Mr. Chris Fraser, the current Chief Executive of Sirius Minerals had remarked last week that in light of the company’s recent plan to work on a new potash mine, it may be in its best interest to go off the stock market. The project is valued at around £4 billion with the mine to be built under the North York Moors National Park.
Mr. Fraser had further added that considering the market sentiment, short-sellers, and other relevant factors, going private may just work in our favor to protect the company from devaluation in the long run.
CEO’s Remarks Were Met With An Immediate Backlash From The Investors
Following the comment, an unease spread through the small investors (85,000 in total) who could picture the massive drop in the overall value of the shares that they currently hold. The villagers situated around the moors who had previously supported Sirius Minerals’ mine project, in particular, retaliated immediately on Chief Executive remarks.
The Woodsmith mine project (£4 billion) could have been streamlined if Sirius Minerals had succeeded in securing a bond last month that was valued at £400 million. Having lost the bond, however, Mr. Fraser had highlighted the potential benefits of going private in terms of shielding the company from the capital markets.
He further added that the markets have been frustrating the process of securing funding for the Woodsmith mine project. Prominent institutions like banks that usually support funding such projects have failed the company.
Sirius Minerals is currently undergoing the review process. An official statement from the company had previously reported that either the company has to opt for debt markets in search of the required funding or a strategic investor must be brought on board for the project to be realized. It was further highlighted that while the current finances may be sufficient to stretch trading until the upcoming spring, the company is still focusing on minimizing costs and have plans of cutting a significant number of jobs.
There Are No Plans For Sirius Minerals To Go Private
A spokesman from Sirius Minerals, however, has clarified the stance and silenced the rumors with a statement that there are currently no plans for the company to go off the stock market. The company is awaiting the completion of its strategic review that will potentially make the benefits of the mining project evident to the shareholders, following which, raising funds for the project can be expected to turn easier.
The share price for Sirius Minerals, nonetheless, saw a sharp decline of 4.3% yesterday. With a fall of 0.26 GBX, the stock is currently trading at 3.29 GBX. The company had made a high of 44 GBX back in 2016.