Member Info for wwguk

Polyhalite is a strong rock. SM will use the powerful (154,000kg, 900kW) Komatsu 12HM46 continuous miner to mine polyhalite efficiently and cost effectively. See what it looks like and how it works:

https://www.youtube.com/watch?v=HG7H05u5GQc

Superleggera/LITC,
so what you are saying means that the commercial debt from MLA is often more expensive (possibly much higher than the 6-7 percent interests targeted by SM), while the SM corporate bonds purchased by the banks would be cheaper to SM. If the commitments from banks are enough, MLA will not be used. If the commitments from the banks are not sufficient, then the government guaranteed fonds will help it to reach the 3 billion target. What offered by the government will be largely the same (regarding interest) as those provided by the banks (just slightly more expansive due to the small fees earned by the government). When might MLA come into play – only when bank commitments too low? As money from MLA (if not too much expansive) is still better than dilution (particularly from the shareholder’s perspective).
Myo,
in the DFS, in addition to TorPs, the indicative terms also include “Secure lump-sum Engineering Procurement and Construction (“EPC”) contractors for substantially all of the remaining Project construction.” These have not been mentioned recently. I gather this is because the progress in this regard is very satisfactory: the replacements of the contractors for the shafts and tunnels have optimized the mine engineering using more advanced and safer technologies (Herrenknecht Shaft Boring Roadheader (DMC) and the Tunnel Boring Machine (STRABAG). The cooperation of the process facilities with ADM and the port and storage facility with RBT.

Or, the $700 million or more from MLAs would be the SM bonds purchased by MLA and also possibly guaranteed by the government?

Stage 1 and Stage 2 are dependent on each other. Stage 2 is obviously built on stage 1. Stage 1 funding providers were also encouraged by the tentative commitment of the stage 2 funding providers.
Before Stage 1, “Six financial institutions experienced in mining and infrastructure project finance have signed a non-binding, but mutually agreed, term sheet to arrange the financing - Export Development Canada, ING; JP Morgan; Lloyds Bank; Societe Generale, Corporate & Investment Banking; and The Royal Bank of Scotland. … Once approved, stage two financing will likely include aggregate senior debt facilities of up to $2.6 billion (£2 billion). … Expect the money to come from commercial banks, export credit agencies and other money men. Crucially, the so-called Mandated Lead Arrangers (MLAs) have also agreed to fund up to $700 million themselves, although Sirius says the initial marketing it carried out suggests further funds will be available "above and beyond the amounts indicated by the MLAs”. See Lee Wild from interactive investor, 1st September 2016:
https://www.ii.co.uk/analysis-commentary/sirius-minerals-makes-funding-progress-ii350596/

Towards the new Stage 2 target ($ 3 billions) and what were said before stage 1: given that 2 billion is expected to be SM bonds guaranteed by the government (IPA), if $700 million or more would come from MLAs, would the 30 banks only need to provide less than $300 million (or just 10 million each if distributed evenly)? If so, the commitment from each bank seems not a big deal for them, and the financial risk on each of them looks very low. They should be able to share the 1 billion load and make IPA happy quite easily !?

Berenberg is not a house broker of SM.

In its 12 July 2018 report, Berenberg says that “in our view, financing is still a key issue for Sirius, but the risks to not securing a second round of financing are subsiding” (http://www.proactiveinvestors.co.uk/companies/news/200674/sirius-minerals-tipped-for-near-50-upside-as-project-financing-deal-nears-200674.html).

Berenberg was named “Best Investment Bank in Germany” in the “Euromoney Awards for Excellence” by the renowned business magazine in 2018 (https://www.berenberg.de/en/press/euromoney-awards-for-excellence-2018-berenberg-is-germanys-best-investment-bank-4094.html). Hopefully, this may add some credibility to their view.

ABB mine hoist systems: availability, reliability and safety (https://www.youtube.com/watch?v=l7-ju2b4h2U)

Hoisting machines for mining industries (https://www.youtube.com/watch?v=69gLcJ85vZc)

Conveyors provide the most effective way of transporting bulk materials over long distances. The website (https://www.thyssenkrupp-industrial-solutions.com/en/products-and-services/mining-systems/belt-conveyors/) includes an interesting video to show you an example of the Long Distance Belt Conveyor System (VKG, Estonia).

Mr.dt, I have wondered the same. 20 mtpa means to transfer 634 kg polyhalite per second through MTS tunnel (20 x 1000000 x 1000)/ (365x24x60x60), i.e. about the weight of 9 (70kg) adults per second continuously, without stop, in the whole year. This is also the lifting speed and load from the production shaft, quite amazing!

However, when I read that In 2017, Australian and Brazilian iron ore shipments to China were 669 million tonnes and 229 million tonnes (https://fairplay.ihs.com/bulk/article/4297241/chinese-iron-ore-imports-set-record-in-2017), the 20 million tonnes seems to be a small number that can be handled per year by the industry.

Or, many national or international funds are shared/managed by many institutions?

mrJimV, In Morninggstar, does the holdings in Major Funds and Major Institutions overlap?
If yes, the 398 million shares held by major funds of VA CollegeAmerica Smcap World 529E and VA CollegeAmerica New World 529F should make VA CollegeAmerica appear as a top 5 major institution holder (but it is not there).
If not, then the shares held by non-PI (institutions and funds) should be more than 1.67 billion (as only Top 5 Major Funds 903,950,221 and Top 5 Major Institutions 771,757,436 are included in the sum). Non PI shares should be already over 35.5% (1.67/4.7 = 35.5%). This looks increasing very fast.

Cherokee101, road salt has been ones of the products in Boulby for a long time. They also did quite a lot of lab and field testing on using polyhalite as a fertilizer used directly or blended with MOP/SOP (http://www.polysulphate.com/polysulphate-experiments/). They had organized the 1st IPI Symposium on Polyhalite in China with many interesting slides and papers published on hte ipipotash website (https://www.ipipotash.org/en/speech/index.php?ev=157&o=0). I believe they have also made an important contribution to polyhalite fertilizer. As polyhalite is much hard than NaCl and therefore, cost much more to produce, and as there is a salt beam there, it would be hard to imagine that they would sell polyhalite as road salt.

Chesh, such info, I gather, is nothing new to many LS; however, when I read them from different sources, I think that others newcomers like me to forum may also be interested, as a comparison of the SM products with that from their major competitor may help us better understand the strength of the Poly4 products and its potential in the emerging polyhalite market.

As mentioned in the previous post, both the Crushed rock (coated chippings from Boulby) and Bound granules (pellets from SM) be applied directly and can also be used to blend them with other NPK (mainly MOP) products.
Boulby coated chippings are produced by crushing, screening and coating (with some kind of oil/polymer). Bound granules (pellets from SM) are produced by crushing, screening, screening (with granules largely than 1mm sending back to further crushing), and finally binding into even sized pellets (the final steps would add some cost, but such cost is very small than that of chemical processes to produce MOP or SOP).
Poly4 granules spread better than crushed rock (as the of size and weight of pellets are more even). Poly4 pellets are porous, which allows water to easily access nutrients and deliver them to plants. This makes Poly4 granules release nutrients (40 hours) fast than crushed rock (180 hours). Poly4 granules have a lower dust tendency than crushed rocks. This makes Poly4 granules easier to handle and store. Coated chips of crushed rock generate dust, which make handing difficult, attract moisture and increasing caking, and lowering shelf life (https://poly4.com/site/assets/files/1065/poly4_v_crushed_rock.pdf). As most other fertilizer products are granulated, this makes Poly4 pellets easy to blend with the widely available (e.g. MOP) fertilizer products.

Granular and granulated fertilizers are two very different types or product. Granulated fertilizer is the most common form. Although both are granules, granular products are a blend of nutrients as individual granules in their own right. Granulated products are where the nutrients are dissolved to a specific ratio, and then reformed into a new unique granule (http://www.proctorsnpk.com/granular-v-granulated-fertiliser-the-big-show-down).
Boulby and ICL polyhalite products:
1. Polysuophate in three granular sizes (Granular 2-4mm, Mini granular 1-2mm, Standard grade (powder) <1mm. The first two are coated crushed rock to be used directly, or blended with other granular fertilizer products (with N, P, K or other micro nutrients). The powder can also be applied directly but it is mainly used for producing compound/complext NPK products (normally in granulated bound pellets). There are produced by merely crushing and screening polyhalite rocks at Boulby.
2. Potashplus. It is possibly produced by blending ICL MOP products (shipped to Boulby) in granular forms by Boulby (as Boulby has no equipment to granulate and bind them together into pellets).
3. ICL PKplus and ICL NPKplus (future proposed) are products made (possibly in granulated forms) by blending Boulby crushed materials with other ICL products at Amsterdam and Ludwigshafen (https://www.crugroup.com/knowledge-and-insights/insights/2018/icl-bets-on-polyhalite-as-uk-potash-production-finally-ends/?utm_medium=Press_release&utm_source=PR%20Newswire&utm_campaign=CRU%20Insight%20HK%20June%2018).
SM polyhalite products:
1. Poly4 Powder <1mm (https://poly4.com/site/assets/files/1225/poly4_powder_product_specification_sheet_-_oct_2017_-_english.pdf)
2. Poly4 granules (bound using ADM binder into pellets 2-4mm)(had a patent on producing the pellets)( https://poly4.com/site/assets/files/1224/poly4_granular_product_specification_sheet_-_oct_2017_-_english.pdf)
3. Poly4 wth N granules (blending the Poly4 Power with other N source and bound them together using ADM binder into pellets 2-4mm)(future, had a patent on producing the pellets with N)
4. Poly4 compound granules with other NPK or other nutrient sources (blended Poly4 Power with other nutrients and bound them using ADM binder into pellets 2-4mm)(future)
The products in the powder forms from both companies are mainly used for blending, rather than direct application, as it is much more difficult to spread them evenly even in short distance. Such blending needs special equipment to bind them into granules (pellets).
Crushed rock (coated chippings from Boulby) and Bound granules (pellets from SM) can be applied directly and can also be used to blend them with other NPK (mainly MOP) products in granular forms. Such blending is much easier (just to mix them with some equipment or even manually; or simply spreading MOP products and Polyhalite products separately).

Durace, I also believe that stage 2 will be successful with the government guarantee. Due to the excellent economics potential and as construction has already well underway, for national interest, the local and central governments are well-motivated to provide their support (under the condition that banks have made adequate commitments). I noticed that Liberum's analysts had well addressed most of the bear arguments appeared on ft. However, there is still some worry left relating to customer demand: especially on the quality of the two new Chinese customers and the drop of the previous better known Chinese customer with a good distribution network. As many here, before this event, the only thing I am looking for is the amount of Torp, which already shows a reasonable demand and very close to the required number (just adding 0.8m to reach 6.5m). Given there is still Brazil, India, and Europe to come, the condition of bank commitments seems quite easy to meet. However, in case the two new small private Chinese customers cannot meet the quality requirements of the banks, they may invoke additional conditions, such as the involvement of other reputed investors or partners (e.g., large institutions or big Potash companies). I believe that the risk of money in a hole is very very low. SM and the government will not let it happen. SM will get the needed money eventually, and the mine will be built. The expected plan A is, of course, debit only. The worst scenario for existing shareholders may be some dilution from the involvement of a big potash company or strategic investor (plan B or C?), as CF mentioned that investment interests from institutions are increasing and JimGlickenhaus mentioned that he would not be surprised if several companies might take a serious look at Sirius.

Myo, I do not have and do not know anyone connected to the ICL site. As you mentioned, I also hope they have a good cooperative relationship, as they have had, voluntarily or not. This will be good for the local people.

or they believed that they had a good insight on the potential demand/market of polyhalite, as even by now the size of the demand is still an open question.

Hi myo and jesse, I did not have a link to the source materials for the Poly4 samples used in various field testing in many countries. As Boulby is currently the only producer of polyhalite, I gather the Poly4 sample products are made (bound) from the standard Polysulphate product (i.e., the one <1mm, rather than the other two coated chips). I recall that one of the posts here mentioned that one of the Boulby staff members said that “all the stuff is from us”. As Boulby and SM are located very near to each other and share the same polyhalite seam, their polyhalite should be largely the same (although the thickness of the seam at different locations may differ). The current major difference between their products is between coated “chipped rock” and granulated and bound “pellets”. Therefore, it should be fine for testing purpose to prepare large volume Poly4 samples from the Boulby source/cooperation; rather than to get them by drilling small deep holes (although such sample bars might be used in some small-scale lab testing in early years).

On the change from SOP extraction from polyhalite to simple granular, granulated, and pelletized polyhalite products:
- OCHOA:
http://www.agapito.com/portfolio-posts/ochoa-polyhalite-mine-project-southeastern-new-mexico/
https://www.polynatura.com/project/ochoa-polyhalite/
- SM and Boulby:
Similar product shifts can be found from their planned product descriptions in the documents they provided many years ago, initially mainly for cost reasons (I read them somewhere on the web, but had not kept the links). More recently, testing results using the products from both of them have shown that polyhalite can also be used alone as an excellent fertilizer for specific crops in specific soil conditions. More importantly, they can be used to substitute parts of MOP and SOP in blended forms/products to improve the crop yield and quality cost-effectively, and the multi-nutrient balanced fertilizer practice is also a plus. These results can be found in their product testing reports accessible on their company websites and in many published papers cited by them. At this moment, the large-scale adoption of the blends is still just potential, but the results mentioned above indicate that it is quite promising (as it will help meet the growing potash demand in the world and provide better potash products in a lower price for the farmers). The multi-nutrient and low chloride properties may help SM to gain market share initially and get a premium product price later.

Myo, I agree with you that ICL Boulby re-application would not be easy, especially on a scale as large as the one got by SM, at the moment or in the future, as long as SM exists, as it makes no sense for government to support building two large competing miners on the same products in the same place. SM got it by then as the management of ICL Boulby, or ICL had not tried to re-apply before SM, either because they did not have a clear vision

ICL Boulby's polyhalite production and marketing activities, of course, are for their own survival, but these have also been very beneficial to SM. The lessons learned from their mining experience on deep shaft and polyhalite operations are very helpful to the nearly SM. They provided the source materials for Poly4. This allows SM to test Poly4 products around the world and provide supporting evidence for Poly4 marketing many years before SM's production. Their various polyhalite products, the testing and the adoption of these products are also beneficial to SM. They are in effect testing the water for SM and developing a large market that is beyond their production capability and ready for SM’s much larger-scale and cost-effective production, which may finally end their independent survival as polyhalite miner. They are first to the market, but due to their early hesitation, it might be too late for them to stop SM and keep the market for themselves. All the major polyhalite projects (e.g. SM, Boulby, OCHOA) initially aimed to produce and market SOP from polyhalite. However, all of them have now changed to provide and sell granular or granulated polyhalite products (to large volume distributors as a multi-nutrient source for blending with other NPK products, mainly MOP and SOP, to promote a balanced fertilizer practice). Many testing results have shown that such polyhalite blends are more cost-effective than the currently dominant MOP or SOP products. Therefore, it seems that such a polyhalite market is emerging, but it is only for those who can produce polyhalite as a cost much lower than MOP (the major source of K). SM can do just that. Such blends will help meet the increasing potash demands in the world, especially those areas lacking potash resources, such as China, India, U.S, and Brazil. As CF said, the world needs SM to succeed.