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Sirius Minerals making “good progress” at Woodsmith, financing and construction on track

Sirius wants to get its North Yorkshire fertiliser mine into production in 2021. To do that it needs to first raise another US$2.6bn through debt financing, which it expects to wrap up by the end of 2018

woodsmith mine
Sirius already has buyers for 4.7mln tonnes of fertiliser a year once the mine is producing

Sirius Minerals PLC’s (LON:SXX) Woodsmith mine in North Yorkshire remains on track to deliver first polyhalite production in 2021.

In an operations update, the FTSE 250 group said it enjoyed another quarter of “good progress” as it works on building the mine which is host to an estimated 2.6bn tonnes of POLY4 fertiliser rich in potassium, calcium and magnesium.

Last year, chief executive Chris Fraser and his team secured a US$1.2bn funding package which has allowed initial work on the ground to begin.

READ: The Sirius Minerals investment case

To get to production in 2021, Sirius still needs a further US$2.6bn – expected to be achieved via non-dilutive debt financing.

Potential lenders have been carrying out their due diligence over the past few months. A “number” of responses have already been received with more due over the next few weeks.

The plan is to finalise the second round of financing this year, which Sirius says it is “on track” to do.

To try to convince banks to put up the necessary cash, the firm has been working on securing offtake deals and it now has agreements in place to sell 4.7mln tonnes of fertiliser a year.

Analysts reckon the company needs binding agreements adding up to 6-7mln tonnes to deliver the stage-two financing and commercial discussions with other possible offtakers are “well advanced”.

READ: Sirius inks new 7-year POLY4 supply deal for Nigerian market

“It has been a quarter of good progress as we continue to construct our Woodsmith Mine, as well as breaking-ground on Teesside,” said CEO Fraser in Monday’s statement.

“Work to deliver the stage two financing continues at pace and we are delighted to add a new, well established customer, in the high potential African region, to our growing list of partners.”

He added: “With commercial momentum and the development of our world-class mine continuing to progress well, we remain confident of delivering on our key milestones for 2018 and ultimately delivering on our vision to be a world-class fertiliser business.”

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