Shares in mining firm Sirius plummet on £2.9bn financing

Shares have dived at mining firm Sirius Minerals after it announced a £2.9 billion financing to fund its major fertiliser project in North Yorkshire.

Shares in the FTSE 250 company sank by 18% to 17.9p on Tuesday, after it said the project would cost more than previously planned.

US bank JP Morgan has backed the financing package, which will be used to build a giant polyhalite mine under the North Yorkshire moors.

Polyhalite can be used as a fertiliser and has other industrial uses.

Sirius has secured fertiliser supply deals in Europe, South America, China and Africa.

The mine had been expected to cost 3 billion US dollars (£2.3 billion), but last year Sirius revised this up to 3.6 billion US dollars (£2.8 billion) amid a rise in construction costs.

It will now cost 3.8 billion US dollars (£2.9 billion), it said.

The deposit – nearly a mile (1,500m) below the ground – is among the world’s largest, the company said.

The Woodsmith mine, near Whitby, is set for completion in 2021 and is the first to be sunk in Britain for 40 years.

The mining giant estimates the site holds sufficient polyhalite to support more than 1,000 jobs in the area.

The equity will be raised through a £310 million share placing, launched on Tuesday, as well as a £1.9 billion revolving credit facility from JP Morgan.

Chris Fraser, managing director and chief executive of Sirius, said: “We are launching a comprehensive markets-led solution for our funding requirements which will enable Sirius Minerals to complete the development of its mine and unlock what we believe to be the world’s largest known high-grade polyhalite deposit.

“Today’s announcement provides a clear pathway to a fully financed project in the months ahead, while enabling us to progress construction at full speed.”