman, Mrs Gina Rinehart, needs no
introduction given her extremely successful business track record.
We were delighted to partner with her company, particularly given
its extensive experience in both the mining industry and with
royalty agreements. Hancock's growing agricultural interests also
make them an excellent partner for us.
With this part of the stage 1 financing in place, we could
execute the remaining elements of the financing package being the
convertible bonds and a firm placing and placing and open offer.
This meant we were able to secure funding of US$1.2 billion
required to begin the construction of our Project.
I believe, after many further successes, people will look back
and truly appreciate what a momentous achievement this financing
was. A great deal of credit should be attributed to our executive
team, led by Chris Fraser, and our Chief Financial Officer, Thomas
Staley. But the credit stretches throughout the entire
organisation, such is the level of effort needed across the
business in preparing for, coordinating and executing such a
complex structure - essentially three separate significant finance
components.
We have also made other substantial progress this past year
including a new, upgraded take-or-pay offtake agreement, an
increase to our polyhalite probable reserve and the development of
a potential de-icing salt opportunity at our Project. On the
governance side in 2016 Louise Hardy replaced Stephen Pycroft on
the Sirius Minerals Board as a non-executive director. Louise has
brought to our Board additional extensive major project experience
in senior roles in the UK construction industry. Her background is
already proving most valuable for the Company.
Post-balance sheet events
On 19 January 2017 we set out a schedule for reporting our
Project construction updates. Given the levels of interest in our
construction from both shareholders and wider stakeholders, we felt
it was important to give clarity on when to expect Project progress
information to be shared. The first of these updates is scheduled
for release alongside the issue of this annual report.
On 2 February 2017 we appointed our Chief Financial Officer,
Thomas Staley, to the role of Finance Director and Executive Board
Director. Thomas has demonstrated his strong capabilities as Sirius
CFO over the last two years and he brings valuable financing and
governance experience to the Board.
As always, I thank all shareholders for their support for the
Company. We are continually uplifted by the good wishes we receive
from our very large number of loyal shareholders. We look forward
to our first year of construction as we continue to develop our
world-class polyhalite Project.
Kind regards,
Russell Scrimshaw
Chairman
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2016
31 December Nine-month
2016 period
to 31 December
Note 2015
GBP000s GBP000s
---------------------- ------------------------
Revenue - -
Administrative expenses (11,872) (7,422)
----------------------------- ----- ---------------------- ------------------------
Operating loss (11,872) (7,422)
Finance income 2 1,489 99
Finance costs 3 (13,039) (186)
----------------------------- ----- ---------------------- ------------------------
Loss before taxation (23,422) (7,509)
Taxation 468 550
----------------------------- ----- ---------------------- ------------------------
Loss for the financial year (22,954) (6,959)
----------------------------- ----- ---------------------- ------------------------
Loss per share:
Basic and diluted 4 (0.9p) (0.3p)
----------------------------- ----- ---------------------- ------------------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2016
31 December Nine-month
2016 period
to 31
December
2015
GBP000s GBP000s
-----------
Loss for the financial year attributable
to owners of the parent (22,954) (6,959)
--------------------------------------------------------- ------------ -----------
Other comprehensive income/(loss) for the year
Exchange differences on translating foreign operations 18 (135)
Other comprehensive income/(loss) for the year 18 (135)
--------------------------------------------------------- ------------ -----------
Total comprehensive loss for the year (22,936) (7,094)
--------------------------------------------------------- ------------ -----------
Total comprehensive loss shown above is fully attributable to
equity shareholders of the parent in both years.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2016
31 December 2016 31 December 2015
Note restated
ASSETS GBP000s GBP000s
--------------------------------- ----- ------------------- -----------------
Non-current assets
Property, plant and equipment 6,138 1,849
Intangible assets 5 150,204 137,970
Restricted cash 55,283 -
--------------------------------- ----- ------------------- -----------------
Total non-current assets 211,625 139,819
--------------------------------- ----- ------------------- -----------------
Current assets
Derivative financial instrument 1,041 -
Restricted cash 27,641 -
Other receivables 840 1,184
Bank deposits 322,188 -
Cash and cash equivalents 260,157 29,093
Total current assets 611,867 30,277
--------------------------------- ----- ------------------- -----------------
TOTAL ASSETS 823,492 170,096
--------------------------------- ----- ------------------- -----------------
EQUITY AND LIABILITIES
Equity
Share capital 6 10,412 5,737
Share premium account 590,723 240,874
Share-based payment reserve 6,114 7,624
Accumulated losses (112,261) (90,339)
Foreign exchange reserve 1,284 1,266
Total equity 496,272 165,162
--------------------------------- ----- ------------------- -----------------
Current liabilities
Convertible loan 7 321,366 -
Loan from third parties - 748
Trade and other payables 5,854 4,186
--------------------------------- ----- ------------------- -----------------
Total liabilities 327,220 4,934
--------------------------------- ----- ------------------- -----------------
TOTAL EQUITY AND LIABILITIES 823,492 170,096
--------------------------------- ----- ------------------- -----------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2016
Share Share Share-based Accumulated losses Foreign Equity
capital premium payments exchange shareholders' funds
account reserve reserve
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
--------------- ---------- ------------- ------------- ------------------- ------------- --------------------
At 1 April 2015 5,362 216,586 13,290 (95,630) 7,028 146,636
Foreign
exchange
reserve prior
period
adjustment - - - 5,627 (5,627) -
---------------- ---------- ------------- ------------- ------------------- ------------- --------------------
At 1 April
2015- restated 5,362 216,586 13,290 (90,003) 1,401 146,636
Loss for the
period - - - (6,959) - (6,959)
Foreign
exchange
differences on
translation of
foreign
operations - - - - (135) (135)
---------------- ---------- ------------- ------------- ------------------- ------------- --------------------
Total
comprehensive
loss for the
period - - - (6,959) (135) (7,094)
Convertible
loan 43 1,103 - 258 - 1,404
Share issue
costs - (121) - - - (121)
Share-based
payments - - (5,666) 6,365 - 699
Exercised
options 332 23,306 - - - 23,638
---------------- ---------- ------------- ------------- ------------------- ------------- --------------------
At 31 December
2015- restated 5,737 240,874 7,624 (90,339) 1,266 165,162
Loss for the
financial
period - - - (22,954) - (22,954)
Foreign
exchange
differences on
translation of
foreign
operations - - - - 18 18
---------------- ---------- ------------- ------------- ------------------- ------------- --------------------
Total
comprehensive
loss for the
period - - - (22,954) 18 (22,936)
Share issue 4,629 347,281 - - - 351,910
Share-based
payments 32 1,418 (1,510) 1,032 - 972
Exercised
options 14 1,150 - - - 1,164
At 31 December
2016 10,412 590,723 6,114 (112,261) 1,284 496,272
---------------- ---------- ------------- ------------- ------------------- ------------- --------------------
The share premium account is used to record the excess proceeds over nominal value on the
issue of shares.
The share-based payment reserve is used to record the share-based payments made by the Group.
Foreign exchange reserve records exchange differences which arise on translation of foreign
operations with a functional currency other than Sterling.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December
2016
31 December Nine-month
2016 period
to 31 December
Note 2015
GBP000s GBP000s
------------------------
Cash outflow from operating
activities 8 (15,896) (5,307)
------------------------------------- ----- ------------ ------------------------
Cash flow from investing activities
Purchase of intangible assets (12,108) (15,533)
Purchase of property, plant
and equipment (4,346) (1)
Purchases of bank deposits (320,187) -
Interest received 441 99
Net cash used in investing
activities (336,200) (15,435)
------------------------------------- ----- ------------ ------------------------
Cash flow from financing activities
Repayment of borrowings (748) -
Proceeds from convertible -
loan 319,923
Purchases of restricted cash (81,580) -
Proceeds from issue of shares 371,445 23,637
Share issue costs (18,370) (121)
Convertible loan issue costs (9,158) -
Interest paid (19) (186)
Net cash generated from financing
activities 581,493 23,330
------------------------------------- ----- ------------ ------------------------
Net (decrease)/increase in
cash and cash equivalents 229,397 2,588
Cash and cash equivalents
at the beginning of the year 29,093 26,640
Gain/(loss) from foreign exchange 1,667 (135)
Cash and cash equivalents
at end of the year 260,157 29,093
------------------------------------- ----- ------------ ------------------------
NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
-----------------------------------------------------------------------------------------------------
BASIS OF PREPARATION
The financial information set out in this announcement does not comprise the Group's statutory
accounts for the year ended 31 December 2016 or the nine-month period ended 31 December 2015.
The comparative financial information has been extracted from the statutory accounts of the
Group for the nine-month period ended 31 December 2015. The auditors reported on those accounts;
their report was unqualified and did not contain a statement under either Section 498 (2)
or Section 498 (3) of the Companies Act 2006 but did include references to material uncertainties
surrounding the Directors application of the Going Concern assumption. The statutory accounts
for the nine-month period 31 December 2015 have been delivered to the Registrar of Companies.
The statutory accounts for the year ended 31 December 2016 have been finalised on the basis
of the financial information presented by the Directors in this preliminary announcement and
will be delivered to the Registrar of Companies following the Company's annual general meeting.
GOING CONCERN
During the year the Group recognised a total comprehensive loss of GBP22,936,000 compared
to a loss of GBP7,094,000 for the nine-month period to 31 December 2015.
Cash and cash equivalents and bank deposits, which include cash held on deposit, as at 31
December 2016 were GBP582,345,000 compared to GBP29,093,000 as at 31 December 2015. Restricted
cash, which is held to cover interest payments, as at 31 December 2016 was GBP82,924,000 compared
to GBPnil as at 31 December 2015. Net assets have increased by GBP331,110,000 to GBP496,272,000.
The increase in cash and cash equivalents and net assets is principally due to the successful
completion of the Group's stage 1 financing in late November 2016. As a result of this fund-raising,
the Group is now able to commence significant development work on its polyhalite project in
North Yorkshire (the 'Project') with latest cash flow forecasts indicating that the Group
has sufficient assets to meet its planned liabilities as they fall due until 2019.
The Group has publicly announced its intention to conduct stage 2 of fund-raising in 2018
in order to raise sufficient further funds to complete development of the Project and reach
commercial production which will ultimately allow the Group to generate sufficient cash to
sustain itself as a going concern for the foreseeable future. The Directors are confident
of a positive outcome to the stage 2 financing negotiations and have mandated a group of six
financial institutions on the basis of a non-binding but mutually agreed term sheet. At the
same time, the Infrastructure and Projects Authority confirmed its interest in supporting
the Stage 2 financing for the Project.
Having assessed the principal risks and having regard for the above, the directors consider
it appropriate to adopt the going concern basis of accounting in preparing its consolidated
financial statements.
2. FINANCE INCOME
------------------------------------------------------------------ --------------------------------------
31 December Nine-month period to 31 December 2015
2016
GBP000s GBP000s
---------------------------------------------------- ------------ --------------------------------------
Bank interest received 448 99
Fair value gain on derivative financial instrument 1,041 -
1,489 99
---------------------------------------------------- ------------ --------------------------------------
3. FINANCE COSTS
------------------------------------------------- -----------------
31 December Nine-month
2016 period to
31 December
2015
GBP000s GBP000s
----------------------------------- ------------ -----------------
Bank interest paid 1 -
Foreign exchange rate translation -
loss on convertible loan 4,437
Fair value loss on embedded -
derivative 5,744
Interest on convertible loan 2,839 172
Loan interest on loan from
third parties 18 14
13,039 186
----------------------------------- ------------ -----------------
4. LOSS PER SHARE
------------------------------------------------ ---------------
31 December Nine-month
2016 period to
31 December
2015
GBP000s GBP000s
------------------------------- --------------- ---------------
Loss for the purposes of
basic earnings per share
being net loss attributable
to equity shareholders of
the parent (22,954) (6,959)
Loss for the purpose of
diluted earnings per share (22,954) (6,959)
------------------------------- --------------- ---------------
2016 2015
Number (000's) Number (000's)
------------------------------- --------------- ---------------
Number of shares
Weighted average number
of ordinary shares for the
purpose of basic and diluted
earnings per share 2,472,762 2,230,602
------------------------------- --------------- ---------------
2016 2015
Number (000's) Number (000's)
------------------------------- --------------- ---------------
Number of shares
Weighted average number
of ordinary shares for the
purposes of diluted earnings
per share 2,480,858 2,231,795
------------------------------- --------------- ---------------
Basic and diluted loss per
share (0.9p) (0.3p)
------------------------------- --------------- ---------------
Diluted loss per share are calculated by dividing the loss
attributable to ordinary shareholders by 2,480,858,000 (2015:
2,231,795,000) ordinary shares, being the average number of
ordinary shares in issue during the year adjusted by the dilutive
effect of employee share schemes and convertible loan options.
For the year ended 31 December 2016, options over 1,343,090,000
shares (2015: 45,450,000) were excluded from this calculation
because their effect was anti-dilutive for continuing
operations.
5. INTANGIBLE ASSETS
------------------------------------------- ------------------ ---------------- ---------
Exploration
costs and rights Goodwill Software Total
Group GBP000s GBP000s GBP000s GBP000s
--------------------- -------------------- ------------------ ---------------- ---------
Cost
At 1 April 2015 173,412 9,079 79 182,570
Additions 16,254 - - 16,254
--------------------- -------------------- ------------------ ---------------- ---------
At 31 December 2015 189,666 9,079 79 198,824
Additions 12,234 - - 12,234
At 31 December 2016 201,900 9,079 79 211,058
--------------------- -------------------- ------------------ ---------------- ---------
Accumulated provision for permanent
diminution in value
At 1 April 2015 (58,339) (2,436) (74) (60,849)
Amortisation - - (5) (5)
--------------------- -------------------- ------------------ ---------------- ---------
At 31 December 2015 (58,339) (2,436) (79) (60,854)
At 31 December 2016 (58,339) (2,436) (79) (60,854)
--------------------- -------------------- ------------------ ---------------- ---------
Net book value
At 31 December 2016 143,561 6,643 - 150,204
--------------------- -------------------- ------------------ ---------------- ---------
At 31 December 2015 131,327 6,643 - 137,970
--------------------- -------------------- ------------------ ---------------- ---------
At 1 April 2015 115,073 6,643 5 121,721
--------------------- -------------------- ------------------ ---------------- ---------
6. SHARE CAPITAL
--------------------------------------------------- ------------
31 December 31 December
2016 2015
GBP000s GBP000s
------------------------------------- ------------ ------------
Allotted and called up
4,164,514,405 (2015: 2,294,695,991)
ordinary shares of 0.25p each 10,412 5,737
------------------------------------- ------------ ------------
Number of Ordinary Share Total
shares (thousands) shares premium (GBP000s)
(GBP000s) (GBP000s)
------------------- -------------------- ----------- ----------- -----------
At 1 April 2015 2,145,020 5,362 216,586 221,948
Issued during the
year 149,676 375 24,288 24,663
At 31 December
2015 2,294,696 5,737 240,874 246,611
Issued during the
year 1,869,818 4,675 349,849 354,524
At 31 December
2016 4,164,514 10,412 590,723 601,135
------------------- -------------------- ----------- ----------- -----------
7. LOANS
---------
On 28 November 2016 the Group issued $400m of 7 year, 8.5%
quarterly coupon USD-denominated convertible loans at par,
receiving gross proceeds of GBP319,923,000 and incurring
transaction costs of GBP11,577,000 which have been net off the
carrying value of the loan. The key terms of the convertible loans
are that at any date subsequent to 8 January 2017 up until maturity
a bondholder may convert their bonds into ordinary shares in the
Company at a conversion price of $0.31 per share.
Under the terms of the convertible loan, the Group has also been
required to set aside an amount in an Escrow bank account in
respect of all coupon payments due until 28 November 2019 and so
this amount of GBP82,924,000 has been disclosed on the Group's
statement of financial position as restricted cash as the Group is
not able to use the cash for any purpose other than the payment of
quarterly coupons.
Due to the conversion terms of the bonds leading to the issuance
of a fixed number of ordinary shares in the Company in return for
the extinguishment of the bonds whose value is variable in terms of
the Company's functional currency of Sterling, the Group has
accounted for the bonds as a host loan instrument containing an
embedded derivative liability in respect of the conversions
features. The split of the convertible loan between the host loan
and the embedded derivative is detailed in the table below
28 31 December
November 2016
2016
---------------- ------------------------------ ------------------- --------------------- ----------
Initial Fair Interest Foreign Total
recognition value exchange
change loss /
(gain)
GBP000s
---------------- ------------------------------ ------------------- --------------------- ---------- ------------
Convertible
loan
Gross proceeds
of Convertible
loan issue 319,923
Transaction
costs
capitalised on
host loan
instrument (11,577)
Net proceeds
of
Convertible
loan
issue 308,346
---------------- ------------------------------
Host loan
liability 271,657 - 2,839 4,437 278,933
Embedded
conversion
derivative 36,689 5,744 - - 42,433
Convertible
loan
liability 308,346 5,744 2,839 4,437 321,366
---------------- ------------------------------ ------------------- --------------------- ---------- ------------
Fair value estimation
In order to estimate the fair value of the embedded derivative
at inception and year-end, the Group estimated the fair value of
the cash flows due under the host loan at the prevailing discount
rate that would likely apply to any debt issued by the Group which
was not convertible. Based on the pricing terms obtained on the
convertible bonds, management have estimated a discount rate that
for the loan component based on bond yield data of comparable
entities with similar credit profiles at the measurement dates.
The effect of using a discount rate that was one percentage
point higher/(lower) at 31 December 2016 would have been an
increase/(decrease) in the finance cost recognised in the income
statement of GBP13,085,000/(GBP13,961,000).
In estimating the fair value at 31 December 2016, the Group
incorporated the mid-price of the bonds' quoted market price of
102.9 (28 November 2016: 100.0). Therefore, the fair value of the
Group's convertible loan bonds as at 31 December 2016 was
GBP334,679,000 compared to the stated carrying value of
GBP321,366,000.
8. CASH OUTFLOW FROM OPERATING
ACTIVITIES
------------------------------------- --------------------- ------------------------
31 December Nine-month
2016 period
to 31 December
2015
Group GBP000s GBP000s
------------------------------------ --------------------- ------------------------
Loss before tax (23,422) (7,509)
Amortisation - 5
Depreciation 57 84
Exchange differences charged
to profit and loss (4,986) -
Finance expense 11,550 87
Loan conversion into shares - 172
Share-based payments 844 699
Tax credit 468 550
Operating cash flow before changes
in working capital (15,489) (5,912)
Decrease in receivables 344 229
(Decrease)/increase in payables (751) 376
Net cash outflow from operating
activities (15,896) (5,307)
------------------------------------- --------------------- ------------------------
9. ROYALTY FINANCING AGREEMENT
-------------------------------
On 25 October 2016 the Group entered into a royalty financing
agreement with Hancock British Holdings Limited ("Hancock"). Under
the agreement Hancock will pay consideration of USD 250 million in
return for future royalty payments amounting to 5% of gross
revenues on the first 13 million tonnes of product sold in each
calendar year and a further 1% of gross revenues on sales in excess
of 13 million tonnes, for the life of the Project.
Drawdown of the USD 250 million consideration is subject to
certain conditions precedent being met, principally the Group
giving notice to Hancock that it has expended USD 630 million of
the proceeds of the Group's November 2016 stage 1 financing and
that all material permits, commercial arrangements and
authorisations for the project remain in place.
The royalty purchase represents a loan commitment and therefore
falls outside of the scope of IAS 39 "Financial Instruments:
Recognition and Measurement". As such no accounting entries are
recognised in the financial statements prior to receipt of the
consideration.
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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