Theresa May has confirmed that the government is in discussions with Sirius Minerals PLC (LON:SXX) about providing financial backing to the latter’s hugely ambitious £4bn fertiliser project near Whitby.
Sirius is currently in the process of raising the final US$3.5bn it needs to complete development of the Woodsmith mine, which is scheduled to achieve first production by the end of 2021.
Thank you the Rt Hon Robert Goodwill MP and @theresa_may for your support today for our project and our game changing #POLY4 #fertilizer product. Construction continues at #WoodsmithMine as we deliver jobs and growth for the #NorthernPowerhouse. pic.twitter.com/IJ7wGkSfAd— Sirius Minerals (@siriusminerals) January 16, 2019
The FTSE 250 group has previously said that a Treasury guarantee, which would see the government underwrite US$2bn of project loans, was “essential” in securing the remaining funding.
Speaking at Prime Minster’s Questions, May said: “I was particularly pleased to meet the CEO of Sirius during my trip to China and talk to them about the work they are doing.
“In relation to the particular discussions … these are commercially sensitive so it would be inappropriate for me to comment on the specific discussions, but this is exactly the sort of project that is what the Northern Powerhouse is all about: driving investment, driving exports, good for the north.”
PM's comments 'encouraging'
City broker Liberum said it was “encouraging” that, even amid the Brexit turmoil, Sirius’ project is still getting “well deserved attention” from politicians.
It added: “With procurement now complete for all the major construction projects to support stage 2 financing, the banks are now expected to come together to sign commitments letter, with the government’s approval to follow.”
Shore Capital analyst Yuen Low also noted Sirius’ appearance in PMQs, before adding: “All things considered, while Sirius is currently at development stage and still some years from becoming a cash flow generating company, we believe that an investment in Sirius should become progressively de-risked and enjoy significant value uplift as it advances towards production.”
Sirius shares were up 0.6% to 22p on Thursday afternoon.
-- Updates for tweet, share price and analyst comment --