Sirius Minerals upgrades York potash supply deal

19th Aug 2015 08:01

(ShareCast News) - Sirius Minerals has upgraded its take or pay supply agreement with an existing Fortune 500 US-based agri-business customer.The initial agreement for the supply of 500,000 tonnes per annum of polyhalite for a five-year period from the York Potash project was announced back in January of last year, with an option to be renewed for another five years.The revised agreement will see the base amount of polyhalite supplied tripled to 1.5m tonnes a year, while the initial contract term is extended to seven years, with possible extension options for two additional five-year periods.Sirius said the price will remain confidential but is still based on a formula linked to the market price of nutrients contained in polyhalite.Managing director and chief executive officer Chris Fraser said: "We are delighted with this further show of confidence from our North American partner and look forward to sharing successes together for decades to come."Like many in the industry, our customers understand the value of polyhalite, its multi-nutrient qualities and the fact it can help farmers get the same or better yields more economically."Shore Capital said the announcement was "very good news" and represents encouraging validation of the benefits and value of polyhalite that have been suggested by crop trials to date.John Meyer, a mining analyst at SP Angel Corporate Finance, said: "Sirius Minerals has put a lot of effort into crop trials for its polyhalite to demonstrate its effectiveness for customers. Today's announcement shows that this work is developing market support from customers and this should prove valuable in financing discussions."At 1100 BST, Sirius shares were up 3.6% at 17.35p.