Sirius Minerals Plc (LON:SXX) today announced that it has varied its existing mineral transport system tunnelling contract with STRABAG AG to include the engineering, procurement and construction of the fit-out of the Company’s MTS.
The MTS fit-out scope includes the fit-out of; the MTS conveyor, the maintenance railway, electrical and communications infrastructure, and all other services in the tunnel essential to the operation of the MTS.
The price of the MTS fit-out, which will be incurred in GBP, is in line with the Company’s capital re-estimate announced on 6 September 2018. More than 50 per cent of the MTS fit-out price is on a fixed rates or lump sum basis. The remainder of the MTS fit-out price is based upon estimated prices that will be converted into fixed prices prior to completion of stage 2 financing. The proposed schedule for the MTS fit-out is in line with the Company’s overall Project schedule.
The Company has now completed its procurement for the major construction packages related to the stage 2 senior debt financing process, which represents a significant milestone for the Project.
Chris Fraser, Managing Director and CEO of Sirius, comments:
“Procurement of the mineral transport system fit-out marks the completion of our major construction procurement programme to support our stage 2 senior debt financing process and is a significant milestone for the Company. Our efforts are now focussed on the successful execution of our financing plan to fully finance the construction of our world-class, long-life polyhalite project.”
Stage 2 financing
The varied MTS contract, which is the final procurement contract for our stage 2 senior debt financing process, will now be provided to the stage 2 lenders for review by the lenders’ independent technical consultant. Following completion of the procurement contract review, the Company and its lenders will assess the required capital contingency levels for the Project and will determine the overall capital funding requirement of the Project. As previously announced, the Company expects the capital funding requirement of the Project to be US$3.4bn – US$3.6bn (previously US$3bn). The Company believes that a US$3bn senior debt financing is the appropriate level of debt and will not seek to increase this amount.
Given the timing of completion of the final procurement contracts, final lender commitment letters are expected to be received in December 2018 and January 2019. As previously announced, the Company is targeting financial close of stage 2 financing in Q1 2019.
Mineral transport system
The MTS will carry the Company’s mined polyhalite from 360 meters underground at the Woodsmith mine site to the materials handling facility at Wilton, Teesside, on a 37km underground conveyor system. The tunnel will be constructed by three tunnel boring machines. The conveyor system in the MTS will be designed to handle 20 Mtpa of throughput. The tunnel will also contain maintenance rail and services, including a 66kV power feeder from Wilton International industrial complex.