WATCH: Anglo in bid to acquire UK-based Sirius
Anglo said that the transaction was in line with the strategy of focusing on world-class assets and provided certainty for Sirius stakeholders.
Sirius has struggled to deliver its potash project in North Yorkshire after it had failed to get government funding.
Chief executive Mark Cutifani said the group would use its financial muscle towards the development of the project.
“Our development of the project in the years ahead reinforces the quality of our portfolio and our long-term growth profile.
“It will further enhance our ability to deliver leading returns on a sustainable basis and enduring value for all stakeholders,” Cutifani said.
Sirius has described the project as the world’s largest known high-grade polyhalite deposit with a resource of 2.69 billion tons.
In September, Sirius decided to slow the pace of the project’s development after the UK government reportedly turned down a request for a $1bn bond.
It also embarked on a strategic review to explore alternative sources of funding for the project.
Sirius chairperson Russell Scrimshaw said despite an extensive global search for a strategic investor, the company had to date not received a firm proposal for a partial project stake.
Scrimshaw said Anglo American’s offer was the only feasible option for the project.
“The only viable proposal was received from Anglo American in early January, who was only interested in pursuing a 100percent control transaction.
“We acknowledge that to many shareholders our decision as a board to recommend this offer will have come as a shock.
“The board deeply regrets that we could not deliver the complete stage two financing in 2019 despite a very broad and thorough process,” Scrimshaw said, adding that following the review process it was clear that no such options would be available and that in that context Anglo American’s offer was the only feasible option.
Scrimshaw also apologised to the market, saying that the group recognised that the returns that this offer would represent were not what either shareholder and the board had previously hoped for.
“We regret that we are not able to deliver on our long-term goal of Sirius delivering the project into production,” he said, “although we assure all stakeholders that the team has worked tirelessly and diligently over the past nine years to try to achieve that.
Scrimshaw said Sirius believed that the offer was in the best interests of shareholders.
He said the group would recommend that the shareholders vote in favour of the offer.
“Given the current cash constraints of Sirius, and the lack of realistic and deliverable alternative financing and development options, we believe this to be a fair approach from Anglo American, a company committed to approaching the project in the right way, and with the resources to complete the job,” Scrimshaw pointed out.
Anglo-American shares rose 0.26percent on the JSE yesterday to close at R425.29.