The Sirius Minerals (SXX) share price tumbled today after the group decided to suspend its plans to raise $500m through a bond issue on account of ‘current market conditions’.
The company plans to run the bond issue when ‘conditions have improved later this quarter’. It seems that sour market sentiment curtailed the company’s crucial financing plans. The plunge in government bond yields recently highlights how risk adverse traders are at the moment. A continued lack of investor confidence could further hurt the Sirius Minerals share price.
Sirius Minerals’ Yorkshire site reliant on financing
Sirius Minerals are dependent on raising that $500m in order to unlock a revolving credit facility from JPMorgan, which is essential to the construction of its mine in Yorkshire. The firm is in a tough position as polyhalite is a popular mineral, but the group needs the financing in order to see the project through.
Polyhalite is used in different sectors, but it is best known for fertilizer. Sirius already has fertilizer contracts lined up in many parts of the world including Europe, Africa and Asia, but it all hinges on the development of the site, which in turn depends on financing.
US-China trade spat squeezes mining industry
The trade spat between the US and China put enormous pressure on global stock markets yesterday, and mega miners like Glencore and Rio Tinto were hit hard. If traders are cautious about the biggest mining firms in the world, that does not bode well for the company, or the Sirius Mineral share price, as they are dependent on a major turnaround in investor sentiment in order to set the wheels in motion in relation to the financing.
A rocky year for Sirius Minerals (SXX) share price
Today’s update wasn’t the first time the stock was rocked in relation to financing issues. In April, the group announced plans for $3.8bn worth of financing, which included a $400m cash call form investors, and that entailed issuing nearly two million new shares at a deep discount.
Traders have been hurt this year already by financing plans and their impact on the Sirius Minerals share price, and capital is still a concern, so confidence in the company is likely to be in short supply.