Sirius Minerals - Quarterly Progress

Benefitz Betty's picture

"2 July 2018  Sirius Minerals Plc Quarterly progress update

* The project remains on track to deliver first polyhalite and commercial production on time 

* The fully procured and financed capital estimate will be provided to the market once binding financing commitment letters have been executed

* A supply agreement for Nigeria was signed during the period taking peak aggregate contract volumes from 4.4 Mtpa to 4.7 Mtpa

* Active engagement on multiple commercial discussions for new supply agreements in Brazil and Europe

* Initial responses received from banks participating in the stage 2 financing process are positive

Sirius Minerals Plc ("Sirius" or the "Company") provides its latest quarterly progress update.  Chris Fraser, Managing Director and CEO of Sirius, commented:

"It has been a quarter of good progress as we continue to construct our Woodsmith Mine, as well as breaking-ground on Teesside.  Work to deliver the stage two financing continues at pace and we are delighted to add a new, well established customer, in the high potential African region, to our growing list of partners.

"The economic and social benefits to our nationally significant infrastructure project are vast, as recently illustrated by QUOD's independent economic impact assessment, and we look forward to delivering these important and long-lasting benefits to both national and local economies.

"With commercial momentum and the development of our world-class mine continuing to progress well, we remain confident of delivering on our key milestones for 2018 and ultimately delivering on our vision to be a world-class fertilizer business."

Safety

The project's Lost Time Injury Frequency Rate ("LTIFR") stands at 4.4.  The LTIFR is a measure of lost time incidents per million man-hours on a twelve-month rolling average basis.  The Company is working closely with its contractors to continually improve the safety culture at all locations.   

Sales and Marketing

The Company signed a seven-year supply agreement with Intercontinental Trade DMCC Dubai, a global trading company with an active presence in Europe, Africa, the Middle East and Asia, for volumes of POLY4 ramping up to 350,000 tonnes per annum in year four.  Taking this agreement into consideration the Company's aggregate peak contracted volumes has increased from 4.4 Mtpa to 4.7 Mtpa. 

The Company has undertaken to achieve a target level of circa 6.5 Mtpa of supply agreements in 2018.  Sirius' current priority is to conclude agreements in the key markets of Western Europe and Brazil.  Commercial discussions are well advanced with multiple customers in each of these regions and the Company is confident of delivering on this milestone.  A number of opportunities in other regions of the world are also being progressed.    

A total of 56 new crop trials have been initiated during 2018 bringing the total trials to over 320 covering 35 different crops in 23 countries. 

Stage 2 financing

The initial bank due diligence process commenced early in the second quarter and has been ongoing with potential lenders reviewing the Company's information package and engaged with their independent consultants.  A number of bank responses have been received with further responses due to be received over the coming weeks.  The quality of the responses received so far has been positive.  Once all responses have been received the Company will progress discussions with both potential lenders and the Infrastructure and Projects Authority to finalize the financing.  The Company is on track to achieve financial close in 2018. 

Procurement

The Company is currently in the process of evaluating proposals for each of the outstanding major scopes of work for the project.  These include the materials handling facility, port infrastructure, MTS fit out and drives two and three of the MTS tunnel.  The evaluation and optimisation exercise is now ongoing in conjunction with the commercial discussions associated with each package.  These processes will continue into the next quarter and feed into the stage 2 financing process. 

The opportunity to utilise the Redcar Bulk Terminal continues to be progressed in parallel with the option of developing a greenfield port facility at Bran Sands.      

Construction progress

At the Woodsmith Mine site, diaphragm walling activities on the service shaft are complete and have now commenced on the production shaft.  The excavation of the service shaft is scheduled to commence in the coming weeks.  The initial 120m of the MTS shaft will be sunk using a Herrenknecht Vertical Sinking Machine ("VSM").  Preparation works, such as excavation of the guide collar, are in progress with sinking to commence during the coming quarter. 

A ground-breaking ceremony, attended by the Northern Powerhouse Minister Jake Berry MP, was held at the Company's Wilton site on Teesside in late June to mark the commencement of piling work for the MTS tunnel portal.  In addition to the portal construction, earthworks for support infrastructure such as power supply and welfare buildings is progressing.  Tunnelling activities will commence once the portal construction is sufficiently advanced.    

Cost and schedule

The project remains on track to deliver first production and commercial production on time.  The Company has now entered the final phase of the procurement process involving cost and risk estimation which involves an iterative process of evaluating contractor scopes of work, commercial risk allocation and contingency requirements.  In addition to this, the outcomes of this process are subject to review by the lender's technical consultant as part of the stage 2 financing process.  The Company intends to provide the market with an updated estimate including contingency once binding financing commitment letters have been executed.  This is anticipated to occur around the end of the third quarter of 2018.     

Investor webcast

Sirius Minerals' Chief Executive Officer, Chris Fraser, will host a webcast for investors and analysts at 10.30 am 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.

http://event.onlineseminarsolutions.com/wcc/r/1789152-1/AB893348F991B2213A108F28135A4224 

The Important bit:

http://siriusminerals.com/latest-news/blog/why-the-world-needs-sirius-to...

The Fully Procured?

https://www.youtube.com/watch?v=HCDsFIqIfA0

Oh.

https://www.youtube.com/watch?v=ZBYaoBlYPxo&feature=youtu.be

Bon Voyage.

lol

https://www.youtube.com/watch?v=qEuV82GqQnE

 

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3 Comments

Benefitz Betty's picture

Port Facility

Released : 09/07/2018 07:00 RNS Number : 9375T  Sirius Minerals plc

"Sirius signs materials handling agreement and lease with Redcar Bulk Terminal

Materials handling agreement signed with Redcar Bulk Terminal Limited to provide port and ship loading services for up to 10 million tonnes per annum

Long-term lease of land for storage facilities adjacent to port facilities

Arrangements will provide greater flexibility in storage and port operations

Reduces construction risk and capital expenditure requirements during the current construction programme which will have stage 2 financing benefits

Sirius Minerals Plc ("Sirius" or the "Company") announces that its subsidiary York Potash Ltd ("YPL")  and Redcar Bulk Terminal Limited ("RBT") have entered into a materials handling agreement ("MHA") under which RBT will provide port and ship loading services from its existing Redcar Bulk Terminal port facility.  RBT and York Potash Processing & Ports Ltd ("YPPPL"), another Sirius subsidiary, have also entered into a long-term lease for land adjacent to the Company's existing port facilities for the Company's finished product storage facilities. 

Chris Fraser, Managing Director and CEO of Sirius, comments:

"We are pleased to enter into this arrangement which reduces the complexity of our construction programme and ultimately helps to simplify our stage two financing plan which is being finalised over the coming months.

"By working with a local partner, we can develop our project and also deliver benefits to an existing established business in the Tees Valley.  The RBT facility has been underutilised since the closure of the steel works and this agreement will ultimately help us deliver tremendous economic benefits for the region."

Garry O'Malley, RBT's General Manager, said: 

"This is excellent news for Teesside and we're delighted to be working with Sirius Minerals on a project of such regional magnitude.

"It's another significant step forward in the continued resurgence of Redcar Bulk Terminal (RBT) and demonstrates the integral role we're playing in the regeneration of the South Tees site."

Materials Handling Agreement

RBT's port facility is located adjacent to the Company's Bran Sands site and is also a deep-water terminal capable of handling up to Capesize vessels.  RBT has historically operated as a bulk import terminal in connection with the adjacent steel works that closed in 2015. Following the closure of the steelworks, RBT continued to operate, invest and grow into a multi-model terminal attracting a number of new customers and products.  However, in order to handle POLY4 exports, some capital expenditure, predominantly ship loaders and conveyors, is required at RBT to facilitate the loading of ships with POLY4.    

Pursuant to the agreement with RBT, Sirius will, as part of the Company's procurement plan that is currently being finalised, procure and install the necessary ship loading equipment and systems onto the RBT owned facility.  RBT will operate and maintain the new equipment installed and owned by Sirius.  The services are to be provided for a period of ten years from first shipment of POLY4, subject to customary extension and termination rights for YPL. 

The agreement is for up to ten million tonnes per annum of production from Sirius.  From the third year of production YPL will guarantee certain payments to RBT for a minimum volume of materials handling.  The minimum volumes for such are set in line with the Company's POLY4 sales expectations.   The rate payable to RBT for the materials handling services are based on flat rates (linked to inflation) with incentives for Sirius to utilise larger vessels.  The rates are in line with Sirius' existing operating cost expectations.

The arrangements with RBT provide flexibility for the Company through the utilisation of existing port infrastructure which leads to capital expenditure savings and reduces construction risk during the current construction programme.  Sirius has retained the right to develop its Bran Sands facility at a future date of its choosing, which it continues to plan to do in due course.  As the Company looks to expand beyond the initial production levels, the agreement with RBT provides the flexibility to continue to utilise RBT and to bring on-stream Bran Sands.  This provides Sirius with maximum shipping flexibility and opportunities for berth optimisation for the long-term.

Product Storage Facilities

Via YPPPL the Company has also secured a 30 year lease (with rights to renew) over 40 acres of land adjacent to the RBT port facilities and the Company's Bran Sands port site.  This land will be used to develop the Company's finished product storage facilities.  Locating the storage facilities adjacent to both port locations provides the Company with a more efficient loading circuit by substantially decreasing the distance from the warehouse (previously planning to be located at the materials handling facility at Wilton) to the ship loader.  The Company received planning permission from Redcar Cleveland Borough Council for locating the storage facilities on the RBT site on 30 April 2018. "

Cruising along ...

Oh, OK :-0

https://www.youtube.com/watch?v=lDK9QqIzhwk

Bah ...

'Capesize vessels'

Humbugs.   

Thats a $164mil dollar question...

 

Benefitz Betty's picture

SXX: Cutting Corners

Benefitz Betty's picture

SXX: China Provinces

20 July 2018  Sirius Minerals Plc

POLY4 Supply Agreements - China

*New long-term supply agreements signed each with two new Chinese customers, Eiliseng and YSA, for 1.2 Mtpa and 800,000 tpa respectively

* Pricing terms consistent with the Company's existing agreements

* Eiliseng taken up the rights to resell POLY4 in Yunnan and Sichuan and to service demand from Dian Huang

* Dian Huang and the Company have mutually agreed to terminate the existing agreement for supply of up to 1 Mtpa

* Company's aggregate peak contracted take-or-pay sales volume increased to 5.7 Mtpa

Sirius Minerals Plc ("Sirius" or the "Company") announces the signing of binding take-or-pay supply agreements ("the Agreements") to supply POLY4 to Guangzhou Eiliseng Biotech Co Ltd ("Eiliseng") and Yantai Service Agricultural Science and Technology Co Ltd ("YSA").

Sirius has entered into binding take-or-pay supply agreements with each of Eiliseng and YSA for the resale of POLY4 into certain southern and northern provinces of China.  Both agreements have 10-year terms which run from first production and pricing mechanisms linked to relevant product benchmarks that are consistent with the Company's existing portfolio of agreements.

In China, government enforced changes in agricultural practices and planned farm consolidation will support the drive to restore soil efficiencies through the adoption of more balanced and environmentally sustainable fertilization practices.  Sirius has conducted over 320 successful agronomy trials on 35 types of crop in 23 countries.  These trials have demonstrated the benefits of POLY4 as a multi-nutrient fertilizer with a low environmental impact that delivers greater nutrient uptake and can improve both yield and quality.

This announcement builds on the Company's strong position in Asia, having signed multiple deals across the region with distributors including leading agri-business Wilmar Group, one of the largest and most established fertilizer buyers and distributors in South East Asia.

Taking the minimum volumes under the new Chinese agreements into account, the Company's aggregate peak contracted take-or-pay sales volumes has increased from 4.7 Mtpa to 5.7 Mtpa.

Chris Fraser, Managing Director and CEO of Sirius, comments:

"China is a key market for POLY4 and we are very pleased to have signed agreements with new customers who both have established fertilizer distribution networks and expertise relevant to their respective regions.  We look forward to working with Eiliseng and YSA to establish POLY4 as a long term sustainable fertilizer for use in both of their important agricultural regions in China."

Southern China

Eiliseng is part of an established agricultural group operating with access to an extensive distribution network across key southern agricultural provinces in China.  Eiliseng is committed to moving towards organic and more sustainable fertilizers in line with policy in China.  The Eiliseng agreement provides for resale of POLY4 into provinces based across the south of China with potential sales volumes up to a maximum of 1.3 Mtpa by the seventh year and provides mechanics to ensure minimum volumes on a take-or-pay basis reaching 1.15 Mtpa in the peak year.

Due to its changing growth plans Yunnan Dian Huang Peony Industrial Group Co Ltd ("Dian Huang") and the Company have mutually agreed to terminate their existing agreement for supply of up to 1 Mtpa of POLY4 into Yunnan and Sichuan.  Eiliseng now has the rights to resell POLY4 in these provinces and to service demand from Dian Huang.

Mr Jing Hai Shan, General Manager of Eiliseng, comments:

"Eiliseng is committed to delivering quality solutions for best practice agriculture in southern China through our distribution network direct to farmers.  We are confident that with Chinese Government policy support and POLY4's unique multi nutrient characteristics that it will play an important role in meeting southern China's agricultural challenges and delivering best practice fertilization."

Northern China

YSA is an agricultural services business and strategic partner of Yantai Agricultural Means of Production Corporation ("Yantai AMP") responsible for product innovation and procurement in line with the Chinese Government's policies.  YSA distributes its products through the Yantai AMP network utilising their extensive agronomic and sales support network.  The YSA agreement provides for resale of POLY4 into certain provinces in the north of China.  The agreement provides for a minimum volume commitment on a take-or-pay basis of 800,000 tpa in its peak year with an accelerated ramp-up schedule which has it reaching 800,000 tpa in the sixth year.

Mr Zhang Ya Bin, General Manager of YSA, comments:

"YSA and Yantai AMP are delighted to have secured the distribution rights for POLY4 in northern provinces of China.  POLY4 is a unique fertilizer product that we believe will play a significant role in revolutionising farmer practices in the region and support the policy goals of China."

https://poly4.com/

Chaper 13 of the SRK report... P385/6/7 ... 467mt LOM(50) @<30%

=6.53...

Give or take a tunnel or two @ 474.

Squid.

Anyone got an Octopus?