Sirius Minerals has shelved a 500 million US dollar (£400 million) fundraiser, casting a shadow over plans to construct a giant fertiliser mine in North Yorkshire.
Shares in the mining firm plummeted in early trading, shedding more than half of its value, after it said it would be scaling back production at the site near Whitby and launching a strategic review.
The company said it believes its major bond offering cannot go ahead "in current market conditions" and will launch the "comprehensive" review over the next six months to assess different ways to secure the necessary funding for the project.
Sirius also said that, although it has enough cash to cover the review process, it will also have to return 400 million dollars (£322 million) it raised through a bond earlier this year.
Last month, Sirius said it could run out of cash by the end of the year if it did not secure the necessary funds to unlock a 2.5 billion-dollar (£2 billion) credit facility from JP Morgan.
After failing to secure the necessary funds, the London-listed business said the UK Government rejected an appeal for one billion dollars in bonds.
The funding would have "enabled the company's financing to be delivered as planned" for the potash project which would deliver hundreds of jobs, Sirius said.
Chris Fraser, managing director and chief operating officer of Sirius, said: "Due to the ongoing poor bond market conditions for an issuer like Sirius we have not been able to deliver our stage 2 financing plan.
"As a result, we have taken the decision to reduce the rate of development across the project in order to preserve funding to allow more time to develop alternatives and preserve the significant amount of inherent value in this world-class project.
"This is the most prudent decision to give the company the time necessary to restructure its plans to move the project forward."
Graham Spooner, investment research analyst at The Share Centre, said: "The long-awaited news from Sirius Minerals regarding its future financing this morning will have made difficult reading for the raft of private investors who were attracted to the first major mine in England for a long time.
"With cash running out fast, investors will be fearing for the future of the mine and remain cognisant that the recent history of mining in the UK has been littered with failures."
Shares in the company fell 55% to 4p in early trading.