Directors at Sirius Minerals have backed a £405m takeover deal with the potential to save a mining project which promises to be the 海角视频’s largest in decades.
Anglo American has tabled the multimillion-pound offer for Sirius Minerals and said it will step in to save a mining project which he could provide 4,000 jobs.
The decision, which has been on the table since it was first floated by the firms two weeks ago, could safeguard the thousands of jobs – but it is likely to wipe out most of the cash that up to 85,000 small retail investors sunk into the project.
Anglo American, a FTSE 100 firm which is based in South Africa, is the world’s largest producer of platinum and is believed to have been eyeing up the Sirius Minerals project for some time.
Anglo has bid 5.5p per share in Sirius, making the shares worth a fraction of the 22.38p they were worth a year ago. They hit a high of around 45p in August 2016.
The deal is still subject to approval of shareholders, who have been urged to accept the offer.
“We are sensitive to the fact that the price is lower than what some people, or many people, may have invested in the project,” Mark Cutifani, the chief executive of Anglo American, said .
Sirius has previously said the project could provide 4,000 jobs to the local community and it would be one of the biggest private investments in the North of England for years.
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Mr Cutifani said that Anglo has “no plans to make significant changes” to the jobs figures, but will look at opportunities to improve the project. But, he stressed, “this process is about preserving and creating jobs, not cutting them.”
Sirius was cast into turmoil last year as it failed to reach a fundraising target which would have unlocked a 2.5 billion dollar (£1.9 billion) bank loan to fund the project.
It forced the miner to go back to the drawing board and try to find a new way of paying for its project.
In the meantime it scaled back the development.
“Four months ago, following the setbacks in the bond market, we took the difficult decision to slow the pace of development of our project and initiate a strategic review to reassess how best to unlock the long-term value for our shareholders, the community, the 海角视频, and our customers all around the world,” Sirius chairman Russell Scrimshaw said.
The company searched for a partner who would provide cash in return for a minority stake, Mr Scrimshaw said, but in the end the full acquisition by Anglo was the only “viable proposal”.
“We acknowledge that to many shareholders our decision as a board to recommend this offer will have come as a shock. Your board deeply regrets that we could not deliver the complete stage two financing in 2019 despite a very broad and thorough process,” he added.
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The project plans to extract polyhalite from a mile below the North York Moors to use as fertiliser.
It would transport the material on a 17mph underground conveyor belt to Teesside, 23 miles away, where it would be shipped to customers worldwide.
The key seven top executives, including Sirius chief executive Chris Fraser, have committed to staying with the project for at least 12 months, Mr Cutifani said.
Ben Houchen, Tees Valley Mayor, said the announcement was a massive vote of confidence in the project.
He said: “Anglo American are one of the biggest mining companies in the world and their involvement is a sign they have huge confidence in the quality of the product and will be a big boost for what is a world-class project.”
Northern Powerhouse Partnership director Henri Murison added: “This offer from Anglo American which the Board of Sirius Minerals is recommending to its shareholders is welcome news for the area and will hopefully bring some certainty to the 1,200 staff working on the project across its sites including Wood Smith Mine near Whitby and in Scarborough.
“The Sirius Minerals project gives these communities – and particularly their young people – real opportunities they would otherwise have to leave the area to secure with the prospect of a further 2,500 high-skilled jobs being generated once the mine is up and running.
“Sirius has already invested over £1 billion in the project and become a crucial and very visible part of the northern economy – it will deliver substantial economic benefits to whole of the 海角视频, including notably to the balance of payments, and if the government is genuinely serious about levelling up and narrowing the north-south divide, it will need to back privately led infrastructure projects like this in the future.
“On this occasion, many investors who will not get back what they put in can rightly be disappointed that when all that was sought was Treasury guarantees, no direct government investment, that these were not in the end forthcoming.”