Liberum analysts have taken the long view on the prospects of Anglo American PLC (LSE:AAL)’s Woodsmith mineral fertiliser mine in North Yorkshire following news that the mining giant wrote down US$1.7bn after buying initial project runner Sirius Minerals in 2020.
An extended construction period is due to make way to initial production in 2027, albeit at an upscaled extraction of 13 million tonnes per annum (mtpa) against initial projections of 10mtpa.
Capital expenditure dedicated to the project is estimated at US$1bn (£830mln) per year, 20% higher than Anglo American’s US$800mln capex projections.
“There will be downgrades because of the capex and production delay, but offsetting this is that the company now using a polyhalite price of $192 per tonne for their analysis, versus our long-term of $125/t,” said Liberum.
Despite the delay, the project continues to “progress well” with tunnel boring and shaft sinking going as planned.
Liberum has a hold rating on Anglo American stock with a target price of 2,725p.