ANGLO American has agreed a £405m rescue deal with the board of embattled Sirius Minerals, it was announced yesterday.

Under the agreement, Sirius shareholders will receive 5.5p for each share, a 34 per cent premium on the British mining firm's 4.1p closing price on 7 January.

The deal is a lifeline for Sirius, which had been under pressure to come up with alternative funding for its North Yorkshire potash project.

In November the London-listed firm said it would welcome a strategic investor to help fund a new two-stage plan.

Anglo American said that it had been interested in the project for some time due to the "quality of the underlying asset".

In a statement, the mining giant said: "The project has the potential to fit well with Anglo American's established strategy of focusing on world-class assets, particularly in the context of Anglo American's portfolio trajectory towards later cycle products that support a fast-growing global population and a cleaner, greener, more sustainable world."

The polyhalite deposit, which is the focus of the project, is believed to be the largest high-grade site in the world. The mine will be the UK's largest in a generation.

The offer is good news for Sirius' share price, representing a 46.5 per cent premium on the firm's three-month price from last September. Sirius' shares rose 2.6 per cent to 5.55p yesterday.

(c) 2020 City A.M., source Newspaper