Sirius Minerals plc’s plans to complete its North Yorkshire polyhalite mine and processing plant under development in northeast England have been thrown into doubt this week after the company decided to suspend a proposed US$500 million bond offer, citing current market conditions.
The company said it intends to revisit the market when conditions have improved later this quarter. It had launched the bond on July 19 (GM July 26, p. 28).
The US$500 million bond is a critical part of the company’s ambitious US$3.8 billion Stage 2 financing needed to complete its polyhalite project.
Sirius Minerals needs to find enough buyers and complete the full bond sale before Oct. 30, 2019, to unlock a US$2.5 billion revolving credit facility from JP Morgan Securities LLC (GM May 3, p. 1).
Shares in the polyhalite developer plunged on the news that the bond had been suspended – announced on Aug. 6 – dropping to 9.55 UK pence per share by 17.00 hours BST on Aug. 8, their lowest in four years.
Germany’s Berenberg analyst, Rikin Patel, believes the risks to Sirius Minerals’ North Yorkshire polyhalite project are now “greater than the reward” following the suspension of the US$500 million bond offering, according to a Bloomberg report. However, despite the uncertainty, Berenberg analysts maintained their long-term view of the project, saying the economics were “favorable” if funding could be secured.
Bloomberg reported that Liberum Capital Markets analyst Richard Knights, one of Sirius’ corporate brokers, was more upbeat, saying that Sirius still has effectively two months to get the bond done.