The deal with one of Asia's largest Agribusiness and is a big step towards the Group reaching Stage 2 financing.
Companies: Sirius Minerals
Sirius Minerals (LON: SXX) has signed a seven-year deal with Wilmar International to supply 750,000 tonnes per annum of polyhalite from its Woodsmith mine in North Yorkshire.
Wilmar International is a Singapore-based company and is one of Asia's largest Agribusinesses. It is also the second largest company listed on Singapore's stock exchange.
Polyhalite mined from Sirius' Woodsmith site is in demand for its use in fertilizers due to its high nutrient, low chloride content.
The initial seven-year deal has the potential to be extended a further three years, with Wilmar also having the option to increase the minimum volumes of supply up to 1m tonnes per annum.
Commenting on Wilmar's scope, Sirius MD and CEO Chris Fraser said:
"Wilmar is a partner with the capacity to reach a diverse customer base through well established, trusted relationships. South East Asia is a fast-growing market which provides Sirius with an attractive opportunity to further diversify and grow our current portfolio of customers."
Corporate broker Liberum reiterated its Buy stance on the stock in its note today, giving a useful insight into the Group:
"The agreement takes Sirius binding offtake agreements up to 4.35mt and is a significant step towards achieving its target of 6-7mt of agreements, needed to deliver Stage 2 financing. Having South East Asia's largest agribusiness group make a major investment in POLY4 (c.$110m per annum) is another incremental endorsement for the product which has now gained acceptance from major consumers and/or distributors in North America, China and South East Asia."
SXX shares jumped slightly on Thursday morning with the announcement, up 2% to 27p.
The Group's share price has fluctuated greatly over the past five years, reaching a high of 43p in August 2016. Investors are clearly confident in Sirius' prospects at Woodsmith, with the Group's Market Cap currently over £1.1bn. SXX is also well funded for the future with a cash balance of over £490m.
