Sirius Minerals (SXX) has pulled the $500m (£412m) bond offering that would have unlocked the all-important $2.5bn loan to build its Woodsmith fertiliser mine in Yorkshire.
The company said "current market conditions" had led to the decision. House broker Liberum had expected the group would have to pay a hefty fee to attract bond investors, forecasting a yield of 12 per cent. Sirius shares were down 26 per cent on Tuesday morning, falling under 10p at one point.
The bonds, which the company said it would revisit later in the quarter, are part of the $3.8bn phase 2 financing for the polyhalite project. Pricing was expected to take place this week. Sirius had put together a complicated financing package for its massive project, including a bond issue, a $2.5bn loan from JP Morgan Chase, a $425m equity raise and $400m in convertible bonds. The JP Morgan Chase loan deal will be cancelled if Sirius cannot find buyers for its bonds by 30 October.
Last year it upped the capital cost of the mine by $500m to $4.2bn, and brought in $250m from Gina Rinehart's Hancock Prospecting for a 5 per cent royalty on the mine. Production is set for 2021 and Hancock will bring in at least $65m for the initial part of the deal, which ends after 13 million tonnes (mt), on the low-end $100 per tonne price estimate for polyhalite. Sirius says its current offtake deals are priced around $140/t.
The project build includes the 37km tunnel to the Teesside materials handling facility, which is expected to be 3km by the end of 2019.
