Sirius secures £25m Convertible Security Financing

12 August 2013

Sirius Minerals Plc

Sirius Minerals secures £25 million Convertible Security Financing

§ Convertible security financing of up to £25 million secured with New York based Institutional Investor

§ Provides funding certainty to progress with approvals process and development initiatives to further de-risk the York Potash Project

§ Financing is staged to minimise dilution to existing shareholders, and maximise flexibility to the Company

§ At a time of great volatility in the potash industry, this financing further endorses York Potash as a Tier 1 project

The Directors of Sirius Minerals Plc (AIM: SXX, OTCQX: SRUXY) ("Sirius" or the "Company") are pleased to announce that the Company has secured financing of up to £25m with a New York based institutional investor (the "Investor").

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

"We are delighted to secure this financing which demonstrates confidence in the on-going development of the York Potash project, especially at a time of increased volatility in the sector. These funds will enable the Company to undertake the necessary work needed to secure the required approvals, in addition to other development initiatives including global crop trials that will continue to demonstrate the unique value of polyhalite and de-risk the project."

Under the agreement that has been entered into, the Investor will inject up to £25m into the Company by purchasing up to four tranches of interest free convertible securities (the "Convertible Securities"), which are convertible into ordinary shares in the capital of the Company ("Shares"). The first tranche is £10m with a face value of £11m. The subsequent three tranches can be activated at 120 day intervals at the Company's discretion with a minimum of £1m with a face value of £1.1m and a maximum of £5m with a face value of £5.5m per tranche.

Each Convertible Security will have a maturity of 18 months.

The conversion price for each of the Convertible Securities will be, at the Investor's discretion, either (a) 92.5% of the average of 3 daily VWAPs per Share, as selected by the Investor, during the 10 consecutive trading days immediately prior to the relevant conversion date notice, or (b) at 19.5p (being 120% of the average of the daily VWAPs per Share for the 10 consecutive trading days immediately prior to execution of the agreement), save that (b) may only apply in respect of up to £12.5m worth of Convertible Securities.

The Investor will also receive 6,000,000 options with an exercise period of 36 months from the date of issue (the "Options"). The Options will entitle the Investor to subscribe for one Share per Option at an exercise price of 19.5p.

The Company will make an announcement each time a tranche of Convertible Securities is issued. In addition, the Company will make an announcement each time any Convertible Security is converted into Sirius shares or an Option is exercised. An application will be made to the London Stock Exchange for any Shares issued and allotted on conversion of the Convertible Securities or exercise of the Options to be admitted to trading on AIM.

The agreement includes terms that grant Sirius the right to repurchase the nominal value of the Convertible Securities for cash and limit the ability of the Investor to dispose of shares received on conversion. Sirius also has the right to terminate the agreement at any time by the payment of a modest termination fee, or alternatively, at no cost if the Company's share price falls below a certain level.

The proceeds of this financing will be used by the Company for general corporate purposes, and added to existing cash of £8.5m (as of 31 July 2013) will provide funding for at least 12 months of the necessary work to secure approvals for the York Potash Project and other initiatives including global crop trials that will continue to demonstrate the unique value of polyhalite.

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About Sirius Minerals Plc

Sirius Minerals is a globally diversified potash development company. Its primary focus is to bring on stream major potash mining facilities through the acquisition and development of projects overlying recognised potash deposits. Today it holds properties in the United Kingdom (North Yorkshire) and the United States (North Dakota). 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.