TIDMEML
RNS Number : 0863Q
Emmerson PLC
04 June 2018
Emmerson Plc / Ticker: EML / Index: LSE / Sector: Mining
4 June 2018
Emmerson Plc ("Emmerson" or the "Company")
Re-Admission to the London Stock Exchange
Emmerson Plc is pleased to announce it has raised gross proceeds
of GBP6 million by way of a placing of 200 million new shares at a
price of 3p and has today been readmitted to the Official List of
the UK Listing Authority by way of a Standard Listing following its
acquisition of 100% of the share capital of Moroccan Salts Limited
("MSL") as originally announced on 17 October 2017 ("the
Acquisition"). As a result of the Acquisition, Emmerson now owns
100% of the Khemisset Potash Project in Northern Morocco
("Khemisset" or "the Project").
Trading in the Company's shares will recommence trading at 8.00
a.m. on the London Stock Exchange's ("LSE") Main Market for listed
securities under the ticker 'EML'.
Highlights
-- Significantly over-subscribed placing which raised gross proceeds of GBP6 million
-- Re-admission to the LSE following acquisition of the Khemisset Potash Project in Morocco:
o Large potash JORC compliant Resource of 311Mt at 10.2% K(2) 0
with significant
exploration upside
o Accelerated pathway targeting the development of a low-capex,
high-margin
mine - targeted delivery of Scoping Study by end of Q1 2019
o De-risked development following estimated historical spend (if
conducted at
2018 costings) of US$20 million
o Located in one of the fastest growing potash consuming
countries worldwide
and on the doorstep of European markets
o Established infrastructure including a network of toll roads,
electricity distribution and deep-water ports
-- Positive market dynamics for potash due to potassium-based
fertilizers being critical to improved crop quality as demand for
food increases in correlation with the world population
-- Proven Board and management team with extensive potash and
international capital market experience
Hayden Locke, CEO of Emmerson, commented:
"Now is the perfect time to be developing what we believe is an
outstanding potash project. Food reserves are at a 50-year low and
as the World's population continues to rapidly grow, potash
fertiliser becomes increasingly critical to increase crop yields
and improve the quality of plants. It is estimated that by 2050,
the World will need to produce 70% more food from ever reducing per
capita amounts of arable land, to feed its growing population. Put
simply, global food security goals cannot be achieved without the
significant use of fertilisers.
"In Khemisset we have a project that ticks all the boxes: a
large resource, significant exploration upside, an outstanding
location - with Morocco being named as one of the fastest growing
potash consuming countries in the world. Coupled with a shallow
deposit and excellent local and export infrastructure, we are
confident that we have a project which will benefit from low
capital and operating costs.
"With GBP6 million raised in an oversubscribed placing we have
the funds in place to deliver our near-term value drivers and, as a
result, anticipate being able to hit the ground running with high
impact newsflow post-listing as we move towards the delivery of a
Scoping Study by the end of Q1 2019.
"We are delighted to have successfully brought London's newest
potash company to the market at a time where there is record potash
demand against rebalancing, disciplined, supply. With an excellent
project and a proven Board and management team in place, we now
have the wheels in motion to meet our objectives and move towards
becoming a producing potash fertiliser company."
Ed McDermott, Emmerson's Non-Executive Chairman commented:
"On behalf of the shareholders of Emmerson I am very pleased to
welcome Hayden Locke (CEO) and Rob Wrixon (COO) to the Board. We
are extremely happy with the acquisition of Moroccan Salts Ltd and
look forward to developing the assets further and delivering value
to our shareholders. I would like to thank Cameron Pearce and Sam
Quinn for their service to Emmerson and wish them well in their
next endeavours."
**S**
For further
information,
please visit
www.emmersonplc.com,
follow us
on Twitter
(@emmerson_plc),
or contact: Emmerson Plc Tel: +44 (0) 207
Hayden Locke 236 1177
Edward McDermott
James Biddle Beaumont Cornish Tel: +44 (0) 207
Roland Cornish Limited 628 3396
Financial Adviser
Jeremy King Optiva Securities Tel: +44 (0) 3137
Limited 1904
Broker
Lottie Wadham St Brides Partners Tel: +44 (0) 20
Susie Geliher Ltd 7236 1177
Financial PR/IR
Notes to Editors
Emmerson's primary focus is on developing the Khemisset Potash
Project located in Northern Morocco. The project has a large JORC
Resource Estimate (2012) of 311.4Mt @ 10.2% K(2) O 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 information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014.
Further Information (as per Re-Admission document which can be
found on the Company's website)
Introduction
The Company was incorporated on 1 March 2016 in accordance with
the laws of the Isle of Man with an indefinite life and with
company number 013301V under the name Emmerson Plc.
The Company was admitted to the standard listing segment of the
Official List with trading becoming effective on the London Stock
Exchange's main market on 15 February 2017 ("Initial Admission").
Concurrent with the Initial Admission the Company raised
approximately GBP913,000 before expenses and adopted an investment
policy to undertake one or more acquisitions of target companies,
businesses or assets initially focussing on exploration and/or
production companies in the natural resources sector in South East
Asia, Africa, and the Middle East.
On 16 October 2017 the Company executed a binding agreement with
MSL and the shareholders of MSL at such date (each a "Vendor" and
together the "Vendors") under the terms of which the Company
agreed, subject to due diligence and regulatory approvals, to
acquire 100 per cent. of the issued share capital of MSL (the
"Acquisition") to be satisfied in full by the issue of 333,333,333
new shares of the Company each at an implied price of GBP0.03 per
share. As the Acquisition would result in a fundamental change in
the business of the Company and would constitute a "Reverse
Takeover" under the Listing Rules, on 17 October 2017, the Company
requested the Financial Conduct Authority ("FCA") suspend trading
in its shares pending an application for the Company to have the
Enlarged Ordinary Share Capital admitted to the Official List and
to trading on the main market for listed securities of the London
Stock Exchange.
On 9 May 2018 the Company and the Vendors executed the
Implementation Agreement, under the terms of which both parties
confirmed their satisfaction with respective due diligence, and
approved the terms of the Acquisition subject only to
Re-Admission.
MSL is the holding company for a group of Moroccan companies
which are developing the Khemisset potash project located near
Rabat in northern Morocco (the "Khemisset Project" or the
"Project"). The Directors believe the Khemisset Project has the
potential to become a producing potash operation and intend to
complete the various exploration work and technical studies
required to assess its technical and economic viability. The
Directors believe the Project's fundamentals, based upon the
current resource (as contained in the CPR) and a favourable Scoping
Study in due course, support the potential for a mine life greater
than 20 years and a low capital cost and high operating margin
potash mine in Morocco.
Reasons for the Acquisition
The Directors of the Company have been seeking to identify
opportunities within the resources sector to acquire a natural
resource asset in a stable jurisdiction that has the potential to
transform the Company into a significant international mining and
exploration group focused on investing in and acquiring and
developing resource projects.
MSL has a substantial ground position in, and extensive
technical information on the Khemisset potash basin, and has
recently conducted confirmatory drilling on the project area. Both
the recent and historic drilling results inform the view of MSL,
shared by the Company, that the Khemisset Project could emerge as a
highly competitive global potash mine with potential to return
substantial gains for new and existing shareholders.
The Directors believe that the following are the key features
which make this an attractive project:
-- the current MSL management team have an existing track record
developing and advancing potash projects;
-- taking into account the value of the Consideration Shares and
the CLN Shares and the potential exploration and development
opportunities offered by the Khemisset Project, the Acquisition has
the potential to generate significant value for Shareholders;
-- the Acquisition is in line with the Company's stated investing policy;
-- the Khemisset Project has reported a large Mineral Resource
Estimate under the JORC 2012 code;
-- the Khemisset Project is targeting the production of 60 per
cent. K2O muriate of potash (MOP) (known as K60), the most common
and saleable grade of MOP;
-- the Khemisset Project has been under-developed due to a lack
of investment and, with investment, and based upon the current
resource (as contained in the CPR) and a favourable Scoping Study
in due course, the Directors believe that there is potential for a
mine life greater than 20 years;
-- the Khemisset Project benefits from the shallow nature of the
ore body (relative to existing potash producers) and its strategic
location (relative to existing infrastructure and markets); and
The above is a statement of belief by the Directors and, as
such, the Competent Person has not covered this statement in the
CPR and accordingly cannot opine on this and therefore it should be
treated with caution but none the less are the beliefs of the
Directors.
-- due to its location and proximity to infrastructure and
customers in Morocco, the Khemisset Project has, subject to the
conclusions of the planned Scoping Study, the Director's believe
the potential to be a low Capital expenditure ("Cap-ex"),
high-margin potash project.
The Khemisset Potash project
The Khemisset Project comprises 39 research permits and 1 mining
licence (the "Khemisset Licences") in the Rabat-Salé-Zemmour region
of, Morocco. The 39 research permits are held by MSL Minerals SARL
and the one mining licence (the "Mining Licence") by Mine de Centre
SARL. A summary of the Khemisset Licences is set out below:
39 Research Permits, held by MSL Minerals SARL
Last Renewed
(in compliance
Licence Number Date Granted with Law ndeg Date of Expiry
33-13)
3437967 02/08/2015 17/05/2016 01/08/2019*
3437968 02/08/2015 17/05/2016 01/08/2019*
3437969 02/08/2015 17/05/2016 01/08/2019*
3438011 10/10/2016 06/10/2017 09/10/2020*
3438012 10/10/2016 06/10/2017 09/10/2020*
3438013 10/10/2016 06/10/2017 09/10/2020*
3438014 10/10/2016 06/10/2017 09/10/2020*
3438015 10/10/2016 06/10/2017 09/10/2020*
3438016 10/10/2016 06/10/2017 09/10/2020*
3438017 10/10/2016 06/10/2017 09/10/2020*
3438018 10/10/2016 06/10/2017 09/10/2020*
3438019 10/10/2016 06/10/2017 09/10/2020*
3438041 19/12/2016 06/10/2017 18/12/2020*
3438042 19/12/2016 06/10/2017 18/12/2020*
3438043 19/12/2016 06/10/2017 18/12/2020*
3438044 19/12/2016 06/10/2017 18/12/2020*
3438045 19/12/2016 06/10/2017 18/12/2020*
3438046 19/12/2016 06/10/2017 18/12/2020*
3438047 19/12/2016 06/10/2017 18/12/2020*
3438059 26/09/2017 06/10/2017 25/09/2021*
3438060 26/09/2017 06/10/2017 25/09/2021*
3438061 26/09/2017 06/10/2017 25/09/2021*
3438062 26/09/2017 06/10/2017 25/09/2021*
3438063 26/09/2017 06/10/2017 25/09/2021*
3438064 26/09/2017 06/10/2017 25/09/2021*
3438065 26/09/2017 06/10/2017 25/09/2021*
3438171 18/01/2018 18/01/2018 17/01/2021
2138109 11/08/2015 11/08/2015 10/08/2018
2138137 28/12/2015 28/12/2015 27/12/2018
3438068 01/12/2017 06/10/2017 30/11/2021
2138139 09/02/2016 09/02/2016 08/02/2019
2138140 09/02/2016 09/02/2016 08/02/2019
2138141 09/02/2016 09/02/2016 08/02/2019
3438152 31/08/2017 31/08/2017 30/08/2020
3438153 31/08/2017 31/08/2017 30/08/2020
3438154 31/08/2017 31/08/2017 30/08/2020
3438155 31/08/2017 31/08/2017 30/08/2020
3438156 31/08/2017 31/08/2017 30/08/2020
3438157 03/11/2017 03/11/2017 02/11/2020
Mining Licence held by Mine de Centre SARL
Licence Number Last Renewed Date Granted Date of
(in compliance Expiry
with Law ndeg
33-13)
343166 20/05/2016 17/09/2015 16/09/2019
* All these permits have already been renewed for a four year
period and are not renewable beyond the date stated. Under the New
Mining Code upon the discovery of a workable deposit within the
area covered by a research permit, the Group has a right to apply
for a mining licence in respect of the relevant area.
History of Exploration and Technical Work
The Khemisset Project is a potash exploration property located
some 80 km east of Rabat and covering an area about 60 km by 20 km.
No potash mining has taken place to date.
Three previous drilling campaigns have been performed in the
Khemisset Basin, targeting potash; two historical exploration
campaigns and one recent verification program. The first, carried
out by the association Bureau de Recherches et de Participations
Minieres ("BRPM") and Mines Domaniales des Potasses d'Alsace
("MDPA") between 1955 and 1958, consisted of 9 drillholes,
totalling 7,518 drilled metres. The second one was performed by
BRPM between 1962 and 1969 and included 124 new drillholes. The
drilled metres in both historical campaigns totalled 85,315 m. The
most recent drilling was conducted by MSL in 2016 and consisted of
a three-hole verification program, drilling 1,543 m. Based on the
cost per metre of MSL's 2016 drilling campaign, MSL has estimated
the 133 historic drill holes, plus the 1974 PFS, would (if
conducted at 2018 costings) have a cost of greater than US$20
million.
JORC Resource Estimate
The SRK Classified Mineral Resource Statement is shown below.
The Mineral Resource is contained entirely within the exploration
and mining licences displayed in figures 5-2 and 5-3 of the
CPR.
SRK Mineral Resource Statement for the Khemisset Potash Deposit,
effective date February 2018
Classification Deposit Tonnage (Mt) % K(2) O Thickness
Inferred East Central 253.2 10.3 2.3
Southwest 58.2 9.5 2.6
------------ ------------ ---------
Total 311.4 10.2 2.4
----------- ----------- -----------
* Reported above a cut-off grade of 8.5 per cent. K2O and a minimum thickness of 1.5m
Summary of Work Programme following Re-Admission
The Company has outlined a work programme for 2018/2019
("2018/2019 Work Programme and Budget"), which includes:
-- Geology desktop work;
-- Topographical and seismic survey;
-- Drilling works;
-- Scoping study (including baseline environmental studies and permitting work); and
-- Metallurgical testing is planned to be undertaken early in 2019.
The principal aims of the 2018 exploration are to gain further
geological information to understand the potential faulting, verify
the potash grade and continuity, and further understand the
mineralogy within the most prospective parts of the basin. The
programme also aims to understand the presence of rinneite within
the north-eastern part of the basin. The drilling will also aim to
infill the initial mining area to a denser sample grid which may
enable parts of the Mineral Resource to have sufficient confidence
to be reported as Indicated.
Further details regarding the Khemisset Project is set out in
the Competent Person's Report at Part IV of the Re-Admission
Document.
The Potash Market
Potash
The term potash refers to a group of potassium bearing minerals
and chemicals. Potash is a fertiliser used in potassium deficient
soil, to increase crop yields and improve the quality of the plant.
It may be used in combination with nitrogen and phosphate, to
increase the yields of important crops such as corn, soybeans,
grains, and rice. Potassium protects plants from extreme
temperatures, helps plants to fight stress and disease, reduces
wilting, strengthens roots and stems, and assists in transferring
food. It activates plant enzymes to ensure plants use water
efficiently.
Potassium chloride ("KCl"), or muriate of potash ("MOP"), is the
most globally important source of potash. Sulphate of potash
("SOP") is less common and sells for a premium price.
Potash plays a central role in helping feed the world's growing
population. Approximately 95 per cent. of world potash production
is used as fertiliser, the rest is used in a variety of chemical
and manufactured products. There is no substitute for potash.
Existing Commercial Potash Operations
The key global producing countries are Canada, Russia, Belarus
and China, accounting for some 75 per cent. of world production
(2015). Nutrien (the result of the PotashCorp and Agrium merger),
Mosaic, Uralkali, Belaruskali are the largest producers.
Key producers estimated that, in 2017, global demand for MOP
would range between 62 Mt and 64 Mt up from approximately 60 Mt in
2016. Industry participants expect 2018 to be another year of
strong demand growth, led by Latin America and China, with up to 65
Mt of global consumption. From 2001 to 2016, Potash grew with a
compound average growth rate of 2.7 per cent.. Argus FMB expects
similar growth for the future. MOP remains the cheapest source of
potassium for agricultural purposes and so demand is expected to
remain robust for the foreseeable future.
Potash Prices
The Canadian potash producers formed a consortium called the
Canadian Potash Exporters ("Canpotex"), which is jointly owned by
the three Canadian fertiliser producers. Its role is to market and
export all potash produced in the province of Saskatchewan which is
to be sold outside of North America. The Belarussian Potash Co was
formerly the marketing agent for Belarussian and Russian potash,
however, this consortium collapsed in July 2013 and has yet to be
reformed. The prices agreed each year by the Russian and
Belarussian producers as well as Canpotex typically acts as a
benchmark for global spot prices. For many years, the free on board
("FOB") Vancouver potash prices were stable at just over US$100 a
tonne. Growing consumption of food towards the end of the 20th
century and early 21st century, as well as controlled marketing by
the key producers, led to a demand/supply imbalance, which saw
prices rise to almost US$900 a tonne in 2008 before dropping back
as the world economy slipped into recession. Since 2011, spot
potash prices at the Port of Vancouver have fallen from around
US$490/t metric tonne to their current levels of approximately
US$230 metric tonne in March 2018.
Potash Producers
According to PotashCorp, the largest Canadian producer, global
potash shipments have risen from approximately 43 million metric
tonnes in 2001 to around 61 million metric tonnes in 2016,
representing a compound annual growth rate ("CAGR") of
approximately 2.7 per cent. Many producers agree that 2017 was a
record year for potash consumption with demand estimated to be in
the range of 62 to 64 million metric tonnes. Key potash producers
are forecasting 2018 to be another record with demand up to 65
million tonnes. Global growth in demand is currently being driven
by increasing Latin American demand, particularly in Brazil, which
is the largest seaborne market for potash; China and South-East
Asia. Africa currently has low fertilizer application rates
compared to other regions due to the lack of accessibility and
affordability to smallholder farmers and there exists a great
opportunity in Africa to transform agricultural productivity by
improving its fertilizer supply chain. Africa has a rapidly growing
food market that may be worth more than $1 trillion by 2030.
The Enlarged Group's trading strategy and prospects
Following Admission the Enlarged Group has approved the
2018/2019 Work Programme and Budget, which includes:
-- Geology desktop work;
-- Topographical and seismic survey;
-- Drilling works;
-- Scoping study (including baseline environmental studies and permitting work); and
-- Metallurgical testing is planned to be undertaken in 2019.
The principal aims of the 2018/2019 Work Programme and Budget
are to gain further geological information to understand the
potential faulting, verify the potash grade and continuity, and
further understand the mineralogy within the most prospective parts
of the Khemisset Project. The programme also aims to understand the
presence of rinneite within the north-eastern part of the Khemisset
Project. The drilling will also aim to infill the initial mining
area to a denser sample grid which may enable parts of the Mineral
Resource to have sufficient confidence to be reported as Indicated.
SRK Consulting (UK) Limited ("SRK") has been requested by the
Company to prepare a Competent Persons Report ("CPR") on the
Khemisset Project and has confirmed that it considers the 2018/2019
Work Programme and Budget warranted. Furthermore, SRK believes that
the information gained from this programme will address faulting
and mineralogy risks associated with the Khemisset Project. SRK has
confirmed that the 2018/2019 Work Programme and Budget, and
accompanying budget presented for the required work, is reasonable
and achievable over the Working Capital period following Admission.
Further detail on the Work Programme is set out in the CPR.
The Directors believe that both the recent and historic drilling
results inform the view of MSL, shared by the Company, that the
Khemisset Project could emerge as a top tier global potash mine
with potential to return substantial gains for new and existing
shareholders.
The Directors believe that the current MSL management team have
an existing track record developing and advancing potash projects
and creating shareholder value and that the 2018/2019 Work
Programme and Budget has the potential to increase the size of the
Khemisset Project resource (detailed at 10 of Part I of the
Re-Admission Document) and achieve near-term shareholder value that
has not previously been unlocked due to a lack of investment.
Board of Directors and Key Management
Edward ("Ed") Peter McDermott, age 35, Non-Executive
Chairman
Ed McDermott started his city career with credit derivative
broking firm Creditex International Ltd. Ed's subsequent roles have
been in corporate broking which has seen him involved with a number
of small to medium sized companies. With over 10 years' experience
in the management, financing and development of small companies he
has broad experience in a number of sectors including natural
resources, financial services, retail and leisure. He is currently
a Non-Executive Director of AIM listed Fishing Republic Plc and
FastForward Innovations Limited. Ed is part of the corporate
broking/finance team at Optiva, an investment advisory firm with
over 20 years in business. He has previously served as a Director
of AIM listed Stellar Resources Plc and Noricum Gold Ltd.
Hayden Thomas Locke, age 36, Chief Executive Officer
Mr Locke has nearly 15 years' commercial experience in
investment banking, private equity and junior resource company
management. He initially studied engineering and commerce before
completing a graduate degree in mineral exploration geosciences at
the Western Australian School of Mines. He commenced his career in
investment banking in London, initially with Deutsche Bank and then
J.P. Morgan before returning to Australia in 2009. On his return to
Australia, Mr Locke helped to set up and run the Australasian
operations of Barclays Natural Resource Investment, a private
equity investment vehicle focused on energy, renewables and metals
and mining, with over US$2 billion in committed capital. In 2011,
Mr Locke was recruited as Head of Corporate for Australian gold
explorer Papillon Resources (ASX:PIR). Papillon discovered and
fully permitted 5 million ounce Fekola Gold Project in Mali, West
Africa, completing a number of technical studies and capital
raisings, before eventually selling the company to Canada listed
gold producer B2Gold for over $600 million in 2014. In 2014, Mr
Locke joined ASX listed Spanish potash developer Highfield
Resources as Head of Corporate and Sales & Marketing. As of
mid-2017, he also assumed responsibility for Technical Services
Department including geology (resource and reserve estimation),
mining and metallurgy and processing.
Dr Robert Christopher Wrixon, age 46, Executive Director - Chief
Operating Officer
Dr Wrixon has 18 years' commercial experience in corporate
strategy, mining M&A and exploration management. He began his
career in mining as head of strategy for Xstrata Coal in Sydney and
later moved to a corporate strategy role for Xstrata plc in London.
After leaving Xstrata, Dr Wrixon ran two ASX listed exploration
companies, Manhattan Corporation Limited and Haranga Resources
Limited. Dr Wrixon has been the Managing Director of Moroccan Salts
Limited since its inception in 2013 and brings a wealth of
knowledge on the project and the region. He is also currently a
director of Starboard Global, a natural resource venture capital
group based in Hong Kong. He holds an honours degree in chemical
engineering and a Ph.D in mineral engineering from the University
of California, Berkeley.
Jeffrey Lindhorst, Bsc. Geology, Grad Dip. GIS, MAIG, age 58,
Exploration Manager
Jeffrey is a geologist with almost 30 years' international
experience in the mining industry. He has worked in project
evaluation and development throughout Alaska, Australia, PNG, Peru,
Chile, Philippines, Thailand, Laos PDR, Morocco and Rwanda. His
work in senior technical and management positions involved
management of extensive drilling programs, selecting and building
teams and working closely with local populations and government
officials in a wide range of cultural settings. He was Exploration
Manager for Kasbah Resources based in Morocco for six years from
2008. Since 2014 he has been working in Rwanda on developing and
consolidating the domestic tin mining industry. Jeffrey is a member
of the Australian Institute of Geoscientists and qualified as a
Competent Person under JORC Code (2012).
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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