Construction of a polyhalite mine in Yorkshire is to continue after developer Sirius Minerals announced a funding deal to combat rising costs.
American investment bank JP Morgan has agreed to back Sirius Minerals’ £4.2bn Yorkshire mining project – underwriting the issue £307M new shares in the company and providing a £1.9bn credit facility.
The credit facility will help provide liquidity to fund the day-to-day construction and other activities.
Sirius Minerals hopes to raise a further £307M via a bond issue and £380M through debt.
Sirius Minerals had to rethink its funding strategy earlier this year when the Treasury and the Infrastructure Projects Authority (IPA) cut the amount of public money for the project from £1.1bn to £760M to reduce risk to the taxpayer.
Costs of the project have risen dramatically to £4.2bn from £3.6bn in the past year.
The main cause of the cost increase is a complex mineral extraction system, which will involve Sirius constructing what is claimed to be the longest conveyor belt in the world through a tunnel under the North York Moors. The 37km tunnel will transport the polyhalite from the mine beneath the Moors to reduce its impact on the protected landscape.
Sirius minerals cross section mine and tunnel
Sirius Minerals managing director and chief executive Chris Fraser said: “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.
“We are pleased to announce that, as a result of that work, we are launching a comprehensive market-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.”
The mine aims to extract 20M.t of polyhalite per year after scheduled completion in 2024.
Construction is already well under way with the UK’s first use of an innovative vertical shaft sinking machine (VSM) taking place at the end of last year.
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