* Spoke to government in August to seek $1 bln funding
* Shares collapse
* Options include seeking strategic partner
* Posts deepened H1 loss
By Barbara Lewis and Noor Zainab Hussain
LONDON, Sept 17 (Reuters) - Sirius Minerals scrapped
a plan to raise $500 million through a bond sale, sending its
shares more than 50% 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% lower by 0730 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 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 fertiliser.
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 pounds 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.
Sirius says it has offtake contracts with customers in the
United States, Europe, Brazil, India and Africa.
Apart from uncertainty over Britain's relations with Europe,
investor appetite for risk has been hit by uncertainty over the
global economy and trade tensions between the United States and
China.
Sirius Minerals on Tuesday reported an operating loss of
14.3 million pounds for the six months ended June 30 versus a
loss of 10.8 million pounds a year earlier.
(Reporting by Barbara Lewis in London and Noor Zainab Hussain
in Bengaluru; editing by Jason Neely)
