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Sirius Minerals making progress in offtake agreement talks, says Liberum analyst

Sirius Minerals has started geotechnical work on its North Yorkshire polyhalite fertiliser site

Sirius Minerals
Sirius Minerals has seen its share price surge over the past year

Sirius Minerals (LON: SXX) has been engaged in “encouraging” talks with a number of major offtakers as it begins work on its North Yorkshire polyhalite fertiliser site, according to an analyst at Liberum.

Richard Knights, at house broker Liberum, told Proactive Investors that Sirius Minerals has been trying to sign as many binding offtake agreements for up to 7mln tonnes.

The miner has so far secured 3.6mln tonnes of binding offtake agreements.

“They are engaged in multiple detailed discussions with a number of major offtakers at the moment so that sounds encouraging,” Knights said.

Knights, who visited the site six months ago, said Sirius has started geotechnical work ahead of the shaft construction, which is expected to begin in July. He said it was “early days” for the project with the focus on marketing and signing offtake.

“I suppose it’s really all about marketing at the moment and trying to sign as much offtake as possible ahead of getting the financing package ready for phase two which will need to occur within the next couple of years to finance the remainder of the project,” he said.

Sirius Minerals has been promoted to the FTSE 250, which Knights expects will be “significant in terms of bringing attention” to the investment story. The group’s shares have risen more than 75% in the year to date and more than 107% in the past 12 months, giving it a market capitalisation of £1.4bn. 

Last year the group landed a US$300mln investment from Hancock Prospecting, the company controlled by Australian mining billionaire Gina Rinehart. It will be used to support the first stage of building its polyhalite mine.

"It is a unique project and I think you could say there aren’t too many investors who have invested in a similar style project anywhere in the world because there aren’t any," Knights said. 

Quick facts: Sirius Minerals PLC

Price: 5.2 GBX

Market: LSE
Market Cap: £365.05 m

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