TIDMSXX
RNS Number : 1650S
Sirius Minerals plc
29 September 2017
29 September 2017
Sirius Minerals Plc
Quarterly development update
-- The project remains on time and on budget
-- Diaphragm walling activities commencing at the Woodsmith
site
-- Optimisation opportunities being progressed across several
project components
Sirius Minerals Plc (AIM: SXX, OTCQX: SRUXY) ("Sirius" or the
"Company") provide its latest quarterly development update.
Chris Fraser, Managing Director and CEO of Sirius, comments:
"Activity levels at the Woodsmith Mine continue to increase
every month and now step up significantly as we commence diaphragm
walling activities. Our team, including both employees and
contractors, continues to grow as we expand the Company's execution
capability and we are pleased with the progress being made and the
positive attitude across the expanding team."
Safety
Unfortunately, one recordable incident occurred in August during
the drilling activities at the Woodsmith site. A thorough
investigation has been undertaken from which additional safeguards
and procedures have been implemented.
The Company is approaching one million man hours of total
project activity and will have completed 12 months of construction
activity after the fourth quarter. From 1 January 2018 safety
reporting will transition to a recordable injury frequency rate
framework, consistent with good industry practice.
Cost and schedule
The Project remains on time and on budget.
Design work has continued to identify simplification and capital
reduction opportunities in parts of the Project. These include the
redesign of the mine infrastructure between surface and 120 metres
below ground, refinement and optimisation of the granulation
process in the materials handling facility ("MHF") and
simplification of the mineral transport system ("MTS") conveyor
design. Given the early stage of the overall project development
programme, the Company believes it is too early to recognise any of
these opportunities as a reduction in total project cost.
The Company had been pursuing the opportunity to accelerate the
diaphragm walling ("D Walling") component of the shaft sinking
programme. Unfortunately, this opportunity was not able to be
captured due to mobilization and design delays. The opportunity to
accelerate the commencement of tunnelling activity continues to be
progressed with further design and logistics works to be completed
over the balance of this year before a final decision to proceed
can be made.
Commercial
The shaft sinking scope of work was formally awarded to AMC in
July. As disclosed in the half year results, the commercial
arrangement with AMC is one of risk sharing with financial
incentives for completing the scope of work under budget and ahead
of schedule, and there are also financial penalties should
completion be late or above the target price. The target price of
AMC's scope is consistent with the allocated project budget and the
target dates are within the dates outlined in the project schedule.
The cost of this work is expected to be incurred in a combination
of currencies and the Company is in the process of appropriately
mitigating foreign exchange exposures. The Company and AMC are
continuing to work to finalise the remainder of the detailed
aspects of the contract.
In relation to the MTS, the Company has entered into an
agreement with the Hochtief Murphy Joint Venture ("HMJV") for early
contractor involvement activities with a view to progressing the
engineering and design in advance of negotiating a design and build
contract.
Permitting
The Company has made good progress with the relevant authorities
in clearing the particular conditions related to each work
programme. The minor planning amendments the Company is seeking, as
outlined in the previous quarterly development update, are due to
be evaluated by the relevant planning authorities during the next
quarter.
Site preparation
Site preparation has continued to plan with significant progress
being made at both the Woodsmith and Lockwood Beck sites. At
Woodsmith, where there are currently approximately 230 people
engaged in construction activities, work has continued on the
various pads, civil works and site office facilities. Construction
of the pad for the MTS shaft is progressing well and the concrete
batch plant, to be used across multiple activities on the Woodsmith
site, has been commissioned.
At Lockwood Beck, all access works and shaft pad construction
are complete.
Geotechnical investigation
The additional geotechnical borehole within the production shaft
(SM14B) is progressing with coring and testing completed to the
950m level. Geotechnical and hydrogeological testing work has so
far provided positive data confirming the conservative nature of
some parameters used in the current shaft design and construction
methodology. Opportunities to refine some of these assumptions in
the initial project estimate will be explored further once the data
is fully processed. The drilling programme has experienced some
typical delays over the previous months and the Company is working
to ensure these delays do not impact the critical path of the
broader construction programme.
MTS related geotechnical activity continues with emphasis in
this period on the seismic programme along the tunnel segment
between the MHF and Lockwood Beck. The high quality of the data
being received so far will be of significant assistance in the
detailed design process for the tunnel. In addition, a series of
geotechnical boreholes have been drilled to inform the design of
the tunnel boring machine launch caverns located at Lockwood Beck
and Woodsmith.
Shaft sinking
D Walling equipment is being assembled on site in parallel with
the construction of the service shaft guide walls. The bentonite
plant, rig workshop and welfare facilities (specific to D walling
activities) are also under construction.
The foreshafts for the service and production shafts are 35m and
32m in diameter respectively, with a depth of 60m. Following
construction of the foreshafts, D Walling rigs will then complete
the main services and production shafts down to the 120m level from
surface. The excavation process will commence once the D Walling
scope has been completed.
The amendments to near surface components of the mine (larger
diameter and deeper foreshafts, removal of a series of roadways at
the 45 meter level and removal of the related grouting programme)
have resulted in an increase in the scope of the D walling activity
required but will ultimately result in a cheaper, simpler and more
efficient operational environment.
Other project activities
The Company is working closely with HMJV with a view to
evaluating the opportunity to commence preparatory tunnelling
activities from the MHF location early in 2018. This opportunity
will be assessed with a view to improving the aggregate project
schedule and expediting production ramp up.
Test work on major granulating processing equipment has
progressed well, allowing the Company to finalise an improved
process design. Overall MHF design and site layout work has also
been optimised and simplified and these improvements will now be
progressed to front end engineering and design.
Sales and marketing
The Company is in advanced negotiations with potential customers
in multiple regions to expand its commercial reach into new markets
and is hoping to conclude these soon. In addition, other
discussions are actively taking place in existing markets to secure
additional tonnage via offtake agreements. The Company's flagship
product, POLY4, continues to gain market acceptance globally from
both industry participants and experts.
Agronomy
Since the last update the Company initiated 16 new agronomy
trials in new and existing regions building upon its past programme
success. The overall programme encompasses over 235 trials in 17
countries on 29 different crops.
The Indian product registration process has commenced in
partnership with the Indian Agricultural Research Institute. This
registration process will facilitate long term sales into the
Indian market.
The Company continues to pursue other research and development
activities that broaden the market opportunity for POLY4 including
application technologies and compatibility testing for inclusion in
various complex NPK production processes.
Corporate
The Company's work on the stage 2 debt financing is progressing
well with increasing engagement with HM Treasury's Infrastructure
and Projects Authority ("IPA"). This work is focused on formulating
an acceptable structure for the government guaranteed component of
the stage 2 debt. Once an appropriate financing structure for the
project has been developed with the IPA the Company will recommence
the formal due diligence process with the mandated bank group.
For further information, please contact:
Sirius Minerals Tristan Pottas Tel: +44 845 524
Plc Email: ir@siriusminerals.com 0247
Investor Relations
Manager
-------------------- ------------------------------ -----------------
Media enquiries Jos Simson Tel: +44 20 7920
Tavistock Emily Fenton 3150
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About Sirius Minerals Plc
Sirius Minerals Plc is focused on the development of the
Woodsmith Mine, which will access the world's largest and highest
grade polyhalite deposit located in North Yorkshire, United
Kingdom. Polyhalite is a unique multi-nutrient fertilizer, which
can be used to increase balanced fertilization around the world.
Sirius Minerals' shares are traded on the Premium List of the
London Stock Exchange. 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.
The company news service from the London Stock Exchange
END
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