Anglo American is mulling over a bid for Sirius Minerals, confirming it is “in advanced discussions” with the British polyphalite miner.
Sirius Minerals has been struggling to build a potash mine below a national park in North Yorkshire, England.
The company has failed to raise the required fund to get the Woodsmith mine project started, despite the backing of several investors including Australian mining prodigy Gina Rinehart.
Anglo American stated it identified the Woodsmith project as a potential interest “some time ago,” regarding it to be a quality asset in terms of scale, resource life, product quality and operating costs.
The company is now considering to make an offer at a value of 5.5 pence ($0.10) per Sirius share in cash, valuing Sirius’ entire issued share capital at approximately £386 million.
“The project has the potential to fit well with Anglo American’s established strategy of focussing on world-class assets,” the company stated in an media statement.
“Anglo American believes the possible offer could provide certainty to Sirius’ shareholders, whilst Anglo American brings the financial, technical and marketing resources and capabilities to progress the project over time.”
The Woodsmith mine, which would be the United Kingdom’s first deep mine in 40 years, hosts the world’s largest and highest grade known deposit of polyhalite.
It is a unique multi-nutrient fertiliser containing potassium, sulphur, magnesium and calcium.
Sirius makes its fertiliser product POLY4 with this product as it can improve yields for a range of crops.
The Woodsmith project involves the construction of a mine to extract polyhalite and a tunnel system to transport it to the material handlings facility and Teesside harbour.
Should Anglo American proceed to make an offer, any development work on the Woodsmith project within the first two years of the deal must be in line with Sirius’ existing development plan.
Anglo American is required to announce a firm intention whether it is making an offer by February 5 London time.