TIDMEML
RNS Number : 8707R
Emmerson PLC
11 March 2021
Emmerson Plc / Ticker: EML / Index: LSE / Sector: Mining
11 March 2021
Emmerson Plc ("Emmerson" or the "Company")
Shareholder Newsletter
Dear Shareholder
Q1 2021 has been an exceptionally productive time for Emmerson,
and the coming months are expected to be similarly constructive.
Across the various dimensions of our business including operations,
corporate positioning and commercial opportunity, we have made
significant strides over the past few weeks and this forward
momentum is expected to continue as we look to commence
construction of Africa's first potash mine by the end of 2021.
Operations Review
The backbone of our business is of course the Khemisset Potash
Project in Morocco (the "Project"), a low capital cost, and high
margin potash asset which is being advanced towards production in
2023.
The Company recently announced a key deliverable in the approval
of the Mining Licence ('ML') which provides Emmerson with the
exclusive right to develop and mine the potash deposit, within the
specific perimeter of the licence area, in the Khemisset basin. The
grant of the Mining Licence followed a successful application
process including the submission of a proven, JORC compliant,
Mineral Resource Estimate ("MRE") and the confirmed technical and
economic viability of the Project, which was satisfied by the
Feasibility Study. In fact, the Feasibility Study highlighted
Khemisset's outstanding attributes including industry leading
capital and operating costs and delivered an initial mine life of
19 years, based on less than 50% of the global resource base for
the Project. Importantly, the ML encompasses the full resource base
allowing simple expansion of the operations in the future without
the requirement to re-permit.
Noting the robust fundamentals which were demonstrated in the
June 2020 Feasibility Study, the Company announced in February 2021
its intention to examine the opportunity for phased development and
expansion projects at Khemisset, aimed at potentially reducing
upfront capital costs whilst increasing the ultimate production
output and capturing more of the margin, improving on what is
already a world class project. The key objectives of the phased
development approach include:
-- Minimise upfront capital cost of the flagship Khemisset Potash Project Development
-- Increase salt sales to up to 4Mtpa;
-- Incorporate SOP as part of the larger project development schedule;
-- Increase MOP production by up to 50%; and
-- Increase mine life by including additional resources not currently captured in the mine plan.
The Company intends to complete a concept study examining the
potential to develop Khemisset along this alternative route and
will share with shareholders in due course. It is the Company's
ultimate intention to realise the enormous potential of Khemisset
whilst reducing funding and execution risk, with the intention of
minimising shareholder dilution.
Corporate Positioning
In late February, Emmerson successfully completed a GBP5.5
million fundraising which was led by several new institutional
investors as well as a number of our existing shareholders. The
purpose of the fundraising was to finance the final critical path
components of development work at Khemisset, so that the timeline
was not delayed as we move to towards securing project finance
through debt and equity for the mine construction in H2 2021.
These components will refine our final route to production and
are also expected to present growth opportunities, particularly in
relation to our SOP project, salt strategy and production capacity
expansions.
Shareholders were also advised at this time about the Company's
intention to move its exchange listing to AIM. This decision was
prompted by a review by the board and advisers relating to the
ongoing suitability of an Official List (standard segment) on the
London Stock Exchange's main market. AIM has long been recognised
as the market for ambitious, growth companies and it has attracted
a strong following amongst private investors and institutional
backers. The Board believes that AIM is a market and environment
better suited to the Company's current size and strategy and will
support the Company and its shareholders during the rapid growth
phase expected in the coming months and years.
As such, the Company's admission to AIM will occur concurrently
with the proposed cancellation from the Official List (standard
segment) on the London Stock Exchange's main market so that
shareholders will continue to be able to trade their positions with
no interruption.
The proposed move to AIM will be put to shareholders at a
General Meeting which is scheduled for 11:00 a.m. on 25 March 2021,
and an announcement relating the results to shareholders will be
made during the next business day. Although shareholder approval is
not a requirement of the proposals put forward by the Board, we
believe that as a matter of good corporate governance our
shareholders should be consulted on this matter in order for them
to be aligned with our business as it moves forward on its new home
on AIM.
Commercial Opportunity
We are fortunate that we now have a tailwind in the potash
market, with increasing demand tightening up the pricing that
producers can set. Clearly this is a helpful situation as we look
to negotiate the strategic financing options to construct our mine.
In the last four weeks several of the producers have reported
improving prices as strengthening fundamentals from 2020 start
showing their effect. They mention a combination of diminished
inventories, rising commodity prices, compelling farm economics,
and a cyclical recovery being underway.
The leading fertilizer industry analysts at Argus were
forecasting monthly price increases from the lows of mid 2020 for
the short and medium term time horizons. This is what has been seen
so far and in fact the price in Brazil, which is where Emmerson
demonstrates its logistics advantage, was already about 10% higher
in January than was being forecast early last year.
The more encouraging market outlook for potash will clearly
assist in the ongoing strategic and debt financing discussions for
Khemisset.
Outlook for 2021
2021 has opened with a steady flow of high impact news for
Emmerson and we see that this momentum is set to continue with a
pipeline of operational and corporate updates due in the coming
weeks, alongside an improving pricing environment the potash
market.
There is significant latent value in this project and I truly
believe that all of our stakeholders are unanimous in their support
of delivering Khemisset to market. Our deep-rooted values of "doing
the right things in the right way" permeates through every decision
we make on the ground in Morocco and in the boardroom and it is
this philosophy which will ensure that this exceptional asset
continues to generate the widespread support we have enjoyed thus
far.
I would like to extend my gratitude once again to our
shareholders, both new and old, for their support of Emmerson and I
look forward to delivering on our strategy to bring our low capex
and high margin potash asset in construction before the end of
2021.
Graham Clarke
CEO
**ENDS**
For further information, please visit www.emmersonplc.com
, follow us on Twitter (@emmerson_plc), or contact:
Graham Clarke +44 (0) 20 7236
Edward McDermott Emmerson plc 1177
Jerry Keen
Toby Gibbs
John More Shore Capital +44 (0)20 7408 4090
Damon Heath +44 (0) 20 7628
Isabella Pierre Shard Capital 3396
St Brides Partners
Megan Denison Limited
Susie Geliher 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
(2012) of 537Mt @ 9.24% 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 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 also, as a
result of its location, one of the highest margin projects. This
delivered outstanding economics including a post-tax NPV(10) of
approximately US$1.4 billion using industry expert, Argus', price
forecasts.
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.
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END
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