Sirius Minerals PLC (LON:SXX) has announced that it is to suspend its offering of US$500mln worth of senior secured notes, due to what it blandly describes as “current market conditions.”
These notes were originally offered to the “current market” just a few weeks ago, back in mid-July, when market conditions were, to be frank, pretty much the same as they are now.
So, what’s changed? The answer, of course, is not much.
There’s never been any shortage of market participants who have been sceptical about Sirius and its plans to mine Polyhalite from deep underground in the north of England.
The company’s plans involve a massive increase to the world’s supply of polyhalite, which is billed as a new and effective fertiliser, but which in truth is largely untried. There can be no certainty that enough demand will ever exist to meet this new supply.
Yes, there are off-take agreements in place.
But these are easy enough for counterparties to sign up to when there’s no actual production in place - if production never happens they can quietly be allowed to lapse, without the loss of anything more than some time and a few lawyers’ fees.
And yes, markets have dipped in the wake of the escalating trade war between the US and China. But talk until today was that Sirius would simply be raising the coupon on its bonds to secure take up.
But in reality, Sirius is at last coming face to face with an unpalatable truth. Because it’s so big, at least in terms of UK mining projects, half of London’s mining investment community have become beholden to it in terms of fees or the hope of future fees.
That’s given the company a distorted vision of its own prospects for success, not to mention leading a fair few investors astray too.
But just look at the company’s share price over the past year or so. The shares have lost more than a third of their value in the past year. They were down more than 31% today at the open. The market knows what’s what.
Whether it’s “current” or not.