Sirius Minerals PLC (LON:SXX) got a much-needed US$250mln cash injection from Australia’s richest woman on Friday just days after it warned development costs had soared at its US$4.5bn potash mine near Whitby.
Costs at the FTSE 250 group’s Woodsmith mine have swollen recently after it realised a 37km tunnel which will take potash from the mine to a processing facility needed to be wider and thicker, adding up to another US$600mln to the cost of the project.
Through her Hancock Prospecting company, Australian mining magnate and billionaire Gina Rinehart agreed to release the money as part of a deal originally struck back in 2016.
In return, Hancock will receive a 5% cut from the first 13m tonnes of polyhalite, a form of potash which can be used as a fertiliser, shipped from the mine, and 1% thereafter.
The extra cash should tide Sirius over while it raises the best part of US$3bn in debt funding which it hopes to have secured by the second quarter of next year.
“The drawdown of the Hancock Royalty is another important milestone as we develop into a leading fertilizer business,” said Sirius managing director Chris Fraser.
“We are delighted to have an experienced partner in the mining industry aligned to Sirius and one that has a growing, long-term agricultural interest. The long-term nature of the royalty investment is well aligned to the underlying characteristics of this world-class, long-life asset.”
Sirius shares were 1.7% to 27.5p in late-afternoon trading on Friday.