TIDMEML
RNS Number : 5393A
Emmerson PLC
26 September 2022
Emmerson PLC / Ticker: EML / Index: AIM / Sector: Mining
26 September 2022
Emmerson PLC ("Emmerson" or the "Company")
Renewal of Strategic Investment Commitment and US$6.0 million
Equity Placing & Retail Offering
Emmerson, the Moroccan focused potash development company, is
pleased to announce it has reached agreement with Global
Sustainable Minerals Pte Ltd ("GSM") and Gold Quay Capital Pte Ltd
("GQC") (together the "Strategic Investors") to extend the
commitment period for the previously announced US$40.0 million
convertible loan note subscription to 30 September 2023, providing
continued cornerstone financing support for the development of the
Khemisset Potash Project ("Khemisset" or the "Project").
In addition, the Company is pleased to announce that it has
entered into a subscription agreement (the "Subscription
Agreement") with GSM whereby GSM will make an immediate equity
investment of US$6.0 million at a price of 6.0 pence per new
ordinary share of nil par value in the capital of the Company
("Ordinary Shares") (the "GSM Subscription").
The Company is now funded to complete basic engineering work,
remaining permitting and project financing processes through to a
construction decision.
To enable the Company's existing shareholders to participate on
the same terms as the GSM Subscription, the Company intends to make
an offer of Ordinary Shares at a price of 6.0 pence per Ordinary
Share available on the REX platform (the "Retail Offer"). A
separate announcement will be made by the Company shortly regarding
the Retail Offer.
Highlights
-- US$40.0 million Convertible Loan Notes commitment from
strategic investors GSM and GQC extended by 12 months to 30
September 2023, reconfirming a key component of Khemisset's
construction financing plan
-- In consideration for the extension of the Convertible Loan
Notes commitment, the Company has issued 50,000,000 warrants to
GSM, exercisable at a price of 8.2 pence per share until 23
September 2023 (the "New Warrants")
-- Equity subscription for US$6.0 million (approximately GBP5.4
million) at a price of 6.0 pence per Ordinary Share, a discount of
8% to the 30-day VWAP and a premium of 9% to the share price at
market close on 23 September 2022
-- Retail Offer on the same terms as the GSM Subscription, open
to the Company's existing shareholders
-- Emmerson now funded for remaining technical and other
workstreams to deliver Khemisset through to construction decision
and finalisation of project financing, currently expected to be
during H2 2023
-- Khemisset represents a world class development project,
technically de-risked and with strong cornerstone investor support,
ready to deliver into strong global potash markets
-- Strong expressions of interest received from international
and Moroccan lending banks, as well as development financial
institutions and other financing counterparties, expected to
underpin attractive construction financing package
Graham Clarke, CEO of Emmerson commented: "I am very pleased
with the progress that the Emmerson team have made at Khemisset in
recent months, working with our Moroccan partners Reminex. I am
particularly delighted to be able to announce the continued support
from GSM and GQC. This further investment from our strategic
investors demonstrates their continued commitment to the Khemisset
project and their confidence in Morocco. Emmerson is funded for all
anticipated technical and working capital requirements. This is a
world-class potash project with huge potential and I look forward
to working with a range of Moroccan partners to take it to the next
stage. In view of the strong interest we have received from banks
and other investors keen to invest in this exciting Moroccan
venture, we expect to pull together the full financing package for
the construction phase rapidly, once the remaining environmental
approvals have been received."
Background
On 10 November 2021 the Company announced a strategic investment
of up to US$46.75 million by GSM and GQC for the development of
Khemisset, comprising an equity investment of US$6.75 million and a
subscription for up to US$40.0 million of convertible loan notes
with a conversion price of 8.2 pence per share and using a GBP: USD
exchange rate of 1.375 (the "Convertible Loan Notes"). The
subscription for the Convertible Loan Notes was subsequently
approved by shareholders at a general meeting held on 6 December
2021.
In conjunction with the subscription for the Convertible Loan
Notes, GSM and GQC were issued 82,391,714 warrants to subscribe for
new Ordinary Shares at a price of 8.2 pence per share, expiring 6
December 2022 (the "CLN Warrants").
Draw-down of funds under the Convertible Loan Notes is subject
to satisfaction of conditions precedent, to be satisfied by 30
September 2022 (the "Long Stop Date") including, inter alia:
(i) the Company obtaining all requisite Government licences and
approvals for the construction of the Project; and
(ii) the Company having 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
Project.
As these conditions precedent and others (see 10 November 2021
announcement for full details) will not be satisfied by the Long
Stop Date, the Company has engaged with the Strategic Investors to
extend their financing commitment, which is seen as a key component
of the expected financing package for the Project's construction
financing.
Extension of Convertible Loan Note Financing Commitment
Pursuant to a deed of variation (the "Variation Deed"), the
Company, GSM and GQC have agreed to:
(a) extend the Long Stop Date for the Convertible Loan Notes
subscription by 12 months to 30 September 2023, maintaining the
cornerstone financing commitment through the remaining permitting
and project financing processes;
(b) extend the expiry date of the CLN Warrants by 12 months to 6 December 2023; and
(c) amend the GBP: USD rate for the Convertible Loan Notes
conversion price from 1.375 to 1.227, reflecting the significant
weakening of the GBP against the USD.
The Company considers the overall investment by GSM and GQC to
be in the best interests of the Company and has therefore agreed to
seek the approval of the UK Panel on Takeovers and Mergers and
independent shareholders for a waiver of the requirement for GSM
and/or GQC to make a mandatory offer for the shares of the Company
as a result of GSM and/or GQC exercising their rights under the
Convertible Loan Notes, CLN Warrants and the New Warrants (with
such waiver limited to a maximum total combined shareholding of 40
per cent).
In consideration for the extension of the Convertible Loan Notes
commitment, the Company has issued the New Warrants to GSM,
exercisable at a price of 8.2 pence per share until 23 September
2023.
The GSM Subscription
Pursuant to the Subscription Agreement, GSM has agreed to
subscribe for 89,285,714 shares (the "Subscription Shares") at a
price of 6.0 pence per Ordinary share representing aggregate
proceeds of US$6.0 million before expenses (based on an agreed
exchange rate of 1.12).
Completion of the GSM Subscription is conditional upon the
admission of the Subscription Shares to trading on the AIM Market
of the London Stock Exchange ("AIM") and the Subscription Agreement
not having been terminated. For the avoidance of doubt, the GSM
Subscription is not conditional upon the completion of the Retail
Offer.
Retail Offer
In addition to the GSM Subscription, the Company intends to make
an offer of Ordinary Shares available on the REX platform at the
Subscription Price, in which retail investors will be invited to
participate. The Retail Offer is only being made available to
existing shareholders of the Company. A separate announcement will
be made by the Company shortly regarding the Retail Offer. The
maximum aggregate size of the Retail Offer will be capped at GBP1
million. The Retail Offer is conditional upon, amongst other
things, completion of the GSM Subscription and the admission to
trading on AIM of the Ordinary Shares issued pursuant to the GSM
Subscription and Retail Offer.
It is agreed that neither the Subscription Shares nor the Retail
Offer will trigger the price protection clause in respect of the
Convertible Loan Notes.
Admission of Shares
Application will be made for the Subscription Shares and those
shares to be issued pursuant to the Retail Offer (together the
"Fundraising Shares") to be admitted to trading on AIM
("Admission"). Admission is expected to occur at 8.00 a.m. on 10
October 2022 . The Fundraising Shares will, when issued, be
credited as fully paid and will rank pari passu in all respects
with the Company's existing issued Ordinary Shares.
The Company will provide an update as to Total Voting Rights
following the completion of the Retail Offer.
Use of proceeds
The net proceeds of the GSM Subscription and any proceeds from
the Retail Offer, together with the Company's existing cash
resources of approximately US$3.0 million as at 23 September 2022
will mean the Company is well funded to complete basic engineering
and geological studies for the development of Khemisset, and to
finalise the permitting and project financing processes.
The Company also announces its Interim Results for the six
months to 30 June 2022 today, which includes a full update on
project development, permitting and other corporate activities.
**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 / Jim Wynn / Charles Vaughan 1177
Shore Capital (Nominated Adviser and Joint
Broker) +44 (0)20 7408
Toby Gibbs / John More 4090
Liberum Capital Limited (Joint Broker) +44 (0)20 3100
Scott Mathieson 2000
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 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 income 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.
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% K(2) O, 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. 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, and the spot
price for granular MOP fertiliser has since risen, further
enhancing the valuations.
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END
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