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Opposition to Proposed Whitby Potash Takeover

Opposition to Proposed Whitby Potash Takeover

Published by Jon Burke at 9:25am 28th February 2020.

A body of investors is trying to explore whether shareholders have enough interest in keeping the Whitby Potash mine in its current ownership.

There's a shareholder vote next week, on whether or not to accept an offer from Anglo American of 5.5 pence per share, for the takeover of Sirius Minerals.

The Sirius Minerals Shareholder Action Group has got an 'interest' in pledges for more than £42 million  of the £460 million offered by Anglo Amercian.

The group has written an open letter to Sirius Minerals:


Dear [Board of Sirius and Institutional Investors]

FAO: Sirius Minerals Board and Institutional Investors

Since the shareholder meeting with the Board of Directors of Sirius Minerals on 4th February 2020, the private investors have remained of the view that the present offer made by Anglo American for a 100% purchase of the shares, at an offer price of £405m (5.5p per share), significantly undermines the intrinsic and actual value of the asset, the business and the share price.

It does not represent fair value for a venture which until recently, had an estimated NPV of $11bn (Strategic Review, Nov 2019). The area contains the highest-grade resource of polyhalite (poly4) to be found anywhere in the world.

Retail and Institutional shareholders have so far funded the project to a sum of circa £1.4 billion, from pre-planning stage, to a point of achieving production within less than two years. Anglo have spoken openly about buying at “near the bottom of the market”. (Reuters)

The loyalty shown to the project by retail investors from its embryonic state, over a period in excess of ten years, should be repaid with an opportunity to explore the funding of the next stage.
The board never tried to place the $600m as bonds to the market in September 2019, despite having just returned $400m of bonds from escrow and stated that the additional $500m bonds that failed to place in August would have succeeded, if warrants had been attached.

It would seem clear that the appetite for $600m could have been satisfied, if attempted and we are at a loss to understand why the board has made no attempt to raise the funds from the markets or investors.

Therefore, we urge the board of directors of Sirius Minerals to commit to:
a) A thorough exploration, through existing investors and the markets towards raising the $600m by: rights issue; open offer; and/or a bond placement.
b) Providing clarification of the precise current cash reserves and the point in time of depletion, of those reserves - and seeking a bridging-loan, if necessary.
c) Delaying the Scheme of Arrangement timetable, until such time as the above requests have been satisfied.

We would remind the board that we represent up to 85,000 shareholders and 50% of the company shares. Additionally, Institutional investors have also urged the Board of Directors to explore all alternatives (Jupiter Asset Management 7.79%), while Odey recently described the Anglo offer as a “mockery”. (Guardian)

The board of Sirius has, through its CEO, repeatedly stated that it has - at its heart, the protection of shareholder interests and the unlocking of the mid to long term value of the project. The Anglo offer does not achieve that. It destroys the private investor.

All private or institutional investors wishing to support this position are invited to contact the Sirius Minerals’ Shareholder Action Group: Yashmin Ismail at Yashmin@FundSirius.com and visit www.FundSirius.com

Yashmin Ismail (Founder), Sirius Minerals’ Shareholder Action Group.

A spokesperson for Sirius Minerals said:

"The Board, having consulted its financial advisers and brokers, has evaluated the ability of the equity market to support a US$600 million equity raise by the Company. It is the view of the Board, supported by historical analysis, that there would be insufficient appetite to complete such a transaction. For example, retail demand in the equity financings of 2016 and 2019 was less than US$100m on each occasion."

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