Hopes have risen for a project that could bring hundreds of jobs to the North East after Sirius Minerals announced a cheaper plan to start production at its North Yorkshire mine.
There were fears earlier this year that the project would flounder when Sirius pulled a £400m fundraising drive and said it would hold a “comprehensive” review into its future.
Shareholders had feared their stake in the polyhalite project could be heavily diluted after Sirius failed to reach a bond sale target which would have unlocked a loan of up to $2.5bn (£1.95bn) in September.
It put the brakes on the mine after the announcement, which came as a shock to many retail investors - typically private individuals, rather than professional investors - who had put their money into the company.
But now a new plan has been put forward by boss Sirius Minerals CEO Chris Fraser, saying the company will split funding for the project into two stages.
The company will now seek to raise an initial $600m (£470m) by the end of March 2020 to fund the construction of the mineshafts at its Woodsmith mine near Whitby and first section of tunnel only.
The remaining infrastructure - the rest of the tunnel, plus processing and shipping facilities at Teesside - will be deferred for between 12 and 24 months, and financed separately, up to $2.5bn (£2bn).
The company says it believes this approach will reduce costs and mitigate financing risks.
Mr Fraser said: “We are in discussions with potential strategic partners and debt investors with the aim of securing the best route to finance our revised initial scope of work and will update the market and our stakeholders on the progress of those when appropriate.
“The value of Sirius is unlocked by reaching production and delivering POLY4 to our customers around the world. This approach allows us to achieve that with less upfront capital while retaining the significant return opportunity it presents for our shareholders and stakeholders.
“I would like to thank our employees, contractors and partners for their continued focus and commitment, and recognise that the progress achieved on the ground in recent months remains a source of huge inspiration for the whole team.”
The news has been welcomed by Labour and Co-operative candidate for Redcar Anna Turley, who said: “I am pleased Sirius Minerals have been able to devise an alternative funding approach which should allow this brilliant project to progress.
“However, they should not be in this position. Government should be backing this project to rebalance the economy and bring decent, skilled jobs to our region.
“As a result of this failure, the project has had to be scaled back, 300 jobs have been lost, and this new approach now delays the Teesside section of the project for up to two years. The Sirius project is a huge vote of confidence in our region and everything possible must be done to unlock its huge potential.”
If successful, the new funding plan would allow Sirius push ahead with a scaled-back drive to mine polyhalite in North Yorkshire.
The mineral, which can be used as fertiliser, would be transported to Teesside via a conveyor belt in a 23-mile (37km) long tunnel. There, it would be processed and Sirius would ship its polyhalite-based fertiliser, Poly4, to customers.
Shares rose 16.4% on the news to 3.72p.
