Potash miner Sirius Minerals PLC (SXX.LN) Monday said it agreed to buy a U.K. potash company for GBP25 million in shares, in a deal that brings it the rights to a major potash project in England.

Sirius said it agreed to buy York Potash Ltd., which owns mineral rights covering roughly 600 square kilometers of land in England's Yorkshire region.

Sirius said the York project has the potential to be a world-class potash development. The area has been producing potash since 1973 and York estimates it could contain between 3.3 billion and 6 billion metric tons of polyhalite, a key source of potash, Sirius said.

"While the York potash project is still at the early stages of exploration and assessment, the directors believe the potential of the project is significant," Sirius Minerals said in a statement.

It agreed to pay York shareholders 150 million shares to acquire the company, which, based on Sirius's closing price Friday, values it at about GBP25 million.

As part of the deal, York Potash founder Chris Fraser has been named Sirius Minerals' new chief executive.

Potash hit the headlines last year when mining giant BHP Billiton Ltd. (BHP.AU) made a $38.6 billion bid for Potash Corp. of Saskatchewan Inc. (POT), although the bid later collapsed because of Canadian government objections.

Demand for potash, used in fertilizer, has surged in recent years in line with the world's demand for food, and shares in Sirius Minerals have more than doubled on year-ago levels.

-By Jason Douglas, Dow Jones Newswires; 44-20-7842-9272; jason.douglas@dowjones.com
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