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Emmerson PLC - Project Update

RNS Number : 9616Y
Emmerson PLC
15 September 2020

Emmerson Plc / Ticker: EML / Index: LSE / Sector: Mining

 15 September 2020

Emmerson Plc

("Emmerson" or "the Company")

 Project Update


Emmerson Plc, the Moroccan focused potash development company, is pleased to provide an update for its 100% owned Khemisset Potash Project in Northern Morocco ('Khemisset' or 'the Project'), which demonstrates clear progress towards delivery of this world class project.


The highlights of the update are:

·    Multiple workstreams in progress to further de-risk the project and provide confidence in the ongoing project finance and due diligence processes

·    Permitting process on track, with main permits targeted to be in place in H1 2021

·    Investigation of options for staged development to reduce upfront capital costs and provide financing flexibility

·    Engagement with potential strategic partners, debt providers and anchor investors proceeding well


Emmerson CEO, Graham Clarke, commented, "This is now a pivotal time for Emmerson as we continue to make excellent progress with the delivery of the Khemisset Project and move closer to construction.  The team continue to add value and the ongoing workstreams shall enhance what is already a world class project."


Project Update



●     Company vision:  In setting out to define, design, permit and build the Khemisset Project, Emmerson is driving towards meeting the Company vision of "being the first and leading potash producer in Africa".  Africa is the continent expected to benefit most from increased food production in the medium term, both as an engine of export and to keep track with the needs of its fast-rising population.  Many stakeholders will gain from successfully delivering this project.

●     Morocco: The Company has great respect for its host country, Morocco, which has welcomed significant Foreign Direct Investment in recent years and is demonstrating a policy of encouraging independent operators in the mining industry with generous fiscal terms and a clear permitting system. The country itself is supporting a successful push into increasing agricultural production with its Green Morocco agenda. The annually increasing imports of potash required mean that Emmerson is well positioned to play an important role in this area of economic development.

●     Stakeholder Engagement:  The Company values are summarised by the phrase "doing the right things and doing them in the right way" so Emmerson is committed to bringing positive impact to local stakeholders, particularly the direct effects of the Project and the mitigation of negative outcomes.  The underlying belief is to consider wider benefits to the society and recognise that effective inclusion of the community, partners in the value-chain, and the broader range of stakeholders ultimately leverages sustainable benefits for the Project and the related entities. This is done through new jobs, development of infrastructure, and the mining project being a catalyst for overall development in the region. The benefits that the project will bring were recently confirmed in the Socio-economic Study. 

●     Team: The team that has been working on the project have achieved exceptional progress but as the project moves towards construction new and additional skills will be required to ensure the speed of progress is maintained. The process of building the team has commenced  and will continue over the coming months to ensure all the appropriate roles are covered, but as has been the case it is intended to keep the team lean with the roles filled by committed and talented people.



●     Risk Analysis: A detailed risk analysis has been completed to identify the areas that need further work to mitigate the risks and prepare the project for funding due diligence. This work is now being completed and guides the priorities for expenditure - using existing funds to maximise impact and to be fully prepared for a high level of due diligence from funding partners.

●     Work underway: Workstreams that have commenced using the existing funds include geological work that will prepare for and finalise the scope of general site investigation and de-risking of the declines, a further seismic survey and additional drilling to further prove out the early mining blocks.  Ventilation modelling, cuttability testing and a technical review of the mine plan are being undertaken and further process work is also underway. Where necessary, independent experts have been engaged.


Development options

●     Adding flexibility: Work is currently being done to confirm the opportunities for phased development of the project which will present an advantage in financing talks. The options being assessed have the potential to materially reduce the upfront capital cost with the flexibility around potentially phased development meaning financing can be considered at different levels.  Furthermore, because the valuable product off-take has not yet been allocated, in a potash market dominated by a handful of majors, this independence of supply is a major attraction to various potential partners.


Growth options

·    SOP: The Company is engaging with external consultants to further investigate the potential for producing SOP (Potassium Sulphate).  Work is ongoing towards delivering a Preliminary Feasibility Study ('PFS') to outline the economics of this alternative and confirm the potential for significant value to be added to the project. The Scoping Study on the SOP project indicated a post tax NPV of US$411 million with average post tax free cash flow of US$70 million per year.

·    Salt: The strategy is still in place for marketing the de-icing salt, which is a by-product of mining the potash.  The target market for this salt is the U.S.A, which is a large consumer.  This additional income stream will effectively reduce the cash cost of producing the potash, so it is an important aspect of the project when in production. The Company is continuing to investigate and develop this significant opportunity for adding value to the project. The Feasibility Study assumed that 1 million tonnes of de-icing salt would be sold with this element of the project having a post tax NPV of up to US$133 million. The project can potentially produce up to 4.5 million tonnes of salt per annum leaving considerable scope for an increase in the value generated by the sales of salt.

·    Resource: A mining consultant has been engaged to investigate an expansion of the mineable potash resource.  The aim of this is to secure a much longer mine plan, rather than an increase in the production rate, which would be helpful for all stakeholders in the medium and long term.



·    Environmental: The permitting process remains on track for completion the of ESIA in the coming weeks with submission of the application in Q4 2020 and successful granting of the permit in H1 2021. Emmerson is focused on doing the right thing in the right way.  The decision was made to produce an environmental survey that is much more robust than the minimum standard required, at a level set out by the IFC Performance Standards and Equator Principles.  It may take some time, but Emmerson is confident that the outcome will be very satisfactory to all stakeholders.

·    Mining: The Company is currently investigating the opportunity to speed up the process of securing the mining permit to ensure that this is successfully granted in H1 along with the environmental permit.

·    Authorities: The Moroccan mining ministry and other relevant authorities are proving to be helpful in dealing with the permitting process, providing confidence that Emmerson will successfully achieve the target of having both the environmental and mining permits in place during H1 2021.


Strategic Partners and Financing

●     Funding: Engagement with potential strategic partners, debt providers and anchor investors has been proceeding well.  As mentioned above, there are multiple opportunities being investigated and due diligence processes are now underway. 

●     Advisors: Additional advisors assisting with this process include Sender International. As announced on 19 August, the Company appointed Shore Capital as joint broker to enhance its capital markets exposure, with an emphasis on bringing some institutional shareholders onto the register.




For further information, please visit www.emmersonplc.com, follow us on Twitter (@emmerson_plc), or contact: 


Graham Clarke

Edward McDermott

Emmerson plc

+44 (0) 207 236 1177


Jerry Keen

Toby Gibbs

John More


Shore Capital



+44 (0)20 7408 4090 




Damon Heath

Isabella Pierre

Shard Capital

+44 (0) 207 628 3396


Megan Denison

Susie Geliher


St Brides Partners Limited

Financial PR/IR


+44 (0)20 7236 1177



Notes to Editors

Emmerson's primary focus is on developing the Project located in Northern Morocco.  The Project has a large JORC Resource Estimate (2019) of 537Mt @ 9.24% K2O and significant exploration potential with an accelerated development pathway targeting a low capex, high margin mine. Khemisset is perfectly located to capitalise on the expected growth of African fertiliser consumption whilst also being located on the doorstep of European markets. This unique positioning means the Project will receive a premium netback price compared to existing potash producers. The need to feed the world's rapidly increasing population is driving demand for potash and Emmerson is well placed to benefit from the opportunities this presents. The Feasibility Study released in June 2020 indicated Khemisset has the potential to be among the lowest capital cost development stage potash projects in the world and, as a result of its location, one of the highest margin projects. This delivered outstanding economics including a post-tax NPV8 of approximately US$1.4 billion using industry expert, Argus', price forecasts.


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