Mining company sheds over half its market value after loan note announcement and project delay.
Sirius Minerals’ (SXX) future is thrown into doubt
- Shares in the FTSE250 company plummet 55% in early trading.
- Group unable to raise $500mn to kick-start next phase of construction on Yorkshire mine.
- Sirius to launch a strategic review and slow work at the Woodsmith mine to conserve cash.
The long awaited news from Sirius Minerals regarding its future financing this morning will have made difficult reading for the raft of private investors who were attracted to the first major mine in England for a long time. Shares which were trading at 30 pence a year ago are down 55% in early trading to 4.5 pence.
The group has announced they cannot proceed with a proposed $500mn loan note, which in turn will mean the project will be delayed. This is as a result of current uncertainty and global market conditions. So the company will now have to go back to the drawing board and review its options in its attempt to extract potash from below the North Yorkshire moors.
CEO Chris Fraser said the group will conduct a ‘comprehensive strategic review’ over the coming six months to assess a different financing structure for the funds required. 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.
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