Global mining giant Anglo American plc on Monday agreed to buy Sirius Minerals, the troubled Scarborough-based firm behind the giant potash mine in North Yorkshire, for £404.9 million in cash.

Sirius chairman Russell Scrimshaw warned that if the acquisition is not approved by shareholders “there is a high probability that the business could be placed into administration or liquidation within weeks thereafter.”

Scrimshaw said this outcome would “most likely result in shareholders losing all of their investment, as well as put the future of the entire project, and its associated benefits for the local area and the UK, at risk.”

The potential deal could save hundreds of jobs — but tens of thousands of retail investors would suffer heavy losses on their shares if the offer is approved.

Sirius shareholders would receive 5.5p per share in cash, a 34.1% premium to the closing price on January 7, the day before Anglo American said it was in talks to buy the fertilizer company.

Sirius shares traded as high as 45p in 2016.

The deal has to be approved 75% of Sirius shareholders at general meeting.

Scrimshaw said in a stock exchange statement: “Four months ago, following the setbacks in the bond market, we took the difficult decision to slow the pace of development of our project and initiate a strategic review to reassess how best to unlock the long term value for our shareholders, the community, the UK, and our customers all around the world.

“The scope of the strategic review was to consider and incorporate optimisations to the project development plan and to explore alternative funding solutions, including looking for a strategic partner to acquire a minority interest in the project to provide those funds and support the senior debt financing required to complete the project.

“We were successful in reducing the initial funding needs of our project to map out a way to develop the project in a way that better aligned risk to capital providers but, despite an extensive global search for a strategic investor, we have to date not received a firm proposal for a partial project stake.

“The only viable proposal was received from Anglo American in early January, who were only interested in pursuing a 100% control transaction.

“Alternative financing solutions have also been pursued in parallel to the strategic partner process, which resulted initially in a non-binding proposal being received in December 2019 and subsequently a revised proposal being received on 9 January 2020.

“However, in the opinion of the Sirius Board and its advisers, the terms of the proposal received and the conditions attached are not acceptable in their current form.

“It is highly unlikely that acceptable revisions to this financing proposal can be delivered and implemented by the end of March 2020.

“We acknowledge that to many shareholders our decision as a board to recommend this offer will have come as a shock.

“Your board deeply regrets that we could not deliver the complete stage two financing in 2019 despite a very broad and thorough process.

“Going into the strategic review the Sirius board’s strong preference was a solution that allowed current shareholders to participate as fully as possible in the future development of the project.

“Following the strategic review process it is clear that no such options are currently available to us and in that context Anglo American’s offer is the only feasible option.

“We also recognise the returns that this offer would represent are not what either our shareholders or the Sirius board had previously hoped for.

“We regret that we are not able to deliver on our long-term goal of Sirius being able to deliver the project into production, although we assure all stakeholders that the team has worked tirelessly and diligently over the last nine years to try and achieve that.

“However, given the current cash constraints of Sirius, and lack of realistic and deliverable alternative financing and development options, we believe this to be a fair approach from Anglo American, a company committed to approaching the project in the right way, and with the resources to complete the job.

“We now face a stark choice.

“If the acquisition is not approved by shareholders and does not complete there is a high probability that the business could be placed into administration or liquidation within weeks thereafter.

“This outcome would most likely result in shareholders losing all of their investment, as well as put the future of the entire project, and its associated benefits for the local area and the UK, at risk.

“This is the context in which your board must assess the offer for your company and, having given due consideration, your board believes the acquisition to be in the best interests of Sirius and all of its stakeholders, providing shareholders with some financial return.”