Sirius Minerals Aims to Raise US$3.8 Billion Through Financing

UK fertilizer company Sirius Minerals (LSE:SXX,OTCQX:SRUXY) has garnered the backing of investment banking firm JPMorgan (NYSE:JPM) through the underwriting of a US$400 million share placing that launched Tuesday (April 30).

The share placing is a crucial component of Sirius’ Stage 2 financing plan, which aims to raise US$3.8 billion in capital to fund the company’s Woodsmith polyhalite mine development. Polyhalite is part of the low-chloride potash family used as a fertilizer in the agricultural sector.

In March, Sirius announced it had found an unnamed backer of the project, which the company has been working to advance since 2017.

“We are launching a comprehensive markets-led solution for our funding requirements, which will enable Sirius Minerals to complete the development of its mine and unlock what we believe to be the world’s largest known high-grade polyhalite deposit,” said Chris Fraser, CEO and managing director, in a release.

“The funding package will bring together equity, convertible bonds, high yield debt and a US$2.5 billion revolving credit facility in a multi-stage, flexible structure that balances the availability of capital with the needs of the project,” he added.

The North Yorkshire-based project will be one of the largest and most ambitious mining developments in the UK, and will produce an organic multi-nutrient fertilizer, dubbed POLY4.

The agricultural additive is comprised of four of the six key macronutrients that all plants and crops need to grow: potassium, sulfur, magnesium and calcium.

Sirius hopes to have Woodsmith in production in 2021, with a steady output ramp up to 10 million tonnes a year by 2024. There is also a plan to potentially increase production by an additional 20 million tonnes annually if the company can gain regulatory approval.

Constructing a mine of this scale has proven challenging, and more obstacles may lie ahead. Sirius will need to sink two mine shafts to a depth of 1,600 meters, develop a 37 kilometer underground mineral transport system and build a harbor facility for export.

“Today’s announcement provides a clear pathway to a fully financed project in the months ahead, while enabling us to progress construction at full speed,” said Fraser.

Shares of Sirius were down 20.46 percent on Tuesday, trading at GBX 17.42.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.