THE board of Sirius Minerals is set to recommend a £386 million offer for the company which would leave many investors out of pocket.
The company, which is trying to build a fertiliser mine in North Yorkshire, said it is in late-stage talks with Anglo American over the 5.5p a share offer.
The bid has not yet been finalised but would be ahead of Sirius's closing share price at 4.1p on Tuesday. Shares shot up by 33 per cent to 5.4p on the news of the offer on Wednesday.
However it still marks a steep climb-down from a year ago, when the price per share for Sirius Minerals was 22p.
"Anglo American identified the project as being of potential interest some time ago, given the quality of the underlying asset in terms of scale, resource life, operating-cost profile and the nature and quality of its product," Anglo said.
It comes after a tough few months for the miner's investors. The business has attracted many retail shareholders, individuals who invest their own money. A £100 stake in Sirius in January was worth £18.60 at close on Tuesday.
Sirius was forced to go back to the drawing board in September when it failed to raise enough money to unlock the bank loans it needed to push ahead with its fertiliser project.
The business hoped that a bond sale would allow it to borrow up to 2.5 billion dollars (£1.9 billion) from banks.
It was forced to slow down work on the mine in North Yorkshire after the announcement, and later came back to the market with a slimmed-down plan for how to progress.
The mine would extract polyhalite, a mineral that can be used as fertiliser, which is buried around a mile underground in the North Yorkshire moors. Using a conveyor belt, the mineral would be transported through a 23-mile (37km) long tunnel to Teesside, from where it would be shipped to customers.
Ben Houchen, Tees Valley Mayor, said: “The news that Sirius is in advanced talks with Anglo American is a massive vote of confidence in this unique and amazing project.
“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.
“I have always said that the scheme will be delivered and that local people here in Teesside, as well as further afield in Yorkshire, would feel the huge benefits of this truly transformational project.
“We’re not out of the woods yet and there are more details to come, but I am monitoring developments closely and remain in regular contact with Sirius and look forward to more news in the coming weeks.”
Cllr Mary Lanigan, Leader of Redcar & Cleveland Borough Council, said: “The news about a takeover bid for Sirius Minerals demonstrates the huge potential of the Woodsmith Mine.
“The mine and the infrastructure to allow the product to be exported will bring well-paid and skilled jobs to Redcar and Cleveland which, in turn, will provide many families with a brighter and more prosperous future. Sirius Minerals has also invested heavily in community projects which further benefits the borough.
“The problems Sirius encountered in raising funds to complete the construction of the mine were a serious blow, but a new investment to allow it to go ahead would be a huge boost for the whole region.
“From the start, the Council has been committed to the project and has worked closely with Sirius Minerals throughout. We will continue to support the development wherever possible in the future.”
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