22nd Sep 2015 11:05
LONDON (Alliance News) - Sirius Minerals PLC Tuesday said government body Infrastructure UK has awarded the company pre-qualification status, which will assist the company in securing financing to build its huge potash operation in Yorkshire.
Sirius will need around GBP2.70 billion to build the potash mine in the North York Moors National Park, which will split into two tranches. The first phase of the project will focus on the initial construction period which will be entirely funded by debt financing because the perceived risks are higher whilst the second, smaller tranche will be used to increase production at a later date.
Sirius is currently planning to begin production from the mine in 2018, initially producing 10.0 million tonnes per year before being upgraded using the second tranche of funds to deliver up to 20.0 million tonnes per year.
Sirius has been engaging with Infrastructure UK, which is a unit of the UK Treasury, to discuss the company's likely requirements for the second phase financing for the project. Sirius is hoping to get Infrastructure UK to guarantee the company's payment obligations, which in turn would make it easier to find a debt provider to provide financing to the company.
The UK Treasury, through Infrastructure UK, has made GBP40.0 billion of financial guarantees available for certain infrastructure projects within the UK.
Those discussions will hopefully lead to Infrastructure UK providing a guarantee to Sirius which "could provide valuable liquidity for the financing of the project", it said in a statement.
Infrastructure UK and other senior debt providers are now expected to undertake detailed technical, legal and commercial due diligence during 2016.
"The York Potash Project is a nationally significant proposal underpinned by a robust business model, so it aligns well with the Infrastructure UK criteria. Pre-qualification is an important step forward for this element of our overall financing strategy, which we continue to progress rapidly," said Chris Fraser, managing director and chief executive of the company.
Sirius shares were up 1.3% to 19.50 pence per share on Tuesday.
By Joshua Warner; [email protected]; @JoshAlliance
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