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Sirius Minerals has agreed a £405m life-saving takeover deal with a global mining giant.

Anglo American has secured a lifeline agreement to buy the cash-strapped North Yorkshire fertiliser mine and Teesside processing plant .

The two firms announced on Monday that a “recommended cash offer” of 5.5p per Sirius Minerals share had been agreed.

The deal values the company at £404.9m and Anglo said it could provide a huge jobs and economic stimulus to the area.

The buyout still requires the approval of shareholders, who have been urged to accept the offer.

Sirius bosses said the company will collapse into liquidation within weeks and lead to heavy job losses if it does not go ahead.

Mark Cutifani, Anglo American chief executive, said: “Anglo American’s recommended offer provides greater certainty for Sirius’ shareholders, employees and wider stakeholders, while bringing the prospects for the development of this potential Tier 1 Project closer to reality.

“We intend to bring Anglo American’s financial, technical and product marketing resources and capabilities to the development of the project, which of course would be expected to unlock a significant and sustained associated employment and economic stimulus for the local area.”

(Image: Sirius Minerals)

The deal comes after Sirius Minerals pulled a £400m fundraising offer last September, blaming “market conditions”, and slowed the pace of construction on the project laying off 300 workers .

FTSE 100 firm Anglo American, which is based in South Africa, is the world’s largest producer of platinum.

It was among the firms to set up Boulby Potash mine in the 1960s before later selling its interest in the facility .

Anglo is thought to have been eyeing up the multi-billion pound Sirius Minerals project for some time.

Russell Scrimshaw, chairman of Sirius, said: “We acknowledge that to many shareholders our decision as a board to recommend this offer will have come as a shock.

“Your board deeply regrets that we could not deliver the complete stage two financing in 2019 despite a very broad and thorough process. Going into the strategic review the Sirius Board’s strong preference was a solution that allowed current shareholders to participate as fully as possible in the future development of the project.

“Following the strategic review process it is clear that no such options are currently available to us and in that context Anglo American’s offer is the only feasible option.”

Mr Scrimshaw said shareholders now faced a “stark choice” over whether to accept the offer.

He added: "If the acquisition is not approved by shareholders and does not complete there is a high probability that the business could be placed into administration or liquidation within weeks thereafter.

“This outcome would most likely result in shareholders losing all of their investment, as well as put the future of the entire project, and its associated benefits for the local area and the UK, at risk.”

The announcement of takeover talks was previously welcomed by Teesside politicians and the company’s shareholders, of which 85,000 are individual small investors.

Ben Houchen, Tees Valley Mayor, said the announcement was a “massive vote of confidence” in the “unique” project.

He said: “Anglo American are one of the biggest mining companies in the world and their involvement is a sign they have huge confidence in the quality of the product and will be a big boost for what is a world-class project.”

Sirius Minerals said last year it had undertaken a strategic review and was exploring “various different options” including joining forces with a “strategic partner”.

It identified more than £280m in cost and time savings late last year and also said it could start mining early to fund the next stage of the project.

The offer is 34% up on Sirius’s 4.10p closing price on January 7 but well below the peak of around 45p before the firm hit financial trouble.