Hundreds of jobs in peril as Sirius Minerals project under review
One of the UK’s biggest mining projects, expected to provide around 1,200 jobs, was thrown into turmoil today after it was forced to scrap a $500m (£400m) bond sale and pay back $400m from a separate sale to investors.
Sirius Minerals said that poor market conditions had forced it to abandon the sale which would have unlocked a loan of up to $2.5bn.
Read more: Sirius Minerals shares plummet 25 per cent as it suspends £411m bond sale for Yorkshire mine
Chief executive Chris Fraser said that an uncertain market, including concerns over Brexit, had impacted the company’s ability to raise the money it needed.
Shares dropped down a mine shaft on the news, losing as much as 64.3 per cent of their value to 3.57p. They later recovered somewhat to 4.75p.
The management behind the FTSE 250-listed potash project, which was looking for fertiliser under the ground in North Yorkshire, had asked the government to guarantee $1bn in bonds. The project was expected to provide hundreds of jobs in the area.
“I think the support of the government would have been a very significant change,” Fraser said today on a call with analysts.
Ministers were criticised for union Unite for putting hundreds of jobs at risk in a region “crying out” for them.
A government spokesperson declined to comment on what they called “commercially sensitive matters,” but added that “all requests for financial support must meet necessary lending criteria.”
Labour MP for Redcar Anna Turley said that the news was “devastating”.”That the government are refusing to step in and secure this enormous project is an absolute disgrace,” she added.
Sirius said its books were liquid enough to explore its strategic options for the next six months as it opens a review of how to proceed.
“We will require additional capital to go beyond six months,” Fraser said.
Last month Sirius suspended its $500m bond sale, sending shares down 30 per cent at the time.
Read more: Sirius Minerals on course to finish fundraising in September
Investors had been promised a yield of 7.5 per cent, on the 7.5 year secured note, but the company did not find enough interest. However today’s news could scare off some future investors, said Graham Spooner at the Share Centre.
“With cash running out fast, investors will be fearing for the future of the mine and remain cognisant that the recent history of mining in the UK has been littered with failures,” he said.