Britain's biggest mining project in doubt as Sirius aborts bond

Sirius Minerals scraps bid to raise $500m through bond sale and launches six-month review of plan as shares plummet.

    Sirius Minerals suspended the bond issue in August, citing adverse market conditions, but said it would try again if the market for high-risk bonds stabilised [File: Nigel Roddis/Reuters]
    Sirius Minerals suspended the bond issue in August, citing adverse market conditions, but said it would try again if the market for high-risk bonds stabilised [File: Nigel Roddis/Reuters]

    Sirius Minerals scrapped a plan to raise $500m (402.7 million pounds) through a bond sale, sending its shares more than 50 percent lower and delaying a project to mine for fertiliser 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 stabilised.

    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".

    Sirius' shares were trading 55 percent lower by 07:30 GMT.

    The plan would be Britain's biggest mining project and holds hopes of creating jobs in a part of the country that has felt left behind with the decline of heavy industry.

    Many local people are retail investors in the project, which involves tunnelling miles under the North York Moors and aims to exploit what Sirius says is the world's largest deposit of polyhalite, a multinutrient fertiliser.

    The substance is meant to be superior to traditional potash, but equity and bond investors have voiced concerns that the market for polyhalite is not well established.

    Sirius said its cash reserves of 180 million pounds ($223.4m) 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 $500m to gain full access to a $2.5bn 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 $1bn in government bonds.

    The government decided not to provide the support requested, it said. The government was not available for immediate comment.

    SOURCE: Reuters news agency