Project developer Sirius Minerals is recommending shareholders accept a 5.5p a share offer from Anglo to buy the polyhalite fertiliser project for £400m.

Sirius Minerals has warned shareholders, who stand to suffer a significant loss, that the firm will fall into administration if the offer is not accepted.

Anglo American has committed to salvaging the construction project spending around £230m a year for the next two years to keep construction going.

This will allow main tunnelling contractor Strabag, civils specialist P J Carey and mineshaft contractor DMC Mining Services to continue working on the vast scheme.

The full scheme will require £2.5bn to complete, which Anglo is committed to delivering, subject to a development review over the next two years.

So far around £850m has been spent on the scheme.

Sirius Minerals was forced to scale-back construction on the project last November after failing to secure further major funding for the vast construction project.

Failure to raise the $500m needed for the next major phase of construction saw shares in the firm crash 60% to 4p late last year.

Hundreds of workers were laid off at the North York moors potash mine site although Austrian tunnelling specialist Strabag, which has the contract for the three main 23-mile tunnel drives to transport excavated material to the coast, continued construction on one of its drives.

Mark Cutifani, Chief Executive of Anglo American, 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.”

Russell Scrimshaw, Chairman of Sirius, said: “We also recognise the returns that this offer would represent are not what either our shareholders or the Sirius Board had previously hoped for.

“We regret that we are not able to deliver on our long-term goal of Sirius being able to deliver the project into production, although we assure all stakeholders that the team has worked tirelessly and diligently over the last nine years to try and achieve that.”

He added: “We now face a stark choice. 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.”