The mining company Anglo American has agreed to buy Sirius Minerals for £405m in a deal that rescues plans to dig the UK’s first deep mine in 40 years under the North York Moors.
The pair revealed this month they were in advanced talks over a deal that would hand the struggling fertiliser miner to Anglo for a price of 5.5p a share, which valued the company at £386m.
Under the deal, Sirius shareholders – including about 85,000 retail investors – and employees will receive a total of £405m for the company, which was once valued at more than £1.5bn.
Sirius attracted thousands of investors from the Yorkshire area who supported ambitious plans to develop the multibillion-pound Woodsmith potash mine to become the world’s biggest producer of a potent fertiliser called polyhalite.
Sirius has already raised $1.2bn (£920m) to develop the Woodsmith mine but needs a further $3.8bn to complete the plans, which include two mineshafts drilled just under a mile (1.5km) into the ground and a 23-mile underground conveyor belt to transport the mineral from the Yorkshire mine to Teesside for export.
Russell Scrimshaw, the chairman of Sirius, said he understood that the board’s decision to recommend the deal would have “come as a shock” but argued that the takeover bid was “the only viable proposal” to save the project.
Sirius employs 1,200 staff and its project would create a further 2,500 high-earning jobs in the future. But the mine was plunged into doubt last year after Sirius shelved a $500m (£400m) bond issue, blaming factors such as a lack of government support and Brexit uncertainty.
Scrimshaw told investors the board regrets it was unable to complete the project and recognises that the returns from the Anglo deal “are not what either our shareholders or the Sirius board had previously hoped for”.
“We now face a stark choice,” he said. “If the acquisition is not approved by shareholders and does not complete there is a high probability that the business could be placed into administration or liquidation within weeks thereafter.”
Mark Cutifani, the chief executive of Anglo American, said the takeover would offer greater certainty for Sirius’s shareholders, employees and wider stakeholders.
“We intend to bring Anglo American’s financial, technical and product marketing resources and capabilities to the development of the project, which of course would be expected to unlock a significant and sustained associated employment and economic stimulus for the local area,” he said.
The takeover would mark a return to fertiliser mining for Anglo, which has owned phosphate assets but in recent years has focused on mining copper, iron ore, diamonds and platinum.
The credit agency Moody’s said the deal would not affect the miner’s rating but warned that it would raise the company’s financial risk profile for a number of years because of the “very material capital investment needed” to complete the project.
By Jillian Ambrose
Source: The Guardian
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