- Sirius Minerals shares slump 27 percent on cost of project
- Shore Capital says cost significantly higher than expected
Sirius Minerals Plc fell the most in nine months after saying it will cost $3.56 billion to build a potash mine under a national park in northern England.
The first phase will cost $1.63 billion and the second $1.93 billion, the company said in a statement Thursday. The stock fell as much as 27 percent, the steepest intraday drop since June, giving up four days of straight gains before the announcement. Shore Capital said the phase-two cost was “significantly higher” than expected.
“The next step for us is to go and raise the financing,” Chief Executive Officer Chris Fraser said in a Bloomberg TV interview. The company would look at selling shares, strategic partners and debt to fit the bill, he said. “Given what the project can deliver, I think its pretty compelling economics.”
The proposed mine has proved highly contentious, with the approval process dragging on for years and with the national parks own planning officers saying the economic benefit of mining didn’t outweigh the harm it would cause. Sirius say the project will create more than 1,000 jobs and add 1 billion pounds ($1.4 billion) a year to the British economy.
To develop the York potash mine, Sirius plans to dig underground shafts within the 554 square-mile (1,430 square-kilometer) park before boring out the mineral from deposits under the land and the North Sea. The fertilizer would be crushed and processed before being fed to an underground pipe and taken as slurry to a port 28 miles away.
Sirius traded at 19 pence a share at 9:55 a.m. in London.