Sirius Minerals (LON:SXX), the British company building a huge fertilizer mine beneath a national park, has signed up Wall Street giant JPMorgan to provide financing in the form of bonds and credit up to about $3.8 billion.
The bank is underwriting a $400 million share placing, launched on Tuesday, at a price between 15p to 18p a share. It’s also using its balance sheet to provide a $2.5 billion revolving credit, or overdraft facility, which JPMorgan plans to syndicate to other lenders.
The backing, Sirius Minerals said, would be enough to build its Woodsmith polyhalite mine in North Yorkshire and have it in operations by 2021.
Wall Street giant JPMorgan will provide financing in the form of bonds and credit up to about $3.8B.
“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,” chief executive Chris Fraser said in a statement.
Besides the share placing, Sirius is also hoping to raise $400 million from the sale of convertible bonds, also underwritten, as well as $500 million of senior debt.
Woodsmith, poised to be one of the world’s largest in terms of the amount of resources extracted, will generate an initial 10 million tonnes per year of polyhalite, a form of potash that is used in plant fertilizers. That figure is expected to double once running at full tilt, by 2024.
The operation involves sinking two 1.5km shafts below a national park on the North York Moors and is expected to create about 1,800 jobs during construction, as well as 1,000 permanent positions once it opens.
The ore will be extracted via the two mine shafts and transported to Teesside on the world’s longest underground conveyor belt via a 37km-underground tunnel. It will then be granulated at a materials handling facility, with the majority being exported to overseas markets.
Higher funding costs
Sirius had originally said it would raise $1.5B of commercial debt and $1.5B of loans backed by the UK government. That plan was revised in March, when it said it had received a conditional proposal from an unnamed financial institution for the $3B senior debt it needed to move forward with the project, in the works since 2016.
Shares in the company fell as much as 19% to 17.72p on the news — their lowest in more than a year. The drop, likely a market reaction to the higher funding costs and dilution from the share placing, shrunk Sirius’ market capitalization to about $854m from $1B a week ago.
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