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Sirius finalises procurement contract

Sirius Minerals (LSE:SXX) has awarded the final major procurement contract for its Woodsmith polyhalite project in Yorkshire, UK, and can now move to complete the second stage of the senior debt financing process.
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Sirius expects the Woodsmith polyhalite mine to start production in 2021

Staff reporter

The mineral transport system (MTS) fit-out scope contract was the only outstanding contract left to be awarded, with the company deciding to change the existing MTS tunnelling contract with STRABAG to include the engineering, procurement and construction (EPC) of the fit-out of the system.

It had previously named STRABAG as the preferred MTS contractor, chosen in September to design and build tunnel drives two and three of the MTS between the mine and Lockwood Beck.

The cost of varied MTS contracts will be in line with the previously announced capital re-estimate of US$1.6 billion, with more than half of the price on a fixed rate or lump sum basis and the rest based on estimated prices that Sirius plans to convert to fixed before it completes the stage two financing.

The company will now provide the varied MTS contract to stage two lenders to review and once that is done, the company and its lenders will assess the project's required capital contingency levels and decide on the overall capital funding requirement.

It said it expected the funding to be $3.4-3.6 billion and a $3 billion senior debt financing would be an appropriate level of debt.

The company expects to receive the final lender commitment letters in December and January, with the aim of closing the second stage financing during the March 2019 quarter.

STRABAG will be fitting out the MTS conveyor, the maintenance railway, electrical and communications infrastructure, and all other services in the tunnel essential to the operation of the MTS.

Sirius previously awarded the EPC contract for its port handling facility at Teesside to McLaughlin & Harvey.

The company expects the Woodsmith mine to start production in 2021.

Sirius shares were down 1.01% Monday to 23.64p (US30.38c).