Will Sirius Minerals go bust...probably not, but the risk profile means that a new investor won't be kind to existing equity investors

Sirius minerals

Interesting interview with John Meyer at Proactive Investors on Sirius Minerals and I agree with his views.

For SXX he says it is difficult to reboot the financing given the scale of investment in Woodside and the UK government and bond investors have been spooked by fears about the polyhalite market (with potash prices not great) as off-take targets have not been hit. The money was not forthcoming from the government despite this being a flagship prospect for the “Northern powerhouse” and although they do not have a big record of supporting the mining industry, the financial advisors in Whitehall would have analysed the numbers and the investment is pretty substantial (SXX asked for £1 billion-plus guarantee) and plenty of risk.

Let’s face it, SXX could’’t get a bond issue off at 13.5% coupon, the Brexit excuse was a smokescreen. This is a risky investment for a small/medium cap UK mining company and bond investors wanted a pound of flesh. Too much for JP Morgan to stomach for their $2.5 billion financing package.

Sirius minerals share price october 10th 2019

I still think like SPAngel an investor will come in and finance the mine. Too much progress has been made to mothball Woodside in the Yorkshire Moors but existing shareholders who bought in at 10p plus, probably won’t come out smiling.

A huge rebound from these share price levels is unlikely to happen. I feel sorry for all those pensioners in Yorkshire who put in the life savings. But that was madness for this high-risk project. The shares dropped yesterday 7% to 3.4p. I’m not sure of the floor and fair value, but it is not 5-10p with current financing issues.I’m not rushing to build a position. Watching with high anticipation for the end of the strategic review at the end of October though.