TIDMSXX
RNS Number : 1115E
Sirius Minerals plc
02 July 2019
2 July 2019
Sirius Minerals Plc
Q2 progress update
-- Comprehensive US$3.8 billion funding solution for stage 2
financing requirements launched on 30 April 2019 and on-track to
complete before the end of September 2019
-- Successful completion of US$425 million equity offering and
US$400 million convertible bond offering
-- Long-term, take-or-pay supply agreement signed with IFFCO,
one of the largest co-operative societies in the world, for volumes
increasing to 1 Mtpa POLY4
-- Construction advancing well, and the Company remains on
target to achieve first polyhalite and commercial production on
time and in line with its cost schedule
Sirius Minerals Plc ("Sirius" or the "Company") provides its
latest quarterly progress update.
Chris Fraser, Managing Director and CEO of Sirius,
commented:
"The successful raising of US$825 million of funding during the
quarter marked the completion of the first part of our stage 2
financing. We are making good progress with the remaining
components of our stage 2 financing package, which we expect to
complete by the end of September this year in line with guidance,
and which will enable us to bring our multi-nutrient POLY4 product
to our customers to meet the expanding needs of the global
agriculture industry."
Safety
The Project's Lost Time Injury Frequency Rate ("LTIFR") stands
at 2.35. The LTIFR is a measure of lost time incidents per million
man-hours on a twelve-month rolling average basis.
Stage 2 financing
On 1 May 2019, the Company announced that it had successfully
raised gross proceeds of approximately US$825 million as part of
the US$3.8 billion stage 2 financing package announced on 30 April
2019, expected to fund the Project to the point at which it
generates positive operating cash flows. The US$825 million was
raised through a Firm Placing and Placing and Open Offer of
ordinary shares for US$425 million (GBP327 million) and through an
offering of guaranteed convertible bonds due 2027 (the "New
Convertible Bonds") for new gross proceeds of US$400 million.
The Company placed US$106.6 million in aggregate principal
amount of the New Convertible Bonds with holders of the Company's
outstanding US$244 million of Guaranteed Convertible Bonds due 2023
by way of a repurchase. No new proceeds were received by the
Company in connection with the repurchase.
The net proceeds of the New Convertible Bonds have been placed
in an escrow account and will be released to the Company upon the
issuance of US$500 million senior secured guaranteed bonds (the
"Initial Bonds") (or another acceptable US$500 million debt
financing) and entry into the proposed US$2.5 billion revolving
credit facility with JP Morgan Chase Bank N.A., London Branch (the
"RCF"), expected to occur no later than the end of September 2019.
The net proceeds received pursuant to the Firm Placing and Placing
and Open Offer provide the Company with sufficient cash to progress
the Project in line with key milestones to the end of September
2019.
The Company is making good progress on all workstreams connected
with the proposed US$500 million issuance of Initial Bonds and
entry into the proposed US$2.5 billion RCF, which will together
complete the Company's stage 2 financing.
Construction progress
The Company remains on track to achieve first polyhalite in 2021
and in line with its cost schedule. Construction continues to
progress in line with key milestones at each of its construction
sites.
Service and production shafts
Service shaft works are on target to complete the construction
of the foreshafts by year end to enable commencement of excavation
of the main shaft using the shaft boring roadheader ("SBR"). The
Company's first SBR recently passed its Factory Acceptance Test and
is due to commence arrival at the Woodsmith Mine site in August
2019. The SBR will then be erected on-site. Assembly of the SBR and
installation into the foreshaft is scheduled to be completed in
December 2019.
The excavation of the 35-metre diameter service shaft foreshaft
to 45 metres was completed in the first quarter of 2019, enabling
commencement of the excavation of the inner-main shaft, which will
be excavated to a total depth of approximately 120 metres. The main
shaft has now been excavated to approximately 85 metres below
ground level, using conventional excavation techniques.
The service shaft temporary winder building foundations have
been completed. Erection of the temporary and permanent winder
buildings, which will house the service shaft hoists, and
installation of the temporary and permanent winders is in progress
and on schedule.
Production shaft works are on target to complete the
construction of the foreshaft and excavation of the main shaft to
120 metres by year end. The 32-metre diameter production shaft
foreshaft, which will be excavated to a depth of 45 metres from
surface, has been excavated to approximately 9 metres below ground
level at quarter end.
The production shaft differs from the service shaft in that it
already has diaphragm walls installed to a depth of 120 metres in
the inner-main shaft. Once the larger diameter foreshaft has been
excavated to a depth of 45 metres and the floor installed, the
inner-main shafts will be excavated to a depth of 120 metres using
conventional methods inside the existing diaphragm walls. This is
expected to be completed in December 2019. The SBR for the
production shaft is due to commence arriving on-site in October
2019. The SBR for the production shaft is currently erected in
Germany and will be undertaking various cutting optimisation tests
prior to being dismantled and shipped to the Woodsmith Mine.
The application of considerable learnings from the service shaft
excavation has meant that the production shaft excavations are
progressing at a faster-than-expected rate and excavation is on
track to meet 2019 targets.
Construction of the production shaft permanent winder building
foundations is underway and is progressing ahead of schedule.
Mineral Transport System
MTS Drive 1 - Wilton to Lockwood Beck
The tunnel boring machine ("TBM") being used to construct Drive
1 of the mineral transport system ("MTS") completed its advance to
the bottom of the MTS launch portal during the quarter and has
successfully commenced mechanical tunnelling. At quarter end, the
TBM has advanced approximately 210 metres into the MTS tunnel,
which is ahead of schedule. The TBM is progressing on target to
advance the MTS tunnel excavation to 3km by year end.
MTS Drive 2 - Lockwood Beck towards Woodsmith Mine
The Lockwood Beck MTS shaft pre-sink is well underway and had
reached a depth of approximately 37 metres below ground level at
quarter end. The pre-sink will continue to approximately 47 metres
to enable installation of the Galloway (the multi-level working
platform that will be suspended near the shaft bottom during
sinking and raised and lowered as required to allow conventional
drill and blast sinking to continue to the final depth of the
shaft). Drill and blast operations are expected to commence during
the year.
The Lockwood Beck shaft is scheduled to reach its target depth
of 360 metres in the first quarter of 2020. Once complete, shaft
bottom works will be undertaken prior to the shaft being handed
over from DMC to STRABAG to begin construction of the launch cavern
for the Drive 2 TBM at the 360-metre level.
MTS Drive 3 - Woodsmith Mine towards Lockwood Beck
The first approximately 115 metres of the MTS shaft excavation
has been completed during the quarter using a Herrenknecht vertical
sinking machine ("VSM"). The VSM has been removed from the shaft
and preparation for the installation of the drill and blast
Galloway is underway.
Civil works for the MTS winder building is complete and building
erection is about to commence. The drill and blast Galloway is on
site and under construction and delivery of steelwork has
commenced.
Materials Handling Facility
Granulation trials for the materials handling facility ("MHF")
test plant, including yield and efficiency optimisation, have been
successfully completed during the quarter at the Company's R&D
facility in Teesside. The test plant has now been decommissioned in
preparation for conversion to a full R&D demonstration plant to
be commissioned during the year.
Port Handling Facility
Procurement of the overland conveyor that will transport our
POLY4 product from the MHF to the port, was completed during the
quarter. The cost of the contract is in line with the Company's
existing cost estimates. Site clearance continues at the Redcar
Bulk Terminal site and good progress is being made.
Sales and marketing
During the quarter the Company signed a take-or-pay supply
agreement with Indian Farmers Fertilisers Cooperative Limited
("IFFCO") for the supply of POLY4 in India. Volumes under the
agreement will increase to one million tonnes per annum ("Mtpa") in
year eight, with an option to increase this to 1.25 Mtpa. The IFFCO
agreement takes the Company's total peak aggregate volumes under
contract to 11.7 Mtpa.
IFFCO is one of the largest co-operative societies in the world
with access to over 55 million Indian farmers. The agreement
provides access to one of the top three fertilizer markets in the
world with a total nutrient consumption of approximately 30
Mtpa.
During the quarter the Company initiated 29 new agronomy trials
with a total of 48 trials initiated in 2019 to date. The total
number of trials established by the Company now stands at 430 on 48
crops in 30 different countries. The Company has continued to
establish a significant number of on-farm demonstrations with a
number of its offtake partners' key and sizeable customers. The
programme of on-farm demonstrations is expected to show to future
end-users of POLY4 the benefits of incorporating POLY4 into their
fertilizer programmes.
Investor webcast
Sirius Mineral's Chief Executive Officer, Chris Fraser will host
a webcast for investors and analysts at 9.30am today.
The webcast can be listened to live by clicking on the link
below. A replay will be available on the Company's website in due
course.
https://event.on24.com/wcc/r/2042922-1/ECCB108F549528595526DCD6A2553BBC?partnerref=rss-events
For further information, please contact:
Sirius Minerals Plc Jennifer Wyllie, Tristan Tel: +44 845
Investor Relations Pottas 524 0247
Email: ir@siriusminerals.com
-------------------- ----------------------------------- ---------------
Media enquiries Alex Simmons, Ed Brown Tel: +44 7970
Edelman Email: Siriusminerals@edelman.com 174 353
Tel: +44 7540
412 298
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About Sirius Minerals Plc
Sirius Minerals Plc is focused on bringing large-scale volumes
of POLY4 to the global agriculture industry. POLY4 is the Company's
trademarked name for its unique multi-nutrient fertilizer to be
produced from the world's largest and highest-grade known
polyhalite deposit located in North Yorkshire, United Kingdom,
which can be used to increase balanced fertilization around the
world. Sirius Minerals' shares are traded on the Premium List of
the London Stock Exchange. 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.
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END
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