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Sirius Minerals gets ore reserve boost

Polyhalite is a rich source of key plant nutrients thanks mainly to the high potassium content.

Picture of refined polyhalite and jars containing the material labelled Sirius Minerals.
Polyhalite is a rich source of key plant nutrients thanks mainly to the high potassium content.

The world’s largest polyhalite project just got bigger.

Sirius Minerals PLC (LON:SXX) said its project in North Yorkshire is host to a 280mln-tonne ore reserve at a grade of 88.4%, compared with 250mln tonnes at 87.8% previously.

Polyhalite is a rich source of key plant nutrients thanks mainly to the high potassium content.

So the Sirius deposit will provide a rich new source of fertiliser for the world’s largest agricultural economies where demand for the material is high.

The upgraded reserve figure emanates from work carried out by the mining consultants SRK as part of the already-published definitive feasibility study (DFS).

"This increase, in what was already the world`s largest and highest quality polyhalite reserve, adds further confirmation of the outstanding nature of this deposit," said Sirius managing director Chris Fraser.

World class potential 

March’s DFS underscored the world class potential of the North Yorkshire project.

The report said the net present value of the asset today is US$15bn using a 10% discount rate.

This figure rises to US$27bn once the mine is up and running. The after-tax internal rate of return is put at 26%. The operation has the potential to generate underlying earnings (EBITDA) of US$1-3bn a year, depending on volumes and price.

The cash margins on the business are put at 70-85%, while operating costs are expected to be in the order of US$37.20 a tonne. The plan is for the York mine to initially produce 10mln tonnes of polyhalite fertiliser a year, though there is the capacity to double output.

The cost to deliver the 10mln tonnes a year is put at US$3.56bn, with the financing done in two tranches.

Talks with potential funders are “well developed”, the company said in March.

First production will occur in 2021 with the company hitting the 10mln tonnes per year figure by 2023.


Modest upgrade but a huge deposit 

Analyst Paul Smith of WH IRELAND told Proactive Investors it was "only a modest upgrade, but it really shows how robust the project is. It's a huge deposit".

"We’re in an interesting phase for the company at the moment as it moves into funding," explained Smith, who described the project as "exciting".

"it’s got a definitive feasibility study which shows great returns and has done some fantastic work on the agronomics and the demand for the product."

Shares rose almost 3% to 18.25p. 




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