* Anglo proposes offer of 5.5 pence per Sirius share
* 34% premium to Sirius' last closing price
* Sirius shares had plunged amid uncertainty over project
(Adds analyst comment)
By Yadarisa Shabong and Barbara Lewis
Jan 8 (Reuters) - Global miner Anglo American Plc is
in advanced talks to buy fertiliser company Sirius Minerals
for about 386 million pounds ($507 million), throwing a
potential life-line to Britain's biggest mining project.
If the indicative offer succeeds, it could save hundreds of
jobs in northern England as well as diversify Anglo American's
portfolio.
Sirius has so far struggled to get financing for the project
and is reviewing the North Yorkshire polyhalite mine after
scrapping in September a plan to raise $500 million in a bond
sale, delaying the project.
Shares of Sirius surged 34% to Anglo's proposed offer price
of 5.5 pence in morning trade, while Anglo slipped more than 1%.
The review includes a search for a major strategic partner
and financial investor to raise $600 million in funding needed
to develop the project.
Many local people have invested in the plan, which involves
tunnelling under the North York Moors National Park to exploit
what Sirius has said is the world's largest deposit of
polyhalite, a multi-nutrient fertiliser.
Anglo said it had identified the project as a "tier one"
asset - a large scale, long-life, high margin deposit.
Its finance director Stephen Pearce said the Sirius project
provided a rare chance to buy near the bottom of the market.
"This is almost the ideal time," he said on a media call.
Sirius shares lost more than 80% of their value last year.
The project could also help Anglo move away from more
polluting assets, notably coal, as investors demand miners
become more climate aware.
"With a compelling entry point, and (Anglo's) financial
capability to progress this project, we see this as being in the
smart M&A camp," said RBC analyst Tyler Broda.
However, the question remains of whether there is a market
for the kind of fertiliser Sirius would produce, and Broda added
that more questions would be raised including regarding the
viability of the project.
Pearce said the company was shifting its portfolio to
commodities needed for developed economies with growing
populations and "a cleaner, greener, more sustainable world".
If the offer succeeds, it would mark a return by Anglo to
the fertiliser industry in northern England.
Until it sold out to Israel Chemicals in 2002,
Anglo was joint owner of the Boulby mine, near Sirius' project,
which is the world's only producing polyhalite mine.
($1 = 0.7617 pounds)
(Reporting by Yadarisa Shabong in Bengaluru and Barbara Lewis
in London; Editing by Jason Neely and Mark Potter)
