REG - Emmerson PLC - Potash and Salt Offtake MOUs

EmmersonAnnouncement

21/11/2022 07:00

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RNS Number : 9758G  Emmerson PLC  21 November 2022

 

 

Emmerson PLC / Ticker: EML / Index: AIM / Sector: Mining

21 November 2022

Emmerson PLC ("Emmerson" or the "Company")

 

Potash and Salt Offtake MOUs with Keytrade AG and Hexagon Group AG

 

Emmerson, the Moroccan-focused potash development company, is pleased to
announce the signing of non-binding Memoranda of Understanding ("MOUs")
relating to the offtake of potash and salt to be produced at its Khemisset
Mine in Morocco ("Khemisset"), as follows:

 

·    With Keytrade AG for the sale of a minimum of 245,000 metric tonnes
per year of Muriate of Potash ("MOP") for a period of 10 years; and

·    With Hexagon Group AG for the sale of a minimum of 245,000 metric
tonnes per year of MOP and a minimum of 500,000 metric tonnes per year of salt
product ("NaCl"), both for a period of 10 years.

 

The MOUs are non-binding and set out the key terms for subsequent formal
bankable offtake agreements.

 

The prices for MOP (minimum of 60% K(2)O) and NaCl are expected to be derived
from the market or as quoted in independent expert reports, such as Argus
Research, averaged to form a monthly price in the month prior to bill of
lading, and after deducting a marketing fee.

 

Importantly, the MOUs contemplate "take or pay" provisions whereby the
offtakers will market the product to end users and compensate the Company for
any quantities not taken by end users or otherwise sold by the offtakers.

 

The MOUs envisage that all MOP and salt products sold will be delivered Free
On Board (currently Casablanca), unless otherwise agreed by the parties. They
are also non-exclusive, and Emmerson will continue to engage in ongoing
offtake discussions with other wholesale customers, distributors, and global
traders for the remaining production capacity from Khemisset.

 

Graham Clarke, CEO of Emmerson commented: "I am delighted to present our first
offtake MOUs to the market as we continue our process of advancing towards
construction readiness at Khemisset.  These MOUs are an important milestone
in this process and will account for more than 65% of MOP production and 50%
of salt production.  Underpinning a significant proportion of future potash
and salt sales on a take or pay basis is a strong endorsement for the project,
de-risking the development for debt and other financiers. They are also a
clear signal of the critical importance of potash in the context of
international food security, and we look forward to advancing further
negotiations as we continue to lay the foundations for establishing Africa's
first commercial potash mine."

 

 

 

Keytrade AG is a large Swiss based agri-trader that was first established in
1997. Keytrade AG has substantial experience working with all types of
suppliers, distributors, retailers, and end-users across all fertiliser
products and is active in more than 115 countries across the globe with key
offices in Zurich, Madrid, Tampa, São Paulo, New Delhi, and Beijing amongst
others.

 

Hexagon Group AG is commodity trading company established in Switzerland in
2018.  The company specialises in trading, marketing, and logistics in the
area of bulk fertilizers and commodities for a wide range of different
industries.  Hexagon Group AG, together with its subsidiaries, has 19 offices
worldwide and its core operations in fertilizers are concentrated in Asia,
Europe, and the Mediterranean countries including North Africa.

 

 

 
**ENDS**

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

 

 Emmerson PLC                                        +44 (0) 20 7236 1177

 Graham Clarke / Jim Wynn / Charles Vaughan

 Shore Capital (Nominated Adviser and Joint Broker)  +44 (0)20 7408 4090

 Toby Gibbs / John More

 Liberum Capital Limited (Joint Broker)              +44 (0)20 3100 2000

 Scott Mathieson / William King
 Shard Capital (Joint Broker)                        +44 (0)20 7186 9927

 Damon Heath / Isabella Pierre

 St Brides Partners (Financial PR/IR)                +44 (0)20 7236 1177

 Susie Geliher / Charlotte Page

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.

 

Morocco is widely recognised as one of the leading phosphate producers
globally, ranking second 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. 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 NPV(8) 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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