Wednesday 1 May 2019 9:00 am

Sirius Minerals shares drop as it raises $425m for North Yorkshire mine

Sirius Minerals today revealed it has exceeded its $400m (£306m) fundraising target, but its shares were priced at the lower end of expectations.

The London-listed company, which is raising cash to build a fertiliser mine in North Yorkshire, raised $425m from a new share issue.

Read more: JP Morgan backs Sirius Minerals $3.8bn financing package for Yorkshire mine

The company said it had won agreements from investors to buy around 1.62m shares, but at 15p per share, the book-build comes in at the lower end of its 15p to 18p target range.

Now existing shareholders will also be offered a change to buy one share at the same price for every 22 they own.

Shares fell 8.8 per cent to 15.88p this morning.

The project will be the first new deep mine in the UK for 40 years when it is completed in 2021, and it is expected to support more than 1,000 jobs.

“I am pleased that we have had such a positive response to the launch of our stage two financing solution which is key to unlocking the vast and long-term potential of our project,” chief executive Chris Fraser said.

“The order books were oversubscribed, providing scope for a modest increase in the funds raised, further strengthening our financial position as we turn our attention towards securing the next phase of our stage two financing requirements.”

Yesterday the firm announced that JP Morgan was backing the financing package, which is expected to total around $3.8bn. The bank is set to provide a $2.5bn revolving credit facility.

The cost of building Sirius’ potash mine, which is expected to hold enough reserves for a century of extraction, was revised up by $600m last year to $3.6bn.

Read more: Sirius Minerals set to unveil £2.5bn equity and debt package

Fraser added: “I want to take this opportunity to thank the entire Sirius team and our partners who remain fully supportive and committed to the success of this project.”