Britain’s biggest mining project in the balance as Sirius bond aborted
Sirius Minerals scrapped a plan to raise $500 million through a bond sale, sending its shares down more than 50 percent and delaying a project to mine for fertilizer under a national park in northern England. The company had suspended the bond issue in August, citing adverse market conditions, but said it would try again if the market for high-risk bonds stabilized. On Tuesday it said that the government had declined to provide support for financing of the mining project and it would now conduct a six-month review of its plan.
“This is the most prudent decision to give the company the time necessary to restructure its plans to move the project forward,” CEO Chris Fraser said, adding one option was to seek “a major strategic partner.”
The plan would be Britain’s biggest mining project and holds hopes of creating jobs in a region that has felt left behind with the decline of heavy industry.
Many local people are
retail investors in the project, which involves tunneling miles under the North York Moors and aims to exploit what Sirius says is the world’s largest deposit of polyhalite, a multi-nutrient fertilizer.
The substance is meant to be superior to traditional potash, but both equity and bond investors have voiced concerns the market for polyhalite is not well established.
Sirius said its cash reserves of £180 million as of the end of August provide liquidity for it to explore all strategic options.
The company needed to issue a bond of at least $500 million to gain full access to a $2.5 billion revolving credit facility from JP Morgan Chase.
It said discussions were paused with the British government in early 2019, but it re-engaged with the government in August, when it asked for a commitment to provide up to $1 billion in government bonds.
The government decided not to provide the support requested, it said. The government was not available for immediate comment.