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
MSCURVNRANUAARA
(END) Dow Jones Newswires
November 10, 2021 02:00 ET (07:00 GMT)
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