Sirius Minerals agrees to Anglo American takeover bid

The Woodsmith Mine. Image: Sirius Minerals.

Anglo American has reached an agreement with Sirius Minerals to acquire the embattled British potash company.

The acquisition values Sirius’ share capital at £409 million ($773 million), which entitles Sirius shareholders to receive 5.50 pence in cash for each Sirius share.

Despite backing from numerous investors including Gina Rinehart, Sirius has been unsuccessful in its attempt to raise funds to complete its main project, the Woodsmith potash mine in North Yorkshire, England.

Sirius chairman Russell Scrimshaw said while the board’s decision to recommend the offer might shock shareholders, the company faces going into liquidation if the offer doesn’t go ahead, resulting in shareholders losing their entire investment.

“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,” Scrimshaw said.

“We regret that we are not able to deliver on our long-term goal of Sirius being able to deliver the project into production, although we assure stakeholders that the team has worked tirelessly and diligently over the last nine years to try and achieve that.

“Following the strategic review process, it is clear that Anglo American’s offer is the only feasible option.”

Anglo American saw the Woodsmith project as being of potential some time ago, identifying it as “world-class”.

Anglo American chief executive Mark Cutifani said the company’s offer will bring the Woodsmith mine development closer to reality, while providing Sirius shareholders, employees and stakeholders with greater certainty.

“We intend to bring Anglo American’s financial, technical and product marketing resources and capabilities to the development of the project, unlocking a significant and sustained associated employment and economic stimulus for the local area,” Cutifani said.

“Our development of the project in years ahead reinforces the quality of our portfolio and our long-term growth profile, further enhancing our ability to deliver leading returns on a sustainable basis, enduring value for all stakeholders.”

Construction has been underway at the Woodsmith site for the past two years. Sirius has indicated the site is the world’s largest known high-grade polyhalite deposit, with a reserve of 290 million tonnes at a grade of 88.8 per cent.

The deal will be put to Sirius shareholders at the court meeting and must be passed with a vote representing at least 75 per cent of shareholders.

The acquisition is expected to become effective by March.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.