Sirius Minerals plc’s North Yorkshire polyhalite mine and processing plant under development in northeast England now has only a 25 percent probability of completion, analysts at the London branch of Germany’s Berenberg believe, according to a Bloomberg report. They had earlier assumed a 50 percent probability of project completion.
In a note to clients, Berenberg analysts Rikin Patel and Edward Wales said they still hold the view that polyhalite would be a marketable product and that the North Yorkshire project fundamentals are positive. Following Sirius’ failed bond issue last month, however, they said the risks of securing financing are seen as outweighing the potential returns. Even in a best-case scenario, further delays to start-up are likely. Up until recent events, Sirius had been touting first polyhalite output in 2021.
Sirius reported last month that it had cancelled plans to raise US$500 million through a bond issue (GM Sept. 20, p. 1). The bond raising had been a critical part of the US$3.8 billion Stage 2 financing needed to complete the project, and its successful completion was key to unlocking a US$2.5 billion revolving credit facility (RCF) from JP Morgan Securities LLC (GM May 3, p. 1). Sirius blamed market conditions, including Brexit and a lack of U.K. government support, for its decision to cancel the bond raising.
Patel believes a strategic investor could be the only lifeline left for the company, given that there now appears to be little prospect in the foreseeable future of a financial package provided by the U.K. government, according to Bloomberg, citing the investor note.
Following the decision to abandon the bond issue, Sirius last month began slowing construction at the project site in order to conserve funds as it began a six-month strategic review to assess and incorporate optimizations to the project development plan that could reduce overall capital costs and reduce risk to debt holders. The company also said it is looking for financing alternatives, including the potential to bring in a partner for the acquisition of “a significant part” of the project.