REG - Emmerson PLC - Q1 Activities Update

EmmersonAnnouncement

31/03/2022 07:01

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220331:nRSe6574Ga&default-theme=true

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 £10.5bn 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.

 

**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

 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 / Lydia Zychowska

 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, 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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDFLFEEVEIIVIF