The company striving to develop the world’s biggest potash mine says the project is “at risk” if further funding can not be found.
Sirius Minerals was aiming to raise £522m and said talks had fallen through with a consortium of financial investors.
The firm is tunnelling in the North York Moors National Park near Whitby.
Sirius Minerals chairman Russell Scrimshaw has called on shareholders to accept a takeover offer.
He said he wanted shareholders to accept the offer from global mining giant Anglo American.
Mr Scrimshaw said the company faced 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.”
The mine is set to open in 2021 and has the potential to create up to 1,000 jobs.
If developed, it would be the world’s largest mine for polyhalite, which is used in agriculture.
Plans include a 23-mile (37km) tunnel to transport minerals to a processing plant on Teesside.
Sirius Minerals said that it had “reduced the pace of development” on the mine since work started in 2019.
Opponents have said the mine and its operations would damage the landscape and harm wildlife.