REG - Emmerson PLC - Q1 Update, Equity Placing and Retail Offer

EmmersonAnnouncement

08/04/2024 07:00

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RNS Number : 5900J  Emmerson PLC  08 April 2024

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

8 April 2024

Emmerson PLC

("Emmerson" or the "Company")

 

Q1 2024 update, US$2.175 million Equity Placing with Strategic Investors &
Retail Offering

 

Emmerson, the Moroccan focused potash development company, is pleased to
provide an update on its activities in Q1 2024 in relation to its 100% owned
Khemisset Potash Project ("Khemisset" or the "Project"), and has announced it
has raised US$2.175 million from the issuance of new ordinary shares
("Shares") to its strategic investors. In addition, the Company will shortly
launch a retail offer to existing shareholders on the REX platform.

 

Q1 2024 update

 

Environmental approval

 

On 11 March 2024, the Company announced that the Commission Ministérielle de
Pilotage ("Ministerial Committee" or the "Committee"), to whom the Company
referred the decision of the Commission Régionale Unifiée d'Investissement
("CRUI") regarding the Project's environmental approval in July 2023, had
upheld the Company's referral and asked that the matter be returned to the
CRUI for reconsideration.

 

As part of this, the Committee invited the Company to resubmit an
Environmental Impact Assessment ("EIA"), including any environmental
optimisations. The Company and its consultants have therefore been preparing a
revised EIA to address the concerns previously raised by the CRUI including
the improvements arising from the Khemisset Multi-mineral Process ("KMP"), and
this document will be submitted in the coming days.

 

The Company believes that the improvements resulting from the incorporation of
the KMP into the design, notably the reduction in water consumption and the
elimination of brine disposal, are considerable, and address the major
concerns related to water identified by the CRUI. Whilst the Company considers
that its previous EIA was adequate and met all relevant criteria required by
the CRUI and other relevant authorities, it is excited to introduce its new
proprietary KMP technology into the development of the Project.

 

The CRUI is expected to review the EIA submission, particularly focusing on
the amendments, over the coming weeks, and any updates will be announced in
due course.

 

KMP

 

On 1 February 2024, the Company announced that it had completed a scoping
study on a new processing route known as KMP. Full details of the benefits of
KMP can be found in the announcement from that date which is available here
(https://otp.tools.investis.com/clients/uk/emmerson_plc/rns/regulatory-story.aspx?cid=2839&newsid=1784403)
.

 

US$2.175 million subscription with GSM and GQC

 

Emmerson is pleased to announce that it has entered into a subscription
agreement with Global Sustainable Minerals Pte Ltd ("GSM") and Gold Quay
Capital Pte Ltd ("GQC") (together the "Strategic Investors"), whereby GSM will
subscribe for US$2.0 million of new Shares and GQC will subscribe for US$175k
of new Shares, at a placing price of 1.75 pence per Share (the "Placing
Price"). The Placing Price represents a discount of 16.4% to the Company's
5-day VWAP of 2.09 pence.

 

Pursuant to legally binding subscription agreements, GSM has subscribed for
90,702,948 Shares and GQC has subscribed for 7,936,508 Shares at the Placing
Price (the "Subscriptions"). On completion of the Subscriptions, GSM and GQC
will be beneficially interested in 20.30% and 2.64% respectively of the
Company's issued share capital.

 

In addition, the Strategic Investors will receive a warrant to subscribe for
new Shares ("Warrants") for each Share subscribed for pursuant to the
Subscription Agreements. The Warrants have an exercise price of 3 pence and an
expiry date of 31 December 2024.

 

GSM Board Seat

 

On completion of the Subscriptions, and as a result of its shareholding
exceeding 20%, GSM will have the right to appoint a representative to
Emmerson's board of directors, under the terms of the relationship agreement
signed in November 2021 between the Company and GSM. GSM have indicated to
Emmerson that they intend to exercise this right and details of any
appointment, which will be subject to the usual regulatory approvals, will be
announced in due course.

 

Use of proceeds

 

The funds will be utilized by the Company to advance its studies in respect of
KMP towards feasibility level alongside the progression of the EIA process in
Morocco, as well as for general working capital requirements.

 

Retail Offer on REX platform

 

To enable the Company's existing shareholders to participate at the same
Placing Price, the Company intends to make an offer of Shares at a price of
1.75 pence per Share available on the REX platform (the "Retail Offer").
The Retail Offer will be the subject of a separate announcement to be made
shortly.

 

 

Graham Clarke, CEO of Emmerson commented: "Following the news last month that
the Ministerial Committee had upheld the referral of our environmental
approval, we have been working to update the EIA to incorporate the various
improvements that the KMP has enabled. While we maintain the previous EIA
submission was adequate, we believe this, in addition to the previous
optimisations, makes the revised EIA even more environmentally robust, and
addresses all material concerns related to water that have been raised in the
past.

 

"The US$2.175 million subscription with our Strategic Investors is a sign of
their continued support for the Project. In September 2023, we announced to
the market that the original funding agreement from 2021 was no longer
suitable, and had been allowed to expire, but that GSM, as our largest
shareholder, remained supportive. By providing this additional funding
alongside GQC, even ahead of environmental approval, GSM has demonstrated
their confidence in the Project, and particularly in the advantages of the
KMP.

 

"This cornerstone funding has strengthened our balance sheet, thus allowing us
to continue our work advancing the KMP towards Feasibility Level, while we
work with the authorities to obtain the approval for the EIA. We are also
pleased to offer shares at the same placing price to existing investors via
the REX platform, should they wish to participate.

 

"Khemisset is a world-class potash project, but with the addition of the KMP
processing route, it represents a truly unique multi-nutrient producer. By
offering a full suite of fertilisers containing potash, phosphates, and
nitrogen, as well as magnesium and iron, all from a single deposit, it
represents a solution to the challenges of food security and African
self-reliance, unlike any other mine in the world."

 

 

Mark Zhou, CEO of GSM, said: "We are delighted to be able to demonstrate our
commitment to Khemisset, which we believe is an outstanding project. We look
forward to working even more closely with the Emmerson team in the future."

 

Admission of Shares

 

Application will be made for the Shares issued pursuant to the Subscriptions
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 22 April 2024. 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 Shares.

 

The Company will provide an update as to Total Voting Rights, and to confirm
the timing of Admission, following the completion of the Retail Offer.

 

Related Party Transaction

 

By nature of the Substantial Shareholding (as defined by the AIM Rules for
Companies) in the Company, GSM's participation in the Subscriptions
constitutes a related party transaction for the purposes of the AIM Rules for
Companies. The directors consider, having consulted with Liberum, the
Company's nominated adviser, that the terms of the Subscription are fair and
reasonable insofar as the Company's shareholders are concerned.

 

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of
the UK Market Abuse Regulation and the Directors of the Company are
responsible for the release of this announcement.

 

 

**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) 207 138 3204

 Graham Clarke / Jim Wynn / Charles Vaughan

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

 Scott Mathieson / Matthew Hogg
 Shard Capital (Joint Broker)                                  +44 (0)20 7186 9927

 Damon Heath / Isabella Pierre
 BlytheRay (Financial PR and IR)                               +44 (0) 207 138 3204

 Tim Blythe / Megan Ray / Said Izagaren

 

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 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. 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.

 

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