Full Script from todays S. Tel22 Jul 2018 13:34
Obviouslly out of date
Anyone who has spent a morning fossil hunting on the beach at Robin Hood’s Bay will know that North Yorkshire conceals untold riches. Some are easier to unearth than others.
Four miles inland at Woodsmith Mine, Chris Fraser has expended eight years so far trying to tap an unlikely source of mineral wealth that has been talked about in these parts for decades.
It will be at least another four years before his company, Sirius Minerals, begins to produce polyhalite – an organic fertiliser blend of potassium, calcium, magnesium and sulphur – from the site.
To get this far, Fraser, a former banker, and his team have signed rights deals with hundreds of local farmers and landowners and battled to win permission to dig in a national park. These environmental concerns have complicated an already tricky venture.
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At 1.5km, Woodsmith will have Britain’s deepest mine shafts. So that extraction does not spoil the area’s natural beauty, a 23-mile tunnel is being built to transport ore to an industrial park on Teesside. There it will be processed into pellets for export from the Redcar docks, once famous for steel.
The prize is large. Sirius forecasts that the 70m (230ft) deep seam of polyhalite could last a century and yield 20 million tons a year by 2026. It has had to pre-market the stuff to convince farmers, under pressure to boost crop yields, to switch from other fertilisers.
After signing a recent deal with a Dubai-based trading company, Sirius has peak contracted volumes of 4.7m tons a year in place. Production costs are predicted to be roughly $40 a ton and some long-term supply arrangements have been struck at $145 a ton, illustrating the profit potential.
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There are still numerous variables, such as the ultimate cost and timing of the project, how it is financed, and the vagaries of the global resources market if competition from other producers steps up. But what many regarded as a flight of fancy appears to be creeping closer to reality. If Sirius can pass some key milestones in the next few months, the shares, up by 50pc since February, should move further ahead.
The biggest test is pinning down support from the banks. Fraser secured phase-one funding of $1.2bn in 2016 so that he could begin digging. Now he needs a further $3bn, split roughly between bank debt and government support.
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Sirius is making positive noises about this. A group of banks has been carrying out due diligence since the spring, with good responses received so far. The company will detail its financing plan when it has commitment letters in place and expects everything to be tied up this year.
To give lenders some comfort, Sirius needs to secure buyers for another 1.8m tons of polyhalite per annum, and has conversations in Europe and Brazil ongoing. Meanwhile, it has already won p
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