Sirius Minerals – Call with Anglo American

The ShareSoc Sirius Shrareholders Group (SSSG) held a call with Anglo America last Wednesday, 12th February.

The purpose of the call was to facilitate contact between the representative shareholders and the company, allowing the shareholder view to be expressed.

The discussion focused on two areas of shareholder concern: firstly price and secondly the desire for continued economic involvement.

As regards price, we underlined the difference between the offer price and the intrinsic value of the mine with financing in place. Anglo’s involvement transforms the project from financially distressed to fully viable, and shareholders who have supported the project to date feel that Anglo should increase the bid price in recognition of this value gap.

We also expressed shareholders’ concerns at being bought out of the project at a low point in its valuation history. Anglo has elected to bid for the company by way of a scheme of arrangement, which means that if the vote is positive it will be binding on all shareholders. This is a means of preventing existing shareholders from remaining engaged with the project as minority shareholders, and this all-or-nothing approach is responsible for considerable ill feeling among investors.

We suggested that it is in Anglo’s gift to allow existing shareholders the opportunity to remain partially involved with the project (possibilities include minority interest, deferred milestone payments, royalty rights). Allowing Sirius shareholders to share in both the future risk and return of the mine should be more acceptable to Anglo shareholders than a simple price adjustment, and would buy Anglo significant PR and reputational benefit, particularly in North Yorkshire.

The Anglo representatives explained their company’s view that this is a very large, high risk project and that the market for Poly 4 is unproven. They restated that the choice for Sirius shareholders is to vote yes or no to the takeover.

We requested a commitment that our requests would be relayed to the management team, and this was given.

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