The future of a huge fertiliser mine in Yorkshire has been thrown into doubt after the company responsible for its development failed to secure the $500m (£402.8m) needed to move ahead with the project.
Sirius Minerals said that it could not raise the required amount to launch the next phase of development on the mine – and the UK government has declined to back the project.
In a regulatory filing, Chris Fraser, managing director and chief executive of Sirius, said: “Due to the ongoing poor bond market conditions for an issuer like Sirius we have not been able to deliver our stage two financing plan.”
As a result, Mr Fraser added, the company said it had “taken the decision to reduce the rate of development across the project in order to preserve funding to allow more time to develop alternatives”.
Shares in Sirius were down 63% for the day in early trading.
Earlier this month, Sirius showed off its first tunnel boring machine that will create the 23-mile delivery conveyor belt from the Woodsmith Mine to Redcar
The scope of construction activities on the North Yorkshire polyhalite mine will now be adjusted while a strategic review is undertaken over a period of “up to six months”. The review will include a study of alternative financing methods.
Mr Fraser said: “The process will incorporate feedback from prospective credit providers around the risks associated with construction and will include seeking a major strategic partner for the project.”
Sirius said it had sufficient liquidity – about £180m in cash reserves – to explore all of its strategic options.
It would, however, return the proceeds of a $400m (£322.2m) bond issued in May 2019 to investors, the company said.
The government withdrew its support for the company after a review into the financing of the project – Sirius said that, with the support of the government, it would have been able to secure the necessary financing.
“[Sirius] believed this commitment would have enabled the company’s financing to be delivered as planned,” it said in a statement.