Sirius Minerals announces updates to York Potash costs

11 September 2018

Great Britain – Sirius Minerals has signed a design and build contract with Strabag for the remaining mineral transport system (MTS) drives on the York Potash Project. Ground and risk assessments will see the cost increasing by USD 400-600M.

A spokesperson for the company said that since the definitive feasibility study estimates in 2016, the Company's understanding of the geotechnical characteristics of the strata within which the MTS will be excavated has increased, following further ground investigation and seismic work. This has led to a refinement of the parameters set out in the geotechnical baseline report upon which the tunnelling contract has been determined.

Three factors have led to this increase:

  • Optimisation of the tunnel design including an increase in the planned internal diameter of the tunnel from 4.3m to 4.9m and an increase in lining thickness from 250mm to 350mm;
  • A decrease in advance rates as compared from 25m per day to 17m per day; and
  • A commercial risk allocation which transfers construction and delivery risk to STRABAG.

The spokesperson added, “The MTS contract with Strabag is effectively a lump sum arrangement, with fixed rates for tunnelling advance.  The price is based on a defined and agreed geotechnical baseline report, with firm pricing for a range of expected support classes within the build.”

Chris Fraser, managing director and CEO of Sirius Minerals, said: "The signing of the contracts for the remaining tunnel drives and the materials handling facility at Wilton are significant steps forward for the business with almost all procurement now complete. The expected increased funding requirement coming from this process reflects an optimisation of the MTS tunnel design and a significantly improved risk allocation for Sirius to support the senior debt financing. The project's economics remain extremely compelling and we are confident they support the expected additional funding requirement."