Sirius may accelerate UK potash mine construction 29 Jun 2017

Peter Kenyon, TunnelTalk

Sirius Minerals, owner of the North Yorkshire-based Woodsmith polyhalite mine in the UK, is exploring options with its preferred tunnelling contractor to bring forward construction of the 37km-long mineral transportation tunnel that is integral to the project’s success.

In an update statement to investors this morning (29 June), the company said it “continues to evaluate opportunities to accelerate components of the shaft and transportation tunnel elements of the project to further derisk the implementation of the construction project and potentially create opportunities for shortening the development schedule.”

Outline of polyhalite mining project

The statement adds: “Some shaft design optimisations have now been incorporated into the development plan and options to bring tunnelling activities forward are in commercial discussion with the preferred tunnelling contractor.”

Discussions continue with the tunnelling and shaft contractor, Hochtief/Murphy JV, with regard to starting early works activities for the 37km x 4.3m i.d. TBM excavation of the project’s mineral transportation system (MTS). A programme of boreholes and seismic work is also underway to support the design work of the MTS aspect of the project with geotechnical drilling progressing to help inform shaft design of the intermediate TBM access shaft at Lockwood Beck.

At the same time, Sirius confirms that negotiations are nearing completion with AMC UK (the Thyssen/ Redpath JV) which, under a separate construction contract, is selected to sink the 1,500m deep mine production shaft and the 1,500m deep working shaft to the 70m thick polyhalite seam. This contract is expected to start later this year (2017), and the production shaft borehole is progressing with coring and testing complete to the 840m level. The near-surface geotechnical programme is now complete and the results are being analysed and incorporated into the mine development design. AMC is also continuing with detailed design of the shafts, with a focus on completing the foreshaft components. Diaphragm walling rigs are due to be mobilised to site in the third quarter of 2017 to commence work. Planning for securing the winding equipment required for main shaft-sinking activities has been completed and delivery of the equipment is on schedule.

Project construction schedule may be accelerated
Project construction schedule may be accelerated

On the financial side, Sirius Minerals has now completed its move out of the speculative AIM index of the UK Stock Exchange, and is now midway in the FTSE250 list in terms of its £1.4 billion market capitalisation. Shares in the company have risen from their recent low of 17p in December 2016, following the successful US$1.2 billion fundraising to finance Phase I construction, to 32p today (29 June 2017). The company is now progressing work on its Phase II fundraising plan, which is expected to come in the form of debt rather than issue of new equity.

Once operational, the Woodsmith Mine will have the capacity, and is permitted, to deliver 13 million tonne per annum (mtpa) of its natural high-grade potash fertiliser polyhalite. A continuous conveyor housed inside the 37km x 4.3m i.d TBM-driven MTS tunnel is designed to haul a 20mtpa capacity of the product to processing and shipping facilities at Redcar on the northeast coast of the England, subject to additional permitting.


UK potash project moves to construction 02 Mar 2017

Peter Kenyon, TunnelTalk

With US$1.15 billion Phase I funding in place, and an official Woodsmith Mine naming ceremony taking place earlier this week (24 February), construction work begins on development of the multi-billion York Potash mining project in the north of England.

Work begins on the new Woodsmith Mine
Work begins on the new Woodsmith Mine

Project owner Sirius Minerals, which will excavate a 37km long tunnel to transport the high-grade potash (polyhalite) from a new mine head at Dove’s Nest near Whitby in Yorkshire onwards to the coast at Redcar as an essential part of the mine development (Fig 1), now has in place all the necessary finance and permissions to:

  • sink and line a 1,594m x 6.75m i.d. production shaft with a hoisting capacity of 13.4 million tonne/year,
  • sink and line a 1,565m x 6.75m i.d. service shaft,
  • excavate by drill+blast a 360m-deep TBM access shaft and associated launch cavern at the mine head, and
  • construct the portal structure at the opposite end of the transport tunnel alignment.

TBM assembly and excavation of the 37km x 4.3m i.d. transport tunnel will commence in early 2019 as part of Phase II of the construction programme, which includes:

  • construction of the port facility and processing plant in Redcar;
  • tunnel fitout, ventilation and conveyor system installation;
  • construction of the raised conveyor infrastructure between the end of the tunnel and the processing plant.
Fig 1. Design of the new mine development project
Fig 1. Design of the new mine development project

Final tunnel design by Arup calls for the use of three TBMs, rather than the original five, and excavation of a single intermediate shaft rather than the three originally envisaged. Permissions are in place however, for the excavation of two extra ventilation shafts should they be needed if polyhalite production volumes are increased in the future.

A segmental lining installed behind the TBMs as they progress through competent Redcar Mudstone will extend the design life of the mineral transportation system (MTS) to match the 100 years or more of the expected polyhalite deposit extraction.

Site preparations and a program of mandated road improvements associated with the project are already under way and a drill rig has been mobilised to site to assist with final geotechnical surveys prior to shaft sinking. According to the company’s latest construction schedule, tunnelling contractor Hochtief/Murphy will begin excavation of the 360m deep TBM launch shaft and cavern in summer this year (2017), with the work scheduled for completion by the beginning of 2019.

Construction schedule for the new mine project
Construction schedule for the new mine project
Plan of attack for three TBMs
Plan of attack for three TBMs

Milestone funding for Phase I of the project, which was critical to moving into the construction phase, was finalised late last year (2016), and took three forms:

Finalisation of the equity-based funding deal, and the subsequent heavy dilution of the share capital, saw the Sirius Minerals share price stumble from a speculative peak of 51p in the Summer of 2016 to 16p in December. It has since recovered to 18p and has remained in a tight trading range of 17.75p to 19p.

Funding for Phase II construction of the project is yet to be finalised, with Sirius announcing to investors that it does not expect to issue further equity to raise the US$2.6 billion needed to complete the balance of works and move to production. A group of six banks and financial institutions have signed up as mandated lead arrangers of the senior debt that will be used to finance Phase II construction, but the details and terms will not be known until the middle of 2018, ahead of the money being drawn down from mid-2019. The six institutions have indicated they will fund up to US$700 million themselves, leaving a final US$1.9 billion yet to be sourced.

In a bid to stabilise the share price ahead of a planned move later this year (2017) out of the largely unregulated AIM market of the London Stock Exchange and into the FTSE 250, Sirius Minerals has committed to providing comprehensive progress updates each quarter, in addition to major updates as they occur. The first of these will be issued at the end of this month on 27 March 2017.

Official guest at the naming ceremony of the new mine as the Woodsmith Mine last Friday (24 February) was Andrew Percy MP, UK Minister for the Northern Powerhouse, an initiative intended to improve employment and infrastructure opportunities in the north of England.

“Today marks an important step for the Sirius Minerals North Yorkshire mining project, which is a real vote of confidence in the economic potential of the Northern Powerhouse,” said Percy. “The Woodsmith Mine has the potential to create more than 1,000 jobs and generate billions in exports for the region, so I am excited to see it progress.”


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