The British arm of Hancock Prospecting, chaired and directed by iron ore tycoon Gina Rinehart, will buy $50m worth of Sirius shares and a five per cent royalty stream of the first 14 megatonnes of fertiliser produced by the mine each year.
It will also have the right to buy up to 20,000 tonnes of fertiliser each year for use on Rinehart's "expanding Australian agricultural holdings". Hancock has moved further into agriculture in recent years and is currently embroiled in a bid to buy Australia's largest cattle farm.
The Yorkshire project will involve constructing a mine and a 37km underground conveyor system to procure the world's highest grade deposit of polyhalite, a multi-nutrient form of potash which contains potassium, sulphur, magnesium and calcium.
Subject to approvals, the site will produce 20m tonnes of polyhalite a year, though the first phase will develop capacity of 10m tonnes annually.
Shares in Aim-listed Sirius were up 3.8 per cent this morning to 35.54p.
"Sirius has a large, high quality mineral resource and is located in a stable jurisdiction with a competitive tax rate," Rinehart said in a statement.
The project has the potential to become one of the world's leading producers of multi-nutrient fertiliser, and could have a life of 100 years – this fits with my approach of investing in strategic areas for the long term.
Read more: Sirius Minerals confident on York project
Chris Fraser, managing director and chief executive of Sirius, said: "We are delighted to have signed this agreement with such an experienced party in the mining industry, as well as one that has very successful and strong leadership and a long term and growing agricultural interest."