EXPLORATION & DEVELOPMENT

Sirius signs new EPC contract

Sirius Minerals (LSE:SXX) has signed an engineering, procurement and construction contract for its port handling facility at Teesside in the UK.

Staff reporter
Polyhalite fertiliser from Sirius' Woodsmith will travel underground to the Wilton materials handling facility

Polyhalite fertiliser from Sirius' Woodsmith will travel underground to the Wilton materials handling facility

It signed the contract with McLaughlin & Harvey to build the facility, which will include about 250,000 tonnes of polyhalite fertiliser product storage, ship loading equipment, ship outload infrastructure and the final product screening facility. 

The company said the proposed schedule for the works fit into the overall project schedule, with the Woodsmith mine in Yorkshire on track for 2021 production.

Polyhalite fertiliser from the Woodsmith mine site will travel to the port via a 37km underground mineral transport system and will be processed into the finished product, POLY4, at the Wilton materials handling facility. 

Sirius did not give the final contract price, but said it was in line with the company's previously announced capital re-estimate and would be incurred in British pounds and euros on a lump sum basis.

In September, Sirius said it expected finalising procurement and the associated risk allocations expected to result in stage two funding requirement to increase by US$400-600 million.

However, it reduced the estimate of the material handling facility and port costs to $538 million, down from the previous estimate of $641 million, as it deferred the overland conveyor until 2025. It said it would fund the facility and port from operating cash flow.

Sirius is was nearing the end of its second stage financing-related procurement programme, with only the mineral transport system (MTS) fit-out scope contracts still to be awarded.

It has named STRABAG as the preferred MTS contractor for the final contract and final negotiations for the scope of work are ongoing.  

The company previously increased the cost estimate for the MTS from $858 million to $1.46 billion, reflecting fixed rates and risk transfer to the tunnelling contractor.

Sirius' shares were up 2.52% Monday to 24.38p (US31.75c).

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