Sirius mine in North Yorkshire thrown into doubt

The firm also confirmed that around 1,200 jobs could be lost if Sirius fails to secure funding for its work constructing the giant fertiliser mine in North Yorkshire.

Russ Mould, investment director at AJ Bell, said: “The UK miner is struggling to raise enough money to develop its big potash project in Yorkshire.

“This is terrible news for a very large number of retail investors who had put their faith in the company. Many of these shareholders live close to the mine and invested as a show of support in a project that had the potential to greatly improve the local economy."

Sirius has shelved a $500m (£402m) bond offering after the Government refused to offer support, casting a shadow over plans to construct a giant fertiliser mine in North Yorkshire.

The group will now slow down development of the Woodsmith mine under the North York Moors National Park. Sirius blamed global market conditions, the ongoing uncertainty surrounding Brexit and the political environment in the UK for the move.

Mr Mould offered Yorkshire investors some hope, saying that although the group's share price has "taken a beating", it isn’t "game over" for Sirius and its shareholders.

"The miner has a few options to try and salvage the project," he said.

“It has enough cash to give it six months’ breathing space to either find a different solution for the financing or bring in a new strategic investor who could theoretically provide cash upfront in exchange for a stake in the business."

If this happens, Mr Mould said it is highly likely that existing shareholders will suffer as Sirius may have to raise more money or sell a chunk of its business to a new strategic investor on unfavourable terms, "given how it is desperate for a lifeline".

He added it was disappointing to see the Government refuse to support the company when Sirius believes it can generate £100bn for the UK economy over the next 50 years when the mine becomes operational.

Sirius will scale back production at the site near Whitby and has launched a six month strategic review to assess different ways to secure the necessary funding for the project.

Sirius' chief executive Chris Fraser said: “This is the most prudent decision to give the company the time necessary to restructure its plans to move the project forward."

He said that one option is to seek “a major strategic partner”.

The company said 1,200 jobs involved in developing the project would be lost if the plan did not proceed, but Mr Fraser told a conference call he was still confident it could be saved.

The plan would create Britain’s biggest mine and add jobs to a part of the country hit by the decline of heavy industry.

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."

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 £2bn credit facility from JP Morgan.

After failing to secure the necessary funds, the London-listed business said the UK Government rejected an appeal for $1bn 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.