Sirius Minerals drops 20% after delaying UK potash project

Shares of London-listed Sirius Minerals (LON:SXX) lost 20% on Monday after the company put on hold its potash project in North Yorkshire in the UK.

By the close the explorer had lost 19% of its value to £0.90 affording it a market value of £136 million. A massive 36 million shares had changed hands, more than three times the usual daily average. Year to date the counter is down 63%.

Sirius Minerals' plan for UK's only seam of potash needs approval from the North York Moors National Park Authority where the explorer has secured mineral rights for 631 sq km of land.

Sirius Minerals asked the Park to delay making a decision on the $1.7 billion mine while it reworks the application for submission next year.

FT (paywall) quotes analysts at Investec as saying: “Permitting for mines is never easy in the UK and we suspect [Sirius] has found this a more difficult process than initially envisaged. It looks to us like the market will now have to wait for almost another year for any meaningful developments:”

As well as trying to convince planners of the merits of the scheme, Sirius has also been trying to demonstrate that there is a market for polyhalite, the form of potash that it will mine in Yorkshire. Amec, consultants working for the park authority, has questioned the demand for polyhalite but Sirius has pointed to an offtake agreement with a Chinese company for 1m tonnes, as well as framework agreements and letters of intent with further potential customers.