Anglo American (AAL) wants Sirius Minerals’ (SXX) beleaguered Woodsmith fertiliser project in Yorkshire, offering shareholders a lifeline after the financing crisis it suffered last year.
The major miner has put forward a proposed 5.5p-a-share cash offer for the company, which is a premium to the current trading price but well down on its valuation just six months ago. Sirius said it would back a formal offer if it also came in at 5.5p.
The fertiliser developer ran into financing trouble in August 2019 when it could not find buyers for a $500m (£380m) bond issue that would have unlocked a $2.5bn (£1.9bn) loan to keep construction going at Woodsmith, and its share price plunged from over 15p in mid-2018 to under 3p in November. Sirius has been sinking one major shaft and is in the early stages of the 37km tunnel that would take the polyhalite output to Teesside.
Anglo said the offer had come because it was attracted to the “quality of the underlying asset in terms of scale, resource life, operating cost profile and the nature and quality of its product”. The mine would produce polyhalite, a fertiliser only produced in small quantities currently.
Anglo has until 5 February to lodge a formal offer.
The miner’s chief executive, Mark Cutifani, had previously said his last big project in charge would be the Quellaveco copper mine in Peru, which will be finished in 2022. In its statement about the possible offer, Anglo outlined the challenges ahead if it did not step in. “The project requires a significant amount of further financing to develop and commission the operation that has proven challenging for Sirius to procure on an economic basis,” Anglo said. “Anglo American... has the resources and capabilities to help build on the achievements of the Sirius team.”
The news pushed Sirius’s share price up a third to 5.45p, almost to the offer price.
