Emmerson PLC (AIM:EML) has started appointing contractors to carry out pre-construction work at its Khemisset potash project in Morocco, less than a month after securing US$47mln of initial funding.
It awarded the first basic engineering contract to Barr Engineering for the mineral processing facility ahead of first production in early 2024.
The company said it expects to select further contractors for the basic engineering before the end of this year with contracts signed by January 2022.
They will cover highways connection and site access, portal and declines, mine site infrastructure, a tailings storage facility, electrical power and water.
The swift move into the execution phase follows on from deals struck with Global Sustainable Minerals (GSM) and Gold Quay Capital (GQS) that will see Emmerson bring in up to US$46.75mln of new funds.
"The financing deal we secured with GSM and GQC included an upfront cash injection so that we could advance the next stage of the project's development, the basic engineering,” said chief executive Graham Clarke.
“This is part of the upfront capex, rather than an additional cost, and moves us firmly into the pre-construction phase.”
The company expects to invest well over US$500mln over the project's initial 19-year life of mine, while the pre-production capital expenditure is put at US$387mln.
Significantly, that latter figure marks the project among the lowest-cost operations in the fertiliser space and puts it at less than half of the global peer average for capital intensity.
A feasibility study valued Khemisset at US$1.4bn on a post-tax net present value basis, giving an estimated internal rate of return of 38.5% over an initial 19-year mine life.
This initial mine life is based on a mine plan that so far addresses only 43% of the total mineral resource, which comprises a total of 537mln tonnes with an average grade of 9.24% K2O.
GSM is described as a Singapore domiciled investment vehicle backed by a significant south-east Asian investor.