Sirius Minerals shares crash after announcing heavily-discounted $3.8bn cash call

Sirius Minerals narrowed total losses in its last trading year as a result of a fair value re-measurement of derivatives associated with its convertible loans.

The company was aiming to raise $3.8bn via a mix of $400m of new equity, $644m of unsecured convertible bonds, $500m of senior debt and a $2.5bn revolving credit facility.

Company boss Chris Fraser said: "Today's announcement provides a clear pathway to a fully financed project in the months ahead, while enabling us to progress construction at full speed."

Be that as it may, the miner had priced the equity portion of the cash call at between just 15-18p per share.

Despite that and the ensuing share price reaction, Yuen Low at ShoreCap was effusive, telling clients: "The next few weeks represent THE crucial juncture for the company.

"Successfully securing the Stage 2 financing is effectively the key to unlocking Sirius’s vast potential, and we expect should catalyse a major re-rating of the shares.

"Beyond that, while Sirius would still be some years from becoming cash generative, an investment in the company should become progressively de-risked and enjoy significant value uplift as it advances towards production, we believe."

Separately, Sirius Minerals said that it narrowed its total losses over its last trading year as a result of a fair value re-measurement of derivatives associated with its convertible loans.

The pre-revenue fertiliser development outfit cut its total losses 84% to £12.5m compared to a loss of £78.9m in the prior year.

However, on an operating level, losses actually widened 0.8% to £24.2m

Sirius deployed a total of £391.2m towards its projects in 2018, for a 67% year-on-year increase. Funds at the end of 2018 were £290.4m, comprising cash and cash equivalents of £230.1m and restricted cash of £60.3m.

Looking forward, Sirius said 2019 was a "critical year" as it works towards securing financing for its Woodsmith mine in North Yorkshire through to the first extraction of polyhalite from the site before the end of 2021.

Chief executive, Chris Fraser said: "It has been another year of exceptional progress for the business as we continue to increase our customer base around the world and develop the Woodsmith Mine and its associated infrastructure."

As of 0944 BST, shares of Sirius Minerals were trading 14.61% lower to 18.70p.