TIDMEML
RNS Number : 6574G
Emmerson PLC
31 March 2022
Emmerson Plc / Ticker: EML / Index: AIM / Sector: Mining
31 March 2022
Emmerson Plc ('Emmerson' or the 'Company')
Q1 Activities Update
Emmerson, which is developing the world class Khemisset Potash
Project in Morocco ('Khemisset' or the 'Project'), is pleased to
provide an update on its corporate and operational activities for
Q1 2022.
Q1 2022 Key Events and Deliverables:
-- War in Ukraine has highlighted the importance to global food
security of bringing on new sources of potash for fertilizer
production, particularly in reliable well-situated locations such
as Morocco;
-- Continued work to advance the Khemisset Project towards
construction, including a programme of drilling to provide further
information for the design of the declines and other underground
structures, and to provide more data on the orebody;
-- Basic Engineering Package awarded to Reminex SA, a respected
Moroccan engineering company that is part of the Managem SA
group;
-- Environmental approval process continues to progress towards
the final awarding of the permit;
-- Discussions with financing partners progressing well, with
strong interest on both debt and equity;
-- Appointment of Liberum Capital Limited as a joint corporate broker;
-- Appointment of Mr Jim Wynn as Chief Financial Officer; and
-- Continued engagement with Moroccan authorities to enhance the
strong relationship between Morocco and the UK and to underline the
benefits of the Khemisset project to local and national
stakeholders.
Global potash market
The war in Ukraine is bringing about a wide range of global
consequences, the most important and immediate of which are
humanitarian, for those most directly affected by this catastrophe.
It is also having a major impact on the global potash market, as
38% of the world's recent potash supply has originated from Russia
and its ally Belarus. Russia and Ukraine are also, under normal
circumstances, major wheat exporters. With food security an
increasing concern in the context of rising wheat and other
agricultural commodity prices and global population growth
(particularly in Africa), fertilizer production, which is the
primary use of potash, has escalated in criticality.
Potash prices underwent significant increases in 2021, growing
from the long-term average price assumption of approximately
US$400/t at the time of the Khemisset Feasibility Study in June
2020 to around US$800/t by the end of 2021. Recent published spot
prices for potash have now reached US$1,100/t.
The importance of the Khemisset project as a new source of
potash has risen significantly, and the board is more committed
than ever to bring the mine into production as soon as possible. To
that end, the Company has made good progress in advancing the wide
package of agreements relating to financing, offtake, equipment and
consultants. The momentum in recent weeks has built noticeably
across a number of fronts.
Operational Development
Work relating to the technical aspects of the design and
engineering to take the Project towards construction readiness have
continued to move forward during the period. Additional drilling
and geophysical surveys have been undertaken to obtain a more
detailed understanding of the near surface geology, provide data
for the design of the access declines and allow detailed mine
design. A number of multi-purpose drill holes are in various stages
of completion with these holes designed to help situate the
declines into the mine, and also to provide additional data on
deeper areas of the resource. Additional shallow holes have also
been drilled in the planned process plant and tailings storage
facility areas, to provide key geotechnical data ahead of
construction.
Basic Engineering awarded to Reminex SA
During the quarter, the Company awarded the balance of basic
engineering packages to Reminex SA ('Reminex') following the award
of the basic engineering package related to the minerals processing
facility to Barr Engineering in November 2021. This will enable the
completion of the full basic engineering, including a water and
power supply solution to the mine site, mine site access including
a highway junction, all mine site infrastructure, portal and access
declines and the tailings storage facility.
Reminex is the Research & Development, Engineering and
Project Delivery arm of the Managem Group, an international and
integrated mining group based in Morocco, which has been in
existence for more than nine decades and operates in nine countries
across Africa. Reminex has a proven track record in operating mines
and process plants in various commodities including salt, gold,
silver, copper, cobalt, zinc and lead in different locations
including Morocco, Guinea, Sudan, Gabon, Niger, DR Congo. Their
appointment underpins Emmerson's commitment to maximising
in-country opportunities via its procurement and job creation
strategy.
Environmental approvals continue to make progress
The Company's Environmental and Social Impact Assessment
('ESIA') is awaiting final approvals. The Company has addressed all
of the ESIA issues raised by the relevant authorities. In view of
the importance of the project to the country, the authorities have
been careful to ensure that the needs of the widest possible
stakeholder group have been fully taken into consideration. The
Company continues to work proactively with all the relevant parties
and remains confident that the approval will be forthcoming.
The growing importance of the UK-Morocco business relationship
was illustrated by the visit to the UK in March of Morocco's
recently appointed Minister for Investment, Mohcine Jazouli, and
launch of the Morocco Now campaign at an event in London, attended
by Emmerson CEO, Graham Clarke. Morocco Now is a new economic brand
launched by the Moroccan Investment and Export Agency that aims to
build the economic position of Morocco and promote the kingdom as
an investment destination. The Company is engaging closely with the
Moroccan authorities and other key stakeholders to ensure that the
development of the Khemisset project aligns with the developing
economic strategy of the country through a mutually beneficial
partnership.
Project Finance update
Financing discussions for the Khemisset project have progressed
well in the first quarter of the year. The Company has received
interest from a number of local Moroccan and international banks,
as well as support from Export Credit Agencies, which have
submitted formal Expressions of Interest. Good progress has also
been made towards securing strategic equity partners, in addition
to the existing strategic investors announced in November 2021. The
board hopes to be able to provide further details once Emmerson has
selected its preferred financing providers, but momentum has been
building in this area and the board remains confident of securing
good terms on all fronts.
Appointment of Liberum Capital
The board was delighted to announce the appointment of Liberum
Capital ('Liberum') to Emmerson's advisory team in February.
Liberum is a leading investment bank with a specialist mining
franchise and institutional reach across the UK, Europe and the
U.S. Liberum has a very strong mining heritage, with a number of
high-profile metals and mining companies as corporate clients and
having raised a total of GBP10.5bn for mining clients since
inception. Importantly, Liberum is also independently reported as
having a leading research offering, with high quality and
influential equity research produced across the sector.
Appointment of Chief Financial Officer
In February 2022, Emmerson announced the appointment of Jim Wynn
as Chief Financial Officer ('CFO'), effective immediately. Jim is a
highly experienced mining CFO with experience of working in
Morocco. His experience of successfully moving companies through
the final stages of development, construction and production will
be invaluable to Emmerson over the coming years and his keen
commercial knowledge will also be beneficial as the Company
communicates its progress to stakeholders.
Morocco
The Company's activities in Morocco continue to intensify ahead
of mine construction and with this in mind, the board made the
decision to launch a communications programme focussed on
stakeholders within the Kingdom of Morocco. Led by the Company's
in-country team, Emmerson and its operating subsidiary are now
working with local agencies to amplify the work that is being done
in the Khemisset region. A new website will be launched
highlighting Emmerson's vision for a sustainable UK-Moroccan
partnership. As shareholders will be aware, Morocco is one of the
region's most dynamic economies, a growing gateway to Africa and a
welcoming environment for foreign direct investment.
Highlighting the Kingdom of Morocco's standing as desirable
investment destination, the Emmerson team were delighted to be
involved in two events showcasing the country's appetite and
support for direct foreign investment. The "Morocco: Gateway to
Africa" and "Morocco Now" events, both held in London in March
2022, were highly productive and brought together business leaders,
investors and representatives from the Moroccan government with the
objective of demonstrating the country's geopolitical stability,
economic growth potential and world leading renewable energy
capabilities.
**S**
For further information, please visit www.emmersonplc.com ,
follow us on Twitter (@emmerson_plc), or contact:
Emmerson Plc +44 (0) 20 7236
Graham Clarke 1177
Shore Capital (Nominated Adviser and Joint Broker) +44 (0)20 7408
Toby Gibbs / John More 4090
+44 (0)20 3100
Liberum Capital Limited (Joint Broker) 2000
Scott Mathieson / Lydia Zychowska
Shard Capital (Joint Broker) +44 (0)20 7186
Damon Heath / Isabella Pierre 9927
St Brides Partners (Financial PR/IR) +44 (0)20 7236
Susie Geliher / Charlotte Page 1177
Notes to Editors
Emmerson is focused on advancing the Khemisset project
("Khemisset" or the "Project") in Morocco into a low cost, high
margin supplier of potash, and the first primary producer on the
African continent. With an initial 19-year life of mine, the
development of Khemisset is expected to deliver long-term
investment and financial contributions to Morocco including the
creation of permanent employment, taxation and a plethora of
ancillary benefits. As a UK-Moroccan partnership, the Company is
committed to bringing in significant international investment over
the life of the mine, as outlined by a transformative strategic
investment of US$46.75 million received from a major Singaporean
fund and has a defined strategy and exceptional team of industry
experts to deliver this large, and strategic national asset.
Morocco is widely recognised as one of the leading phosphate
producers globally, ranking third in the world in terms of tonnes
produced annually, and the development of this mine is set to
consolidate its position as the most important fertiliser producer
in Africa. The Project has a large JORC Resource Estimate (2012) of
537Mt @ 9.24% K2O, with significant exploration potential, and is
perfectly located to support 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 Khemisset is well
placed to benefit from the opportunities this presents. The
Feasibility Study released in June 2020 indicated the Project 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 NPV8 of approximately US$1.4
billion using industry expert Argus' price forecasts in 2020. The
spot price for granular MOP fertiliser has since risen nearly
three-fold, highlighting the significant upside to this
valuation.
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