Mr Fraser, who helped orchestrate a $2 billion capital financing for Fortescue while working at Citigroup, said the company will test the market again next month.

"As soon as the market comes back on the other side of the summer break, we will wait for that period of stability to launch the transaction," he said.

Shareholders are, in essence, shouldering the full burden of project financing risk.

A successful bond issue is needed to unlock a $US2.5 billion revolving credit facility and $US400 million worth of convertible debt needed to fund the mine which relies on shafts 1.5km deep and a 36 kilometre tunnel to convey the polyhalite to the coast for export.

The company will run out of funding at the end of September and risks being forced into administration if the bond fails and alternative funding is not found, according to documents issued ahead of the proposed bond sale.

Mrs Rinehart's Hancock Prospecting, which invested $US250 million in Sirius last year in a royalty deal, declined to comment on the financing issues at Sirius.

Hancock currently has observers attending Sirius board meetings.

A successful bond issue would also unlock a $US50 million equity investment from Hancock Prospecting. The company would receive 200 million shares, representing a four per cent stake in Sirius, if the funding round is successful.

It would also give Mrs Rinehart the right to appoint a director the board which is chaired by one of Fortescue's founding executives, Russell Scrimshaw.

Sirius shares were crushed by the news of the failed bond issue, finishing the week 38 per cent lower at 16.4p, its lowest close since 2015.

The stock losses will hit the large base of Yorkshire locals who account for a large portion of its 85,000 retail shareholders who own half the stock, according to the Financial Times.

"We believe there is an elevated risk profile evident for equity-holders until completion of the (bond issue), given shareholders are, in essence, shouldering the full burden of project financing risk," said a research note from JP Morgan which is the investment bank organising the bond issue.

"Prior guidance was that Sirius had sufficient funding until the end of September before liquidity would be an impediment".

Mr Scrimshaw had said it is "essential" for the FTSE-listed company to secure a $US2 billion debt guarantee from the government to ensure it can push ahead with the next phase of the project.

"In order to fully realise this transformational opportunity for the UK, a partnership with the UK Government, in the form of a Treasury Guarantee under the Infrastructure Project Authority’s scheme, is essential," Scrimshaw said in the company's 2017 end of financial year report that was released to investors in April last year.