TIDMEML

RNS Number : 9171R

Emmerson PLC

10 November 2021

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

10 November 2021

Emmerson Plc Announces Strategic Investment of up to US$46.75 million(1,2) for the Development

of the Khemisset Potash Project

General Meeting on 6 December 2021 to approve terms of Convertible Loan Notes

Emmerson, the Moroccan focused potash development company, is pleased to announce it has secured a strategic investment of up to US$46.75 million(1,2) from a group of investors to support the development of the Khemisset Potash Project ("Khemisset" or "the Project"). The primary investor is Global Sustainable Minerals Pte Ltd, a Singapore domiciled investment vehicle backed by a significant south-east Asian investor. Defined terms used in this Announcement are set out at the end of this Announcement.

Highlights

-- Strategic investment of up to US$46.75m(123) structured in two tranches comprising:

o An immediate direct equity investment of US$6.75m at 6 pence per share(1) , an 8% premium to the 30-day VWAP, under the Company's existing authority to issue shares.

o Subscription for up to US$40m of convertible loan notes, principal and interest with a conversion price of 8.2 pence per share(13) a 48% premium to the 30-day VWAP, ("Convertible Loan Notes" or "CLN"). The Convertible Loan Notes are designed to contribute directly to the construction funding for Khemisset and are accessible by the Company once the overall funding package for the Project is in place.

o Grant of 82,391,714 warrants pro rata to CLN subscribers, each warrant with a 12-month term and an exercise of 8.2 pence per share. Exercise of all warrants could secure additional c. US$9.3 million investment in the Company(12) .

-- On conversion of the CLN, the Strategic Investors, including GSM, will own up to a maximum of 29.9% of Emmerson Plc

-- The US$6.75m(1) equity investment allows Emmerson to accelerate pre-construction activities at Khemisset:

o Move into the execution phase on Project Financing discussions for debt to support project development with the aim to close in the middle of 2022

o Immediately commence basic design and engineering for the project to prepare to commence full construction during 2022

-- The Convertible Loan Notes allow Emmerson to further discussions with other providers of funding including project finance banks, sovereign wealth funds and royalty and streaming providers as the Company seeks the optimal overall funding solution for the Project

-- Emmerson is well positioned to take advantage of the strongest fertiliser market in more than a decade and Morocco's emerging position as gateway to Africa

-- General Meeting of shareholders on 6 December 2021 to approve terms of Convertible Loan Note and issue of conversion shares and warrants

(1) Using a USD:GBP exchange rate of 1.375

(2) Assumes further issue of ordinary shares to maintain the Strategic Investors holding at 29.9%

(3) Subject to shareholder approval and various conditions precedent including closing the remaining finance to construct the Khemisset Potash Project

(4) Based on the Feasibility Study financial model assumptions per announcement on 1 June 2020 with current Brazil spot prices

Graham Clarke, CEO of Emmerson commented:

"A major investment, at a premium to our current valuation, and long-term strategic commitment by an investment group of this calibre, is a major endorsement of the Khemisset Project. We have already formed a strong partnership with the investors who share our vision of creating a new, independent, and highly profitable and environmentally sustainable potash company. We look forward to working closely with them to achieve our shared vision.

"The whole Emmerson team and I have worked tirelessly, through an extremely rigorous due diligence process, over several months, to secure this strategic investment for the Company. It is a transformational investment for Emmerson, and it is a major step to unlocking the full potential value of the world class Khemisset Potash Project.

"The Project will be important for Morocco and will bring substantial social and economic benefits to the region of Khemisset. Our Moroccan stakeholders continue to be incredibly supportive of us as we move the Project into the execution phase and develop it for the benefit of all of our stakeholders. Emmerson expects to invest well over US$500 million over the Project's initial 19-year life of mine, creating over 2,000 direct and indirect jobs, and establishing a long-term beneficial partnership with Morocco.

"Potash markets have strengthened considerably since we released our Feasibility Study, with prices in Brazil now over US$800/tonne, effectively double the base case assumptions from our previous studies. The strength in potash clearly improves its already outstanding economics and, using current spot price assumptions, it would push our post-tax NPV(8) from a very respectable US$1.4 billion to US$3.9 billion(4) and IRR of over 85.4%, while average life of mine post tax cashflow increases to US$558 million per annum for an initial 19-year life of mine.

"Our attention now moves quickly to the task at hand, which is to get the project into production as quickly as possible. Our advisors are well advanced in their engagement with numerous potential banking partners, and we will move to mandating banks as quickly as possible. We have also engaged with our established engineering partners and will commence the basic design of the key components of the Project while, in parallel, preparing work packages for eventual tender with our EPCM partners. We have already made substantial progress in pre-qualifying the groups who will eventually partner with us in building Khemisset.

"We would like to thank our shareholders for their ongoing support through this process."

Mark Zhou, Director of GSM commented:

"The Khemisset Potash Project is clearly a standout in the development MOP space and we are excited to be partnering in its development with Emmerson Plc.

"We have been very impressed with the technical work completed by Graham and his team to date and the detailed execution plan they have presented to us, which is the basis for this significant investment.

"We look forward to being a part of the development of what will be the only producing MOP potash asset in Africa, in the dynamic Kingdom of Morocco, a global leader in fertiliser that is playing a growing role in the development of African agriculture. We believe this strategic location with developed infrastructure within close proximity makes the asset all the more valuable as Africa's importance for food production, and global food security, continues to grow in the coming decades."

Overview of the Strategic Investment

The Company has raised US$6.75 million before expenses by way of a subscription for 81,818,182 new Ordinary Shares at a price of 6 pence per share by various investors (the "Equity Subscription"). Global Sustainable Minerals Pte Ltd ("GSM") has subscribed for 48,484,848 new Ordinary Shares and Gold Quay Capital Pte Ltd ("GQC") has subscribed for 21,818,182 new Ordinary Shares, in aggregate investing US$5.8 million in the Company. The Subscription Shares shall be admitted to trading on AIM on 24 November 2021.

Having acquired this initial stake, GSM and GQC have committed to acquire a further strategic stake in the Company via a subscription for conditional convertible loan notes (the "Convertible Loan Notes"). The subscription for Convertible Loan Notes is subject to approval of Shareholders at a general meeting of shareholders to be held on 6 December 2021, further details of which are set out below. Draw-down of funds in respect of the Convertible Loan Notes is subject to satisfaction of the CLN Subscription Conditions (as defined below), subject to which GSM shall invest up to US$36 million and GQC shall invest up to US$4 million for a total of up to US$40 million. The proceeds of the Convertible Loan Notes shall be utilised at such point that the Company has all necessary project funding in place for the construction of the Khemisset Project and satisfied all other conditions precedent as described further below.

The Convertible Loan Notes shall have a two-year term from their issuance date. They will have a conversion price of 8.2 pence per share (the "Conversion Price") (at the Exchange Rate) and will accrue interest at a rate of 9% payable annually in arrears on the principal amount of funds drawn down, such interest to be converted into new Ordinary Shares of the Company to be issued to each holder of Convertible Loan Notes at 8.2 pence per share within 30 days after each 12-month interest period ("Interest Shares"). The aggregate amount outstanding under the Convertible Loan Notes including, for the avoidance of doubt, all Standard Interest (as defined below), will be satisfied by the issue of new Ordinary Shares at 8.2 pence per share. In addition, upon subscription for the Convertible Loan Notes commencing from the date on which the Resolutions are approved by shareholders, GSM and GQC will also be granted 12 month warrants to subscribe for in aggregate of up to 82,391,714 new Ordinary Shares representing a ratio of approximately 1 warrant for every US$0.485 committed under the CLN Instrument), each warrant with an exercise price of 8.2 pence per share (the "Warrants"). Each subscriber has the right, but not the obligation, to convert Convertible Loan Notes and all Standard Interest accrued thereunder into Ordinary Shares, at the Conversion Price, in the event of a change of control of the Company (or analogous transaction or occurrence in respect of the Khemisset Project).

The Warrants can be exercised within the 12-month period from the approval of the Resolutions and, if exercised during this period, would result in GSM and GQC (together the "Strategic Investors") (together with their respective affiliates) being interested in 153,694,744 Ordinary Shares representing 15.41% of the Company's issued shares.

The CLN Subscription Conditions have until 30 September 2022 to be satisfied (unless extended). On satisfaction of the CLN Subscription Conditions the Company shall draw down the maximum nominal amount of Convertible Loan Notes such that the Strategic Investors (together with their respective affiliates) will be interested in up to 29.9% of the Company's issued shares. The maximum number of shares that could be issued to the Strategic Investors is 572,320,021 Ordinary Shares, but the interest of the Strategic Investors shall always be restricted (either under the terms of the Warrant Instrument or the CLN Subscription Letter such that the shareholding of the Strategic Investors (and their affiliates) cannot exceed 29.9%.

The Conversion Price (and the exercise price for the Warrants represents a 48% premium to the volume weighted average trading price of the Company's Ordinary Shares traded on AIM over the 30-day period immediately before the date of the CLN Subscription. The Conversion Price represents a premium of approximately 45% to the closing middle market price for the Company's Ordinary Shares on 9 November 2021 (being the last practicable date prior to publication of this announcement).

Global Sustainable Minerals is a Singapore based investment vehicle managed by Mr. Mark Zhou You Chuan. Mr. Zhou is an executive director and the Chief Investment Officer of Golden Energy and Resources Limited a company listed on the Singapore Stock Exchange. GSM is funded by way of a fully committed secured financing facility (by way of a secured note) provided by Asia Star Fund Ltd, a fund controlled by Mr. Indra Widjaja.

Concurrent with the CLN Subscription, GSM will enter into a relationship agreement with the Company and Shore Capital, the Nomad, on the terms set out below.

Gold Quay Capital is an investment company based in Singapore and managed by Mr Barry Dick and Mr Martin Otway. Both have over 30 years of experience in the capital markets with much of that time spent in Asia.

GSM (and its affiliated persons) and GQC (and its affiliated persons) note that they are acting together in their investment into the Company and would therefore be deemed as acting in concert by the Panel on Takeovers and Mergers. As a result they and the Company have sought to limit their maximum collective holding in Ordinary Shares to 29.9% of the Company's issue share capital at any one time.

The Fundraising is conditional, inter alia, upon the requisite majority of Shareholders approving the Resolutions at the General Meeting that will grant the Directors the authority to allot the new Ordinary Shares and the power to disapply statutory pre-emption rights in respect of the new Ordinary Shares

Reason for the Equity Subscription, proposed issue of Conditional Convertible Loan Notes, proposed grant of Warrants, proposed issue of Interest Shares and use of proceeds of proceeds

The purpose of the Equity Subscription and the Fundraising is to provide funding for Emmerson's Khemisset Project, located in Northern Morocco.

The Company has devoted significant time to securing cornerstone funding commitments for the Khemisset project financing package, ahead of detailed negotiations with likely debt funders and industry partners, and the Directors believe the size of the proposed investment by GSM and GQC by way of the Convertible Loan Notes, the identity of the investor group, and the structure of the investment, is strategic in nature and securing this component of the project finance package has the potential to unlock the overall funding package for the Khemisset Project.

As investors will be aware, the development of the Khemisset Project has been the Company's primary focus since acquiring 100% control of the potash licenses in 2016. The recently completed Feasibility Study completed by Golder Associates in June 2020 has confirmed the findings from the 2018 Scoping Study by Golder Associates, which showed that Khemisset has the potential to be a world class, low capital cost, high margin potash mine, which is a very rare asset in the industry. The Feasibility Study is available on the Company's website at www.emmersonplc.com .

The Feasibility Study supported robust economics for the Khemisset Project with a projected post-tax NPV8 of US$1.4 billion and internal rate of return of 38.5% based on production of up to 800,000 tonnes of K60 MOP per annum during steady state operations over an estimated initial 19-year mine life, using an assumed potash price of US$360/tonne. Importantly, the Feasibility Study set out an estimated pre-production capital cost of US$387 million to bring the Khemisset Project into production, less than half of its global peer average capital intensity.

The Khemisset Project is ideally located to benefit from the expected high growth in demand for NPK fertilisers in Africa. Its location, close to a number of potential export ports with easy access to European, Brazilian and US markets, means that the project is expected to receive a premium netback price relative to many of its peers. The need to feed the world's rapidly increasing population is driving demand for potash and the Company is well placed to take full advantage of the opportunities this presents.

The Feasibility Study confirmed both the technical and economic viability of the sale of 1 million tonnes per annum (Mtpa) of salt byproduct produced from the Khemisset Project with, on average, a total of approximately 4.5Mtpa of salt by-product over the life of the mine. As a result, there is clear potential for significant increases in the tonnages of salt which could be sold into the US de-icing salt market. As the salt is a bye-product of potash production at the Khemisset Project, the operating cost associated with its production is very low and the Company expects to be a very competitive producer on a delivered cost basis to the US market.

Emmerson plans to use the net proceeds of the Equity Subscription, if exercised, the Warrants, and funds drawn-down pursuant to the Convertible Loan Notes, to:

-- Fund development capital expenditure on the Khemmiset project and any growth opportunities for the Khemisset project including:

o Completion of basic design and engineering

o Completion of definition of work packages for tender from construction contractors

o Examine expansion opportunities for salt and potash production

-- Achieve financial close on project finance debt and other financing streams for the development of the Khemisset project

   --      Build-out the owners' development team across all key technical disciplines 

Details of the Equity Subscription and Total Voting Rights

The Company has raised US$6.75 million (approximately GBP4.91 million) before expenses through the issuance of 81,818,182 new Ordinary Shares at an issue price of GBP0.06 (six pence) per Ordinary Share to GSM, GSQ and other unrelated investors. GSM has subscribed for 48,484,848 new Ordinary Shares at 6 pence per share and GQC has subscribed for 21,818,182 new Ordinary Shares at 6 pence per share.

The Equity Subscription is being undertaken under the Company's existing authority to issue Ordinary Shares for cash and is conditional, inter alia, upon Admission becoming effective on 24 November 2021.

The Subscription Shares will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission.

Application will be made to the London Stock Exchange for the admission of the Subscription Shares to trading on AIM. It is expected that Admission will occur and that dealings will commence at 8.00 a.m. on 24 November 2021 at which time it is also expected that the Subscription Shares will be enabled for settlement in CREST.

Following Admission of the 81,818,182 Subscription Shares, the Company's issued share capital will consist of 915,062,661 Ordinary Shares. Therefore, following Admission the total number of voting rights in Emmerson will be 915,062,661, which is the figure which should be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, Ordinary Shares under the FCA's Disclosure and Transparency Rules.

CLN Subscription Letters

Subject to approval of Shareholders at the General Meeting the Company is proposing to raise up to US$40 million, before expenses, by the issuance of Conditional Convertible Loan Notes to GSM and GQC, pursuant to the terms of CLN Subscription Letters signed by the Company and each of GSM and GQC on 10 November 2021. The CLN Subscription Letters confirm the legal obligation of GSM and GQC to subscribe for Convertible Loan Notes subject to satisfaction of relevant CLN Subscription Conditions, including but not limited to the requisite majority of Shareholders approving the Resolutions at the General Meeting. GSM and GQC have conditionally subscribed for the Convertible Loan Notes set forth in the table below:

 
   Name of Subscriber        CLN Subscription 
   GSM                    Up to US$36,000,000 
   GQC                     Up to US$4,000,000 
   TOTAL                  Up to US$40,000,000 
 
 

Under the terms of the CLN Subscription Letters the maximum principal amount that can be drawn down by the Company under the Convertible Loan Instrument and maximum amount of Convertible Loan Notes that will be issued to the Strategic Investors is capped at an US$ amount that, at the Exchange Rate, will result in the Strategic Investors (together with their respective affiliates) holding no more than 29.9% of the issued shares of the Company from time-to-time.

A summary of the CLN Subscription Conditions which have to be satisfied by the 30 September 2022 long-stop date (of which (ii) to (vii) below may be waived by GQC and GSM jointly and not severally) are set out below:

(i) the requisite majority of Shareholders approving the Resolutions at the General Meeting (this condition cannot be waived);

(ii) the Company confirming in writing that there are and will be no Events of Default (as that term is defined below) on the proposed date of the drawdown or will result from the proposed drawdown (the "Issuance Date");

(iii) the Company obtaining all requisite Government licences and approvals for the construction of its Khemisset Project and making the requisite announcements on AIM in relation thereto;

(iv) the Company announcing on AIM that it has signed definitive agreements and satisfied all conditions precedent for the draw-down of all project finance (debt, equity and other components) for the funding of the construction of the Khemisset Project ("Project Finance");

(v) the Company not being aware of any pending material adverse event information concerning the Khemisset Project which is inside information required to be disclosed under UK Market Abuse Regulation;

(vi) the Company having prepared a full "Definitive Feasibility Study", acceptable to the banking syndicate providing the Project Finance and providing a copy of such study to each of GQC and GSM; and

(vii) each of GQC and GSM satisfying themselves, in conjunction with the Independent Technical Expert to be appointed by the banking syndicate, of the operating and capital cost assumptions in the Definitive Feasibility Study as referred to in paragraph (vi) above.

The Convertible Loan Notes will be issued, subject to satisfaction of relevant conditions, pursuant to the terms of a convertible loan note instrument (the "Convertible Loan Instrument") adopted by the Company on 9 November 2021. The principal terms of the Convertible Loan Instrument are set out below:

   (a)        Due and payable in two years from Issuance Date (the "Maturity Date"). 

(b) The entire principal amount of the Convertible Loan Notes to be converted to the Conversion Shares, being Ordinary Shares of the Company at the Conversion Price of 8.2 pence per share at the Exchange Rate.

(c) Coupon of 9% per annum payable annually in arrears ("Standard Interest") on principal amount of the issued Convertible Loan Notes, with the payment of such interest to be satisfied by the issue of the Interest Shares on an annual basis within 30 calendar days after the end of each relevant interest period, being new Ordinary Shares at 8.2 pence per share. Interest will accrue on any overdue amounts at the rate of 15% per annum and interest in excess of 9% Standard Interest shall be payable in cash.

(d) Customary representations and warranties including warranty confirming the Company has no other indebtedness and a covenant that it will not incur other indebtedness other than as part of the Project Finance package required to build the Khemisset Project.

(e) Customary adjustment mechanisms in the event any reorganization of the Company's share capital occurs prior to Maturity Date.

(f) Interest payments made by the Company under the Convertible Notes shall be grossed up to offset any withholding tax on interest the Company is required to deduct.

(g) Each subscriber has the right, but not the obligation, to convert Convertible Loan Notes and all Standard Interest accrued thereunder into Ordinary Shares, at the Conversion Price, in the event of a change of control of the Company (or analogous transaction or occurrence in respect of the Khemisset Project).

(h) Upon the occurrence of certain insolvency events and/or a change in control, all of the Convertible Loan Notes then in issue will be immediately due and payable and redeemed in cash or converted to Ordinary Shares of the Company at the Conversion Price, at the sole and absolute discretion of each subscriber.

(i) The outstanding principal amount under the Convertible Loan Notes will be converted to Ordinary Shares of the Company at the Conversion Price:

(i) if the volume weighted average price of Ordinary Shares on the AIM Market ("VWAP") following the Issuance Date for any 10-consecutive trading day period is above 16p; or

   (ii)           on the Maturity Date; or 

(iii) prior to the Maturity Date at the election of the Noteholder in respect of some or all of the Convertible Loan Notes and Standard Interest accrued thereunder, by giving a notice in writing to the Company setting out the number of Convertible Loan Notes to be converted, plus Standard Interest that has accrued but which remains unpaid with such conversion being completed by the Company within five (5) Business Days of receipt of such written notice from such Noteholder.

(j) Ordinary Share(s) allotted and issued on conversion will be fully paid ordinary shares in the capital of the Company and will rank pari passu in all respects with the then existing Ordinary Shares, including in respect of any dividends, rights or other distributions.

(k) Price protection events in favour of each holder of Convertible Loan Notes, while the Convertible Loan Notes are issued and drawn, such that if the Company issues or enters into any arrangement to issue Ordinary Shares to any person at a price below 8.2 pence per share (a "Lower Issue Price"), the Conversion Price will be reduced provided save that that the maximum shareholding position of the Strategic Investors (together with their respective affiliates) in the Company is capped at a maximum of 29.9%.

   (l)         Customary events of default. 

Warrants

Concurrent with the signing of the CLN Subscription Letters by GSM and GQC, the Company adopted a warrant instrument (the "Warrant Instrument") in respect of up to 82,391,714 new Ordinary Shares ("Warrants") of the Company on the terms set out below:

   (a)        12-month term from date of approval of the Resolutions by Shareholders ("Warrant Term"); 

(b) exercise price GBP0.082 (8.2 pence) per share (subject to adjustment to match the issue price of new Shares in the event the Company issues Shares during the Warrant Term at a price lower than GBP0.082 (8.2 pence));

(c) customary adjustment events on share capital reorganisation or distributions by the Company during the Warrant Term;

(d) the Warrants may be assigned to affiliates of the holder but not to third parties unless the Company provides its written consent in relation thereto;

(e) grant of Warrants subject to the requisite majority of Shareholders approving the Resolutions at the General Meeting; and

(f) the Warrants may not be exercised to the extent the issue of new Ordinary Shares will result in the Strategic Investors (and their respective affiliates) holding an interest of greater than 29.9% of the Company's issued shares from time-to-time.

Pursuant to the terms of the CLN Subscription Letters, subject to the requisite majority of Shareholders approving the Resolutions at the General Meeting, the Company has granted Warrants to GSM and GQC pro rata to their respective commitment to the CLN Subscription as set out below:

 
   Name of Warrant Holder      Number of Warrants 
   GSM                                 74,152,543 
   GQC                                  8,239,171 
                     TOTAL             82,391,714 
 

Relationship Agreement with GSM

The Company, Shore Capital and GSM have entered into an agreement to regulate the relationship between the Company and GSM. The relationship agreement contains undertakings from GSM that, amongst other things, it will not seek to interfere with overall balance and independence of the Company's board, the day-to-day control of the Company and that all transactions and arrangements between the Company and GSM and members of its group will be at arm's length and on normal commercial terms. The Relationship Agreement will continue in full force and effect for so long as the Ordinary Shares are admitted to trading on AIM and GSM is interested in 20% or more of the Company's issued ordinary share capital.

Board & Investor Accountant Appointment Rights

Under the Relationship Agreement, GSM has the right to appoint and maintain in office one Director for such time any amounts remain outstanding pursuant to Convertible Loan Instrument, or it has an interest in not less than 20% of issued Ordinary Shares, and such party shall be appointed to the Board's Nominations Committee. In addition, GSM also has the right to appoint, at its cost, an accountant ("Investor Accountant") in an observational role, with full access to the Company's Chief Financial Officer (currently FIM Capital Limited) and Project Control Manager, to monitor the expenditure in relation to the Khemisset Project. In addition, the Company agrees to consult with GSM in relation to the termination of the Company's current Chief Executive Officer or Chief Financial Officer and/or proposed candidates to fill such roles if vacant (or to be vacated) for any reason.

Pre-emption Issue of new Shares

Under the Relationship Agreement, for such time as GSM is interested in aggregate in greater than 5% of issued Ordinary Shares of the Company, GSM shall have the right to participate in relation to any new issue of Ordinary Shares by the Company for cash (other than pursuant to exercise of options or warrants or under the terms of any employee incentive scheme) pro-rata to its interest in the Company as at the date of issue of the new shares.

General Meeting and Posting of Circular

The Company's existing share issuance authorities, are insufficient to allow the issue of the Conversion Shares, the Warrant Shares and the Interest Shares. A General Meeting will therefore be convened to seek shareholders' approval to the allotment and issue of such shares. It is currently anticipated that the General Meeting will be convened for 6 December 2021 and it is anticipated that a circular (containing notice of general meeting) will be issued on or around 11 November 2021.

The Directors have irrevocably undertaken to vote on or procure to vote in favour of the Resolutions in respect of 47,060,055 Existing Ordinary Shares, in aggregate representing approximately 5.65% of the existing issued ordinary share capital of the Company.

Expected Timetable of Principal Events

 
  Announcement of the Proposals                                     10 November 2021 
  Publication and posting of circular to shareholders               11 November 2021 
  Admission of the Subscription Shares                      8.00 a.m. on 24 November 
                                                                                2021 
  Latest time and date for receipt of proxy                  11 a.m. 2 December 2021 
   forms 
  Record Date for voting at the General Meeting               6 p.m. 2 December 2021 
  Latest time and date for receipt of Forms                 11.00 a.m. on 2 December 
   of Proxy or CREST Proxy Instructions (as                                     2021 
   applicable) for the General Meeting 
  General Meeting                                           11.00 a.m. on 6 December 
                                                                                2021 
  Announcement of the result of the General                          6 December 2021 
   Meeting 
  Grant of Warrants                                         on or around 10 December 
                                                                                2021 
  Issue of the Convertible Loan Notes                      on or before 30 September 
                                                                                2022 
 
 

Notes

(i) Each of the times and dates set out in the above timetable and mentioned in the circular to shareholders is subject to change by the Company, in which event details of the new times and dates will be notified to the London Stock Exchange and the Company will make an appropriate announcement to a Regulatory Information Service.

   (ii)    References to times in this Announcement are to London time (unless otherwise stated). 

**S**

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

 
 Emmerson Plc 
  Graham Clarke 
  Hayden Locke                             +44 (0) 20 7236 1177 
 
  Shore Capital (Nominated Adviser and 
  Joint Broker)                             +44 (0)20 7408 4090 
  Toby Gibbs / John More 
 
  Shard Capital (Joint Broker) 
  Damon Heath / Isabella Pierre             +44 (0)20 7186 9927 
 
  St Brides Partners (Financial PR/IR) 
  Susie Geliher / Isabel de Salis           +44 (0)20 7236 1177 
 

Notes to Editors

Emmerson's primary focus is on developing the Khemisset project ("Khemisset" or the "Project") located in Northern Morocco. The Project has a large JORC Resource Estimate (2012) 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 also, as a result of its location, one of the highest margin projects. This delivered outstanding economics including a post-tax NPV(8) of approximately US$1.4 billion using industry expert, Argus', price forecasts.

Further Information

About Emmerson

Emmerson Plc is developing the world class Khemisset Potash Project which is located in northern Morocco in between the capital of Rabat and regional centre of Fes. The Project is benefitted by Morocco's excellent infrastructure and proximity to existing export routes including ports, roads and railway lines.

To view this section with illustrative images please use the following link:

http://www.rns-pdf.londonstockexchange.com/rns/9171R_1-2021-11-10.pdf

Khemisset is relatively shallow, commencing from approximately 350m below surface, and is the lack of aquifer unit overlying the potash seam allows access via a low cost decline. This is one of the key capital cost savings when compared to typical potash mines.

Feasibility Study Overview

The Company released a Feasibility Study in June 2020, which highlighted the outstanding features of the Project including industry leading, low, capital expenditure to bring the Project into production, bottom quartile all-in-sustaining delivered cost to targeted customers and an initial mine life of 19 years. The Feasibility Study estimated Khemisset could be built with industry leading capital costs of just over US$400m, while projected operating costs of US$168/tonne, delivered to Brazil, put the Project in the lowest quartile on the cost curve.

The key assumption underpinning the Feasibility Study is an average annual extraction rate of approximately 6 million tonnes of ROM ore with an average grade (undiluted) over the life of mine of 9.12% K2O. The Feasibility Study is based on 43% of the JORC compliant Mineral Resource Estimate of 537Mt at an average grade of 9.24% K2O, delivering an initial mine life of 19 years. Significant potential remains to increase the mine life by including additional resources, notably in the south-west of the project area, and through further exploration work.

Processing assumes a hot leaching and crystallisation process to extract and purify the KCl in the ore into saleable grade K60 MOP. Over the life of mine, the process plant delivers an average of approximately 735,000 metric tonnes per annum of K60 product and 1 million metric tonnes of de-icing salt for sale.

The Feasibility Study assumes all MOP and salt product is exported through the Port of Casablanca, using trucks from mine site, to be sold in Emmerson's target markets in the Atlantic corridor, which includes Morocco.

World Class Economics

Economic sensitivity analyses of Khemisset shows it to be a financially robust project that delivers strong NPVs and healthy cashflows through a range of potash prices. Strong cashflow generation at a variety of low potash prices is fundamental to the ability to finance the Project.

The Base Case for the Project delivered a post-tax NPV8 of US$1.4 billion and average life of mine EBITDA of US$294m per annum assuming an average potash price of US$412/tonne over the life of mine. Increasing the potash price assumption to US$680/tonne, which is an approximately 15% discount to the current spot price, increases the post-tax NPV8 to over US$3 billion with average life of mine EBITDA of US$556 million.

DEFINITIONS

The following definitions apply throughout this announcement unless the context otherwise requires:

 
 Admission                             means the admission of the Subscription 
                                        Shares to trading on AIM in accordance 
                                        with the AIM Rules 
 AIM                                   means the market of that name operated 
                                        by the London Stock Exchange 
 Board                                 means the board of directors of 
                                        the Company from time to time 
 Business Day                          means any day (excluding Saturdays 
                                        and Sundays) on which banks are 
                                        open in London for normal banking 
                                        business and the London Stock Exchange 
                                        is open for trading 
 CLN Subscription                      means the conditional subscription 
                                        for up to US$40 million of Convertible 
                                        Loan Notes by the Strategic Investors 
                                        in accordance with the terms of 
                                        the CLN Subscription Letters 
 CLN Subscription Conditions           means the conditions precedent to 
                                        be satisfied by the Company before 
                                        draw-down of the funds pursuant 
                                        to the CLN Subscription 
 CLN Subscription Letters              means the subscription letters signed 
                                        by the Company and each of GSM and 
                                        GQC setting out their binding commitment 
                                        to subscribe for up to US$40 million 
                                        in respect of the CLN Subscription 
 Company or Emmerson                   means Emmerson plc 
 Conversion Price                      means 8.2 pence 
 Conversion Shares                     means the new Ordinary Shares to 
                                        be issued to the Strategic Investors 
                                        on conversion of the principal amount 
                                        of the Convertible Loan Notes in 
                                        accordance with the terms of the 
                                        Convertible Loan Instrument 
 Convertible Loan Notes                means up to US$40 million of convertible 
                                        loan notes to be issued to the Strategic 
                                        Investors under the terms of the 
                                        Convertible Loan Instrument subject 
                                        to satisfaction of the CLN Subscription 
                                        Conditions 
 Convertible Loan Instrument           means the convertible loan instrument 
                                        adopted by the Company on 9 November 
                                        2021 pursuant to which the Company 
                                        will, on the terms and subject to 
                                        the conditions of each CLN Subscription 
                                        Letter , issue up to US$40 million 
                                        in principal amount of Convertible 
                                        Loan Notes 
 Directors                             means the directors of the Company 
                                        at the date of this Announcement 
 Equity Subscription                   means the subscription by new and 
                                        existing investors (including the 
                                        Strategic Investors) for the Subscription 
                                        Shares announced by the Company 
                                        on 10 November 2021 
 Exchange Rate                         GBP: USD 1.375 
 Existing Ordinary Shares              means the existing 833,244,479 Ordinary 
                                        Shares in issue as at the date of 
                                        this Announcement 
 FCA                                   means the Financial Conduct Authority 
                                        of the United Kingdom 
 Feasibility Study                     means the technical feasibility 
                                        study in relation to the Khemisset 
                                        Project completed by Golder Associates 
                                        in June 2020 available on the Company's 
                                        website at www.emmersonplc.com 
 Fundraising                           means the proposed subscription 
                                        by the Strategic Investors for the 
                                        Convertible Loan Notes, issue of 
                                        Interest Shares and the Warrants 
                                        pursuant to which the Company will 
                                        raise finance of up to US$40 million 
                                        by issue of the Convertible Loan 
                                        Notes 
 GM or General Meeting                 means the general meeting of the 
                                        Company convened for 11.00 a.m. 
                                        on 6 December 2021 at the offices 
                                        of Emmerson plc at 55 Athol Street, 
                                        Douglas, IM1 ILA, Isle of Man by 
                                        the Notice of GM and any adjournment 
                                        thereof 
 GQC                                   means Gold Quay Capital Pte Ltd 
 GQC Subscription Shares               means the 21,818,182 Subscription 
                                        Shares subscribed for by GQC pursuant 
                                        to the Subscription Agreements 
 GSM                                   means Global Sustainable Minerals 
                                        Pte Ltd 
 GSM Subscription Shares               means the 48,484,848 Subscription 
                                        Shares subscribed for by GSM pursuant 
                                        to the Subscription Agreements 
 Interest Rate, also defined           means 9% per annum 
  as Standard Interest 
 Interest Shares                       means the up to 63,858,093 new Ordinary 
                                        Shares to be issued to the Strategic 
                                        Investors to pay Standard Interest 
                                        accrued under the Convertible Loan 
                                        Notes prior to the conversion or 
                                        repayment of such Convertible Loan 
                                        Notes, each issued at an issue price 
                                        of GBP0.082 (8.2 pence) per share 
 Issued share capital                  means, except where stated to the 
                                        contrary, the issued share capital 
                                        of the Company excluding treasury 
                                        shares 
 K60 MOP                               means the minimum saleable grade 
                                        for standard MOP for agricultural 
                                        uses is 60% K20 
 Khemisset Project                     means the Khemisset potash project 
                                        in Morocco 
 LSE or London Stock Exchange          means London Stock Exchange plc 
 Maturity Date                         means the date falling on the second 
                                        anniversary of draw-down of funds 
                                        pursuant to the Convertible Loan 
                                        Instrument 
 MOP                                   means Muriate of Potash 
 Notice of GM                          means the notice of the GM sent 
                                        to shareholders with the circular 
                                        setting out the proposed terms of 
                                        the Fundraising 
 Ordinary Shares                       means the issued ordinary shares 
                                        of nil par value in the capital 
                                        of the Company 
 Proposals                             means the proposed issue of the 
                                        Conditional Convertible Loan Notes, 
                                        proposed grant of the Warrants and 
                                        proposed issue of the Interest Shares 
 Relationship Agreement                means the relationship agreement 
                                        between GSM, the Company and Shore 
                                        Capital to be executed by the parties 
                                        on first draw-down of funds pursuant 
                                        to the Convertible Loan Instrument 
 Resolutions                                means the following resolutions: 
                                             1. Resolution 1, which will be proposed 
                                             as an ordinary resolution, to authorise 
                                             the Directors to allot and issue 
                                             (i) Ordinary Shares pursuant to 
                                             the terms of the Convertible Loan 
                                             Notes (including the Interest Shares), 
                                             and (ii) the Warrant Shares, being 
                                             up to a maximum amount of 501,016,991 
                                             Ordinary; and 
                                             2. Resolution 2, which will be proposed 
                                             as a special resolution, to disapply 
                                             the statutory pre-emption rights 
                                             in respect of the Ordinary Shares 
                                             allotted for cash, pursuant to the 
                                             authority conferred on them by resolution 
                                             1 to allot such shares up to a maximum 
                                             amount of 501,016,991 Ordinary Shares. 
 "SCC" or "Shore Capital &             means Shore Capital and Corporate 
  Corporate"                            Limited, the Company's nominated 
                                        adviser and financial adviser 
 "SCS" or Shore Capital Stockbrokers   means Shore Capital Stockbrokers 
                                        Limited, the Company's joint broker 
 Shareholders                          means holders of Existing Ordinary 
                                        Shares 
 Shore Capital                         means SCC and/or SCS, as the context 
                                        permits 
 Standard Interest                     Coupon of 9% per annum payable annually 
                                        in arrears 
 Strategic Investors                   means GQC and GSM. 
 Subscription Agreements               means the subscription agreements 
                                        dated 10 November 2021 entered into 
                                        by the Company and GQC, GSM and 
                                        certain other unconnected investors 
                                        in relation to the subscription 
                                        for the Subscription Shares by GSM, 
                                        GQC and the other unconnected investors 
 Subscription Shares                   means the 81,818,182 shares comprising 
                                        the GQC Subscription Shares, the 
                                        GSM Subscription Shares and the 
                                        11,515,152 shares subscribed for 
                                        by certain other unconnected investors 
 United Kingdom or UK                  means the United Kingdom of Great 
                                        Britain and Northern Ireland 
 GBP or Pounds                         means UK pounds sterling, being 
                                        the lawful currency of the United 
                                        Kingdom 
 Warrant Instrument                    means the Warrant Instrument adopted 
                                        by the Company on 9 November 2021 
 Warrant Shares                        means up to 82,391,714 Ordinary 
                                        Shares to be issued to the Strategic 
                                        Investors on exercise of the Warrants 
                                        at a price of 8.2 pence per share 
                                        in accordance with the terms of 
                                        the Warrant Instrument 
 Warrant Term                          12-month term from date of approval 
                                        of the Resolutions 
 Warrants                              means the 12-month warrants granted 
                                        to GSM and GQC to subscribe for 
                                        in aggregate up to 82,391,714 new 
                                        Ordinary Shares at an exercise price 
                                        of 8.2 pence per share 
 

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(END) Dow Jones Newswires

November 10, 2021 02:00 ET (07:00 GMT)

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