Sirius Minerals outlines two-stage development plan for North Yorkshire mine
By Iain Gilbert
Date: Monday 11 Nov 2019
(Sharecast News) - Fertiliser development firm Sirius Minerals unveiled plans for the two-stage development of its North Yorkshire polyhalite mine on Monday, with the group looking to secure $600m funding for the project's first stage.
Sirius fell out of the FTSE 250 in October after its decision to pull a £400m fundraising attempt a month earlier sent shares into freefall and raised doubts over the potash project's future.
However, despite struggling to lock in funding for the project, Sirius said it remained focused on extracting first polyhalite from the mine as part of an effort to remove the "greatest perceived construction risk associated with deep shaft construction".
The London-listed firm said that having held a "comprehensive" review to look at ways of securing a funding lifeline, it had decided to split funding for the project into two stages.
Sirius will now aim to raise an initial $600m by the end of March 2020 in order to fund the construction of the mineshafts at its Woodsmith asset, while the raising of the remaining £2.5bn required will be deferred for 12 to 24 months.
Sirius said it was already in discussions with potential investors to raise the initial $600m.
At 1020 GMT, the shares were up 16.6% at 3.70p.
Russ Mould, investment director at AJ Bell, said: "It seems like Sirius' army of retail shareholders - which are in the tens of thousands - remain optimistic that its potash mine will be built, despite a major funding setback earlier this year.
"A lot of miners make confident statements about finding strategic investors as if you can just pick them off the shelf. In reality they are hard to come by, at least ones which will agree to a deal that doesn't heavily dilute existing shareholders so they are left with next to nothing.
"At this stage, Sirius has no cards to play. It is desperate for money and will have little bargaining power in any negotiations with a potential strategic investor. A third party looking to bail Sirius out of a tricky situation will want the best possible deal for them, as they are taking on considerable risk backing a project which is not yet generating any revenue."
Neil Wilson, chief market analyst at Markets.com, said the new plan "will require significantly less capital than the previous incarnation".
He said this was a "possible way out of the mire, but needs to be picked over in more detail".
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