Too late for miner to dig deep?

CHARISMA and determination can get you a long way in the mining industry and Chris Fraser, chief executive of Sirius Minerals, has oodles of both.

Not quite enough, however, to persuade bond investors that they should stump up $500 million (£400 million) to help finance his ambitious underground mining project in North Yorkshire.

The bond issue was part of a complex financial package, including bank debt and shares, which in total would have given Sirius $3.8 billion – enough to build the mine and surrounding infrastructure and move to first production. At that point, Sirius would have begun to sell millions of tons of polyhalite, a fertiliser that is supposed to be particularly beneficial but has never been mined in quantity before. Fraser has already signed contracts with purchasers keen to buy more than 12 million tons of this fertiliser in the first year of production. But, with bond investors running scared, the entire project is in doubt and the shares have fallen to 4.32p. Midas first looked at Sirius in 2011, when the shares were 10.5p. By the summer of 2018, they were 31.5p and Fraser seemed close to finding the money he needed. Since then, the company has continued to make progress on the ground, but the markets have proved intractable and so, to date, has the Government.

MIDAS VERDICT: Backed by sufficient cash, the mine could be hugely profitable and transformative for North Yorkshire. But Sirius could now fall into administration. Sceptical investors may choose to cut their losses and sell now.