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
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