Royalty financing agreement

25 October 2016

Sirius Minerals Plc

Royalty financing agreement

Sirius Minerals Plc (AIM: SXX, OTCQX: SRUXY) ("Sirius" or the "Company") announces that it has entered into a royalty financing agreement (the "Royalty Financing Agreement") for its North Yorkshire polyhalite project (the "Project") with Hancock British Holdings Ltd ("Hancock"), a subsidiary of Hancock Prospecting Pty Ltd.

Under the Royalty Financing Agreement, Hancock has agreed to: (1) purchase a royalty on the Project of 5 per cent of gross revenue on the first 13 million tonnes per annum ("mtpa") of sales produced in each calendar year and 1 per cent for sales volumes above 13 mtpa in return for US$250 million (the "Royalty") and, (2) upon drawdown of the Royalty purchase amount, Hancock will subscribe for new ordinary shares in the Company in an amount of US$50 million subject to certain conditions. The structure of the Royalty Financing Agreement is similar to that of the arrangements with mineral rights holders and runs for the life of the Project or 70 years, whichever is longer. The funding obligations of Hancock under the Royalty Financing Agreement are guaranteed by Hancock Prospecting Pty Ltd.

The Royalty Financing Agreement is conditional upon the Company completing its Stage 1 financing (taking into consideration amounts received under the Royalty Financing Agreement) and two confirmatory due diligence items which will be satisfied prior to the Stage 1 financing being finalised.

Once completed, drawdown of funds under the Royalty Financing Agreement is conditional on, inter alia, notice having been given to Hancock that the Company has expended US$630 million of the total amount of its stage 1 financing; creation of the royalty interest including the granting of certain obligations and arrangements to secure such obligations in favour of Hancock, to ensure that the Royalty attaches to certain assets which comprise the Project; all material permits, commercial arrangements and authorisations for the Project remaining in place; and other drawdown conditions typical for an agreement of this nature.

The Royalty Financing Agreement is an important component of the Company's capital funding plans as articulated in the announcement of 17 March 2016 and updated most recently on 1 September 2016. As referenced in the announcement on 24 June 2016, the Company continues to make good progress with its previously articulated two stage approach to financing. The details of the Stage 1 capital structure and timing will be subject to further announcement at an appropriate time.

Hancock Prospecting Pty Ltd is a privately owned company which operates in the mining and agricultural sectors. Further information on Hancock is available at www.hancockprospecting.com.au or www.ginarinehart.com.au.

Chris Fraser, Managing Director and CEO of Sirius, commented:

"We are delighted to have signed this agreement with such an experienced party in the mining industry, as well as one that has very successful and strong leadership and a long term and growing agricultural interest."

This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

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About Sirius Minerals Plc

Sirius Minerals is the fertilizer development company focused on the development of its North Yorkshire polyhalite project, the United Kingdom. It has the world's largest and highest grade deposit of polyhalite, a multi-nutrient form of potash containing potassium, sulphur, magnesium and calcium. Incorporated in 2003, Sirius Minerals' shares are traded on the London Stock Exchange's AIM market. Its shares are also traded in the United States on the OTCQX through a sponsored ADR facility. Further information on the Company can be found at: www.siriusminerals.com.