Offtake agreement

Released : 08/06/2016 07:00

RNS Number : 4867A
Sirius Minerals Plc
08 June 2016
 

 

 

8 June 2016

 

Sirius Minerals Plc

Offtake agreement

 

Sirius Minerals Plc (AIM: SXX, OTCQX: SRUXY) ("Sirius" or the "Company") announces that it has entered into a new take-or-pay agreement (the "New Agreement") with Yunnan Dian Huang Peony Industrial Group Co., Ltd ("Dian Huang"). 

The New Agreement replaces the offtake contract announced on 27 June 2013 with Yunnan TCT Yong-Zhe Company Limited ("TCT") (the "TCT Agreement"), which TCT and Sirius have mutually agreed to cancel.  The TCT Agreement was for a period of three years with a seven year extension option.  The New Agreement is for a period ten years from first production, ramping up to one million tonnes per annum over the first six years of the contract. 

TCT has facilitated the Dian Huang agreement as a replacement and upgrading of the contract to supply Yunnan.  The Agreement with Dian Huang strengthens the Company's supply position in Yunnan by supplying a customer closer to the end user and also by removing the conditions that were included in the original TCT Agreement.  Dian Huang is a national peony seed oil production enterprise in China with strong government support and backing. 

As with all of the Company's offtake contracts the price to be paid under the New Agreement will remain confidential.  It is, however, based on a formula linked to the market price of nutrients contained in POLY4, which is consistent with the Company's other offtake agreements.  The TCT Agreement in Yunnan had a fixed price for three years followed by a renegotiated price for the remaining seven years.  The ten year pricing mechanism in the New Agreement gives greater confidence to both parties moving forward.  Previous guidance provided on the expected pricing range to be achieved at first production remains the same.

Chris Fraser, Managing Director and CEO of Sirius, commented:

"There is great potential for our multi-nutrient product in both Yunnan and China so firming up this supply arrangement is another positive step for us, especially at such a competitive time for the fertilizer industry.

"We look forward to working with Dian Huang for many years to come and our POLY4 product playing a significant role in more effective, efficient and environmentally sustainable agriculture in the region."

For further information, please contact:

Sirius Minerals Plc

Investor Relations

 

Email: ir@siriusminerals.com

 

Tel: +44 845 524 0247

Joint Brokers

Liberum Capital Limited (NOMAD)

 

Neil Elliot, Clayton Bush, Jill Li

 

Tel: +44 20 3100 2222

J.P. Morgan Cazenove

Ben Davies, Jamie Riddell

Tel: +44 20 7742 4000

WH Ireland

Adrian Hadden

Tel: +44 20 7220 1666

Media Enquiries

Tavistock

Jos Simson, Mike Bartlett,

Emily Fenton

Tel: +44 20 7920 3150

 

About Sirius Minerals Plc

Sirius Minerals is the fertilizer development company focused on the development of its North Yorkshire polyhalite project, the United Kingdom.  It has the world's largest and highest grade deposit of polyhalite, a multi-nutrient form of potash containing potassium, sulphur, magnesium and calcium.  Incorporated in 2003, Sirius Minerals' shares are traded on the London Stock Exchange's AIM market.  Its shares are also traded in the United States on the OTCQX through a sponsored ADR facility.  Further information on the Company can be found at: www.siriusminerals.com.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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