Sirius Minerals will raise £50m through a share placing to speed up the drilling programme at a new potash mine between Whitby and Scarborough in the UK.

Of the total funding, institutions will subscribe to £46.6m, with the remainder to come from Sirius chairman Russell Scrimshaw.

The company decided to raise the amount after a second bore hole SM2 drilling revealed that it would be possible to develop York with a lower cost shaft.

The second bore hole had intersected 67m of total massive polyhalite mineralisation, of that, 33m was in the materially shallower shelf bed, the company said.

Sirius Minerals chief executive Chris Fraser said they have also decided to raise the funding due to continuing uncertainty in global markets.

"This will allow us to fast-track the project development without any funding constraints so that the project can be brought into production as soon as possible," Fraser said.

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By GlobalData

The funds will be used to drill up to eight extra bore holes at the York Potash Project, support the definitive feasibility study (DFS), complete a detailed scoping study in March and pilot plant programmes, cover ancillary costs and secure land rights.

Sirius acquired the York Potash Project in January 2011, and confirmed the presence of the three seams of potash mineralisation following the drilling of two boreholes.

Macquarie and Liberum Capital will conduct a book-building process for the placing.

Sirius Minerals will decide on a potential minehead location following the first phase drilling, which will establish the underground conditions.

The company expects that the proposed new mine will create around 5,000 jobs, including approximately 1,000 skilled jobs and a further 4,000 associated jobs to the project.