Hancock tie-up brings Sirius closer to the fundraising target it needs to start mine construction © PA
The company seeking to build a $2.9bn fertiliser mine in Yorkshire has struck a financing deal with Australia’s richest woman.
Gina Rinehart’s Hancock Prospecting will invest $300m into the Sirius Minerals project, saying the UK venture has long-term prospects and could benefit Australian farmers.
The tie-up with Ms Rinehart — the heir to a fortune built on iron ore resources in Australia — brings Sirius closer to the fundraising target it needs to start construction of its polyhalite mine under the North Yorkshire moors.
Sirius has estimated the first phase of the project will cost $1.1bn.
The deal with Sirius would mean Hancock paying $250m for the rights to 5 per cent of the gross royalties on the first 13m tonnes of Sirius’s fertiliser sales every year, and 1 per cent above that level. Hancock would also put $50m of equity into the project.
Ms Rinehart is a well-known figure in Australia, where she has waged a battle with her children for control of her business empire.
Hancock Prospecting was started through royalty payments from iron ore mines that were discovered by her father, Lang Hancock. Last year Ms Rinehart realised an ambition to have her own iron ore mine, which started production after $11bn of investment.
The group has moved more into agriculture in recent years and is involved with a bid for Australia’s largest cattle farm, which has attracted controversy because of the involvement of a Chinese partner.
Chris Fraser, chief executive of Sirius, has strong links to the Australian mining sector. He was a resources banker in Australia and was involved in raising money for Fortescue Minerals, another entrepreneurial project that within a decade became the world’s fourth-largest iron ore miner by volume.
Mr Fraser said: “We are delighted to have signed this agreement with such an experienced party in the mining industry, as well as one that has very successful and strong leadership and a long term and growing agricultural interest.”
Analysts at Liberum said the deal was “a clear endorsement of the project from a major Australian mining and agricultural business, reduces the required Phase 1 financing to $800m and is significantly less dilutive than straight equity”.
Sirius said the deal with Hancock was similar in structure to arrangements with holders of mineral rights in Yorkshire, and would run for at least 70 years.
Sirius has previously said it hoped to start building its mine this year. It obtained planning permission last year after an inquiry into its plans for mining under the North Yorks Moors National Park.
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