Sirius Minerals shares plunge 15% after the miner warns of escalating costs at its North Yorkshire fertiliser project
- Shares in Sirius Minerals sank over 15 per cent on Thursday
- The firm warned that it could need an additional $600m to build its mine
- In the first half of the year, Sirius shares were among the bestselling of all stocks
Shares in Yorkshire-based firm Sirius Minerals plummeted more than 15 per cent today after the miner revealed the escalating cost of getting its organic fertiliser mine up and running.
The group said the amount it needs to build its mine in the North York Moors has rocketed by between US$400million and US$600million.
Sirius Minerals – held in high esteem for its ascent from London’s junior AIM market to the FTSE 250 – was the sixth bestselling stock through the Share Centre investment platform in the first half of this year, despite not yet being operational.
This is the site for Sirius’ York Potash Mine near Whitby in the North York Moors National Park
In one of Britain’s biggest engineering projects, it is developing a 200-square mile underground tunnel between Woodsmith Mine and Lockwood Beck in North Yorkshire in order to unearth a fertiliser called polyhalite.
The additional funding is over and above the US$3billion that Sirius already needs. The total cost estimate for the mine is now US$4.2billion, up from US$3.7billion US dollars in 2016.
It put the mounting costs down to changes in the tunnel’s design, including an increase in both the internal diameter and lining thickness.
Map of the area where the mine is being built
Sirius managing director Chris Fraser said: ‘The expected increased funding requirement coming from this process reflects an optimisation of the mineral transport system tunnel design and a significantly improved risk allocation for Sirius to support the senior debt financing.
‘The project’s economics remain extremely compelling and we are confident they support the expected additional funding requirement.’
Work on the mine begun in June this year, with around 2,000 employed to construct it. A further 2,500 jobs will be created once it is fully up-and-running – likely to be around 2021.
Once complete, the polyhalite mine is expected to be one of the largest in the world of its kind.
According to Forrest, shares in the group tend to be volatile, suggesting that shorter-term investors are being attracted in the hope of quick gains.