Sirius Minerals gave investors a fright after warning that funding for its huge new mine in Yorkshire would take longer to arrive and the project may cost more than thought.

Shares in the FTSE 250 company fell 25pc in early trade after it gave an update on plans to build the Woodsmith polyhalite mine in the North York Moors. But the stock regained ground to change hands 10pc lower at 29.5p.

Sirius said the cost of digging the mile-deep mine would rise by $400m-$600m (£309m-£464m), on top of the previously estimated $3bn it still needs to raise in debt funding. It also admitted a deal for the $3bn funding was likely to slip into the start of 2019, having previously indicated it would be secured by this autumn.

The company is exploring a number of options for raising the $400m-$600m shortfall it needs to set aside for contingency, including the possibility of bringing in a partner. The total cost of building Woodsmith has now risen to $4.2bn from $3.7bn estimated two years ago. Sirius has already raised $1.2bn, which has gone towards preparing the minehead site.

Chris Fraser, chief executive, tried to soften the blow by pointing out that new contracts struck to dig the mine would transfer some of the risk onto Sirius’ suppliers. He announced it had hired Austrian construction giant Strabag at a fixed price to dig the 23-mile underground tunnel that will transport mined polyhalite to processing facilities on Teesside.