Sirius Minerals seeks an investment of $600 million for the UK’s largest Woodsmith mine project

on Dec 5, 2019
Updated: Mar 11, 2020
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  • Sirius Minerals requires $600 million of initial investment for its Woodsmith mine project.
  • Another $2.5 billion investment will be required to complete mine's construction.
  • Upon successful completion, the mine is expected to produce 10 million tonnes of polyhalite per year.
  • The stock has underperformed in the stock market in 2019 dropping from 24.15 GBX to 2.91 GBX.

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The United Kingdom’s fertilizer development company, Sirius Minerals, recently revised the development plan for its giant mine in North Yorkshire. The company is currently on a lookout for a strategic investor to realize the two-staged development of the mine.

In a report, Sirius Minerals highlighted that it requires as much as $600 million to access polyhalite deposit. The mineral is commonly used as a fertilizer. The company is currently negotiating with potential investors to raise the funds.

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Another $2.5 Billion Investment Will Be Required To Complete Mine’s Construction

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Following raising $600 million, the company plans on approaching infrastructure funds and banks to raise another $2.5 billion for the mine’s construction to be completed. Sirius has also claimed that upon successful completion of the project, by 2026’s Q3, the mine will produce 10 million tonnes of polyhalite per year.

According to CEO Chris Fraser, approaching investors for fundraising will help minimize dilution for Sirius Minerals’ shareholders while exposing the project to the minimal risk in the meantime. With the reconfiguration of the tunneling and processing, the miner also highlighted cost savings amounting to $370 million in total.

The miner has declared March 2020 as the deadline for raising the initial $600 million. It was further added that the company will look to the debt investors to contribute the most to the investment. The remaining amount will then be expected from the strategic partner.

Earlier this year in September when Sirius Minerals failed to secure JPMorgan’s sizeable financing package, it was construed as a threat to the company’s future. Ever since, Sirius had to slow the pace of its development projects as it continues to struggle in finding a suitable alternative for financing.

The North Yorkshire mine will be the largest in the United Kingdom and can be expected to employ as many as one thousand people. In order to get access to the Polyhalite, the company aims at sinking two 1.5 km shafts, after which the mineral will be transported to the Teesside port via a specially designed tunnel (37 km in total).

Qatar Investment Authority Holds The Largest Stake In Sirius Minerals

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As per the experts, potash producer or sovereign wealth fund like the Qatar Investment Authority is likely to partner with Sirius Minerals for its Woodsmith mine project. The Qatar Investment Authority currently has a 3.3% stake in Sirius Minerals that marks the largest for any shareholder.

Owing to the ongoing complications, Sirius Minerals has underperformed in the stock market in 2019. Having started the year at 21.25 GBX, the stock is currently trading at 3.53 GBX, giving a market value of 247.81 million to the company.

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