RE: Times12 Nov 2019 07:06
Sirius Minerals is trying to breathe new life into its £5 billion fertiliser mine under the North York Moors National Park by touting for a “strategic investor” to help to provide $600 million to get the project back on track.
Shares in the company, which became a penny stock after it was forced to abandon a $3.8 billion funding plan in September, jumped by 10 per cent yesterday and closed up by a quarter of a penny at 3½p.
Sirius is being watched closely by its army of 85,000 retail shareholders, many of them locals, who have been backing the project. Politicians in North Yorkshire say that the government should intervene to kick-start the project, to create hundreds of jobs, a new industry and boost a regional economy affected by the decline of the steel sector.
The company is constructing the Woodsmith Mine, close to the coastal town of Whitby. The deep mine is seeking large deposits of polyhalite, a type of potash used in fertiliser. However, progress to secure the project’s future stalled in September when the issue of a $500 million junk bond, key to unlocking much greater investment, was withdrawn.
Yesterday the company said that a strategic view of its future, which has already led to a slowdown in construction and the laying off of 300 of its 1,200 workers, had provided a new plan. That has begun with “identifying and securing a strategic investor” to raise $600 million to sink shafts that would lift the first deposits of polyhalite, thereby “significantly derisking the construction of the project”.
That means that if Sirius can demonstrate early production of polyhalite on the original time frame of the end of 2021 and by spending less money than had been feared, it will be able to attract senior debt investors and bring down the future cost of the company’s borrowings.
“Our focus during the first phase of the strategic review has been to reassess the best ways to unlock the value of our project,” Chris Fraser, chief executive of Sirius, left, said. “Our analysis has identified a two-stage development plan that enables us to achieve the key derisking milestone of first polyhalite . . . with an upfront capital requirement of $600 million.
“We are in discussions with potential strategic partners and debt investors with the aim of securing the best route to finance our revised initial scope of work.”
Sirius is often the talk of private investors’ internet chat rooms — forums that have infuriated Mr Fraser, 45, who has called on the Financial Conduct Authority to investigate unsubstantiated speculation on the company’s future.
Last night online chatterers were unpicking the update. Many wanted to know why, if the plan was good news, the share price reaction had not been more positive. Some said that they had become tired of the “corporate rhetoric”, while others feared that the stock was in the grip of bears and short-sellers — investors making money on a fall in Sirius shares.
Liberum, the house broker, said
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