(Alliance News) - Shares in Sirius Minerals PLC jumped Monday after it outlined a new two-stage development plan for its North Yorkshire polyhalite mine as it looks to secure funding for the first stage of the project.
Shares in Sirius were 9.5% higher at 3.50 pence in London on Monday, backtracking after having leapt to 4.40p at the open.
In September, Sirius announced it struggled to secure the required funding for its current project plan due to "market conditions". Consequently, the firm intended to slow the development of its polyhalite mine.
Sirius remains focused on extracting first polyhalite from the mine in order to remove the "greatest perceived construction risk associated with deep shaft construction". This will allow Sirius to explore a wider and cheaper range of long-term financing options for the ramping-up of production.
The Scarborough-based firm expects the initial phase to require around USD600 million in investment in addition to its current cash reserves.
"Our focus during the first phase of the strategic review has been to reassess the best ways to unlock the value of our project," Sirius Chief Executive Officer Chris Fraser said.
"Our analysis has identified a two-stage development plan that enables us to achieve the key de-risking milestone of first polyhalite, when the service shaft reaches the polyhalite ore body, with an upfront capital requirement of USD600 million," Fraser added. "The additional works required to reach an installed and ramped up production capacity of 10 million tonnes per annum contemplates up to USD2.5 billion of capital expenditure."
"We are in discussions with potential strategic partners and debt investors with the aim of securing the best route to finance our revised initial scope of work and will update the market and our stakeholders on the progress of those when appropriate," Fraser continued.
"The value of Sirius is unlocked by reaching production and delivering POLY4 to our customers around the world," Fraser said. "This approach allows us to achieve that with less upfront capital while retaining the significant return opportunity it presents for our shareholders and stakeholders."
By Ahren Lester; ahrenlester@alliancenews.com
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