Sirius Minerals secures South American sales

Sirius Minerals has signed up another big customer for its polyhalite fertiliser. All it has to do now is get the stuff out of the ground. For that, it needs permitting and financing for its York potash project.

Assuming it gets the thumbs up from the North York Moors National Park Authority and Redcar and Cleveland Borough Council in the New Year, a seven-year take-or-pay deal will see Sirius supply a South American fertilizer distributor with 300,000 tonnes a year, with an option for an extra 150,000 tonnes. It has also secured additional sales commitments in the form of letters of for another 396,000 tonnes per annum in South East Asia, Africa and Europe.

"Hats off to them for securing commitments for its rather unconventional polyhalite product. Now 'just' needs the permitting and financing," writes Numis Securities on the day that finance boss Rachel Rhodes officially left Sirius after just two months crunching the numbers. Corporate development director Thomas Staley takes over.

Sirius now has six million tonnes of annual sales commitments in various forms. Take-or-pay agreements total 2.05 million tonnes, and these customers hold options for up to an additional 0.9 million tonnes.

"We maintain our Buy stance and 37p price target for Sirius today," says Paul Smith at WH Ireland. "The company has done a very comprehensive job in defining a market for polyhalite with its published agronomy programme. This shows the benefits of polyhalite as a fertiliser on its own and also as a blending material for balanced fertilizers against traditional potassium sources."

Sirius sent off revised planning applications for its York mine at the end of September, but warned earlier this month of a short delay in the process. The company is providing clarifications on some parts of its planning application, adding to its environmental statement and also making amendments to its transport assessment. This is, it said, unlikely to affect the outcome.

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