Based in North Yorkshire, within the United Kingdom, The York Potash Project is Sirius Minerals' flagship development asset. The project targets the production of polyhalite, a multi-nutrient mineral containing four of the six macro-nutrients required for plant growth (potassium, sulphur, magnesium and calcium). The initial development for the Project will target multiple routes to market including production of large-scale granulated polyhalite as a direct application fertilizer and as a main source of potassium for the production of nitrogen, phosphorus and potassium fertilizers (NPK). The project will have significant expansion capacity beyond initial development with options to produce Sulphate of Potash (SOP) from the polyhalite ore at a later stage. In addition to polyhalite, York Potash has vast quantities of Sylvite, a source of Muriate of Potash (MOP). The immediate focus for the Project is on the development of the polyhalite resource.
The York Potash Project asset is the largest and highest grade polyhalite resource in the world, laying the foundation for Sirius to become a leading global large scale potash and multi-nutrient producer.
- Polyhalite product "POLY4" characterisation tests
- Additional sales commitments for 1mtpa polyhalite
- York Potash land acquisition
- Maiden Ore Reserve
- York Potash approvals update
- Additional Polyhalite Sales Commitments
- General update
- Approvals update and additional sales commitments
- York Potash Project approval decision deferral
- Major Polyhalite Offtake Contract
- Crop study update
- Initial UK and European Sales Agreements
York Potash Project Study
In December 2012, Sirius announced the completion of two studies:
1) The Project Study and
2) The NPK Concept Study
The Project Study has delivered a lower estimated capital expenditure to first production, faster construction time and lower risk. The Project Study was completed to a level of accuracy of +/- 25%.
The key findings from the Project Study for the initial development were:
- Estimated capital cost to first production of US$1.7 billion1
- 3 year construction period
- First production targeted to commence in Q1 of year 4
- Simplified processing to produce 5 million tonnes per annum (“mtpa”) of granulated polyhalite for the initial development phase
- Positive free cash flow in year 5
- Production ramp up to 5mtpa by year 6
- Estimated Teesside FOB operating cost of US$37/tonne1 of polyhalite
- Initial development (5mtpa of polyhalite) after-tax net present value of US$2.9 billion1, increasing to US$5.9 billion on first production1
1Figures exclude contingency.
An additional recommendation from the Project Study and subsequent engineering work was that the most appropriate implementation method for the Project is a more conventional combination of Engineering Procurement Construction Management ("EPCM") and Engineering Procurement Construction ("EPC") contracting strategies. The EPCM/EPC implementation approach adds value to the York Potash Project by matching the contracting implementation methodology to the project design. The EPCM and EPC contractors will help ensure the Project is completed as efficiently and as cost effectively as possible.
The NPK Concept Study confirmed the viability of producing 5mtpa of NPK fertilizer at Teesside using polyhalite as the main source of potassium (“K”). This demonstrates that Sirius could produce large scale NPK fertilizer with the added nutrients of sulphur, magnesium and calcium to deliver the benefits of potassium at a lower production cost and energy requirement compared to that of traditional SOP or MOP based NPK’s. The NPK plant was designed as an addition to the granulated polyhalite processing plant with 1mtpa modules allowing for flexible expansion up to 5mtpa of NPK. The NPK Concept Study order of magnitude cost estimates were prepared to a level of accuracy of +/- 50% and established:
- NPK products with varying polyhalite content up to 70% can be produced using dry granulation;
- Estimated capital cost for initial 2mtpa NPK capacity at Teesside of US$318m1,2 with trucking of raw materials to the plant;
- Total estimated capital cost for 5mtpa NPK capacity at Teesside of US$736m1,2 (inclusive of the costs of the initial 2mtpa capacity described above) including the cost of switching to shipping of raw materials to the plant;
- Estimated Teesside FOB operating costs, excluding raw materials, of US$61/tonne2 reducing by US$23/tonne2 post expansion beyond 2mtpa due to import of raw materials via ship to Teesside; and
- NPK expansion could deliver incremental annual EBITDA in the range of US$374 - $617m from approximately 2.5mtpa of polyhalite
Work has commenced on the Definitive Feasibility Study (“DFS”) and the Company is targeting completion of that study for both granulated polyhalite and NPK by the end of 2014 to a level of accuracy of +/-15%. The team will also focus on a number of engineering optimisations and opportunities to reduce financing requirements as part of the DFS. Expansion capacity and options such as processing to create Sulphate of Potash (“SOP”) to be considered once the project is cashflow positive.
1Excludes any land or acquisition costs.
2Figures exclude contingency.
JORC Compliant Reserve and Resource Statements
York Potash Project has a JORC compliant Mineral Resource Estimate of 2.66 billion tonnes of 85.7% Polyhalite within an area representing 7% of the York Potash Area of Interest.
In September 2013, the Company announced a maiden Ore Reserve for the York Potash Project comprising a Probable Ore Reserve of 250 million tonnes of polyhalite with a mean grade of 87.8% polyhalite. This has been derived from, and is a sub set of, the Indicated Mineral Resource reported for the Project on 7 May 2013 of 820 million tonnes at an average grade of 87.3%. The Indicated Resource, which is the thickest and highest grade polyhalite Reserve in the world, is derived from just 1% of the Project Area of Interest.
The JORC compliant Inferred Mineral Resource Estimate was prepared by independent consultants SRK Consulting (UK) Ltd.
Reserve Statement September 2013
Mean Thickness (m)
Mean Polyhalite Grade (%)
Polyhalite Content (Mt)
Resource Statement May 2013
Mean Thickness (m)
Mean Polyhalite Grade (%)
Polyhalite Content (Mt)
Sirius is targeting completion of a DFS for both granulated polyhalite and NPK by the end of 2014. The DFS will be prepared to a level of accuracy of +/-15% and include consideration of a number of optimisation opportunities including:
- Mine development – Results from the shaft pilot hole geotechnical work will enable shaft design parameters, sinking methodology and lining to be finalised.
- Mine planning – Complete work to refine mine start-up and ramp-up strategies once geological results are known from SM11 with a view to maximising grade of extracted ore in early years of operation.
- Equipment leasing – Discussions with equipment providers to structure financing options for key construction and operational equipment
- Infrastructure outsourcing – Preliminary discussions are underway to consider outsourcing initial infrastructure including power, port facilities and the pipeline.
- Storage optimisation – Current estimates for Initial Development of polyhalite and NPK Concept Study on NPK include US$365 million for product storage facilities, opportunity exists to potentially optimise and better stage operational requirements
The proposed mine is at the centre of high quality concentration of the polyhalite ore deposit as defined by our drilling program, with all infrastructure designed to have minimal environmental impact. In addition, the site has existing main road access for construction and operations. The Company submitted the mine planning application in January 2013. On 18 July 2013 the Company requested a deferral to the determination of its mine application by the NYMNPA following the publication of a number of reports by the Authority's consultants. Refer below for an update on the planning process.
The mine access and related surface infrastructure will be located approximately four kilometres south from the outskirts of Whitby on the B1416. The site currently comprises a farm and commercial forestry block, and already benefits from extensive woodland screening and access to the main A171 road.
Sirius is undertaking a design that offers a low visual impact, reduces time to production and is also cost effective.
- Twin vertical shafts to a depth of around 1,500 metres below surface
- Hoisting system below surface to reduce surface impact
- Initial hoisting capacity of 12mtpa of ore
The UK has an extensive history of buried pipelines due to being an environmentally and economically viable alternative to other transport systems.
The projects pipeline will consist of:
- Buried pipelines carrying the polyhalite ore as suspended particles in water
- Approximately 44.5km’s to Teesside - the preferred processing and port site
- Capacity for up to 15mtpa of polyhalite
This solution will give the project very low operating cost whilst minimising any environmental impact once installed.
The vast majority of the processing of the polyhalite will occur at the port at Teesside. When the ore arrives it will be dewatered, dried and then granulated either by addition of a binder or by compaction. Working with GBM, laboratory test work has been conducted to confirm each process step and measure key parameters.
Following processing, the granulated polyhalite will be transferred by conveyor to a covered portside storage facility. Port infrastructure will include a ship loader and jetty capable of handling bulk carrier vessels.
Additional information for the mine application will be submitted for determination by the NYMNPA in July 2014 once further work has been carried out to enable a full cumulative assessment of the mine with the other areas of the Project. The submission of applications for the remaining three project areas to the appropriate authorities will follow shortly thereafter. The revised approach better reflects the wishes of a number of the decision making authorities and key statutory consultees.
The Company has placed an indicative schedule of submissions on the 'key planning documents' page of its Project website (www.yorkpotash.co.uk). Over the coming months it will engage in a series of meetings and discussions with the NYMNPA and other key statutory stakeholders and decision making bodies, as is a normal part of the planning process. It intends to publish some related documents on its website, such as monthly progress reports and meeting minutes to ensure transparency.
The York Potash Project will set a new benchmark for delivering sustainable economic development in a sensitive environment.
LOCALLY IT WILL:
- Provide a major stimulus for the North Yorkshire economy - creating jobs, improving skills and contributing to people's prosperity for generations to come
- Support community projects with millions of pounds paid into a community fund over 50 years through the York Potash Foundation
NATIONALLY IT WILL:
- Deliver a significant amount of capital investment into the UK as well as boosting the national economy through export of a vital commodity
- Help to re-install the UK at the forefront of the advanced global mining industry
- Safeguard UK-sourced supplies of high-value fertilizer products that are essential for the future efficiency of UK farming and food security
INTERNATIONALLY IT WILL:
- Provide a solution to the challenge of global food security by becoming the world's most significant large scale supplier of multi-nutrient fertilizers
The Company acquired the entire share capital of York Potash Ltd in January 2011.
For more information, please visit the York Potash website.