Sirius shares climb after $250m deal plugs funding gap on Yorkshire mine project
Sirius Minerals has struck a $250m (£190m) deal to plug a funding gap after its Yorkshire mine project costs rose.
The company's shares tumbled more than 18 per cent earlier this month when the miner said it may need an extra $600m to construct its mine under the North York Moors.
It said the initial $3bn funding for its project to build the Woodsmith polyhalite mine would also take longer to arrive than previously expected – slipping to the start of 2019.
Read more: Sirius shares crash after rising Yorkshire mine costs
It has now agreed a $250m funding deal with Hancock British Holdings to plug the gap until funding for the second phase of the project is needed in the second quarter of next year.
Shares rose 2.6 per cent in early trading as the company said it had hit an “important milestone”.
Sirius has already secured distribution partners to take large volumes of the mineral.
The deal sees Hancock take a five per cent royalty on gross revenues from the project, if the money is provided by 19 September.
Sirius Minerals chief executive Chris Fraser said: “The drawdown of the Hancock royalty is another important milestone as we develop into a leading fertilizer business.”
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He added: “The long term nature of the royalty investment is well aligned to the underlying characteristics of this world-class, long-life asset.”
The firm said increased costs of digging a 37km tunnel to connect the mine to a processing plant nearby had led to overall cost of the project rising above $4bn.