REG - Emmerson PLC - Q2 Update

EmmersonAnnouncement

05/07/2024 07:00

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RNS Number : 2470V  Emmerson PLC  05 July 2024

 
 

 

5 July 2024

 

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

Q2 2024 Update

 

Emmerson, the Moroccan-focused potash development company, is pleased to
provide an update on activities during Q2 2024 from its 100% owned Khemisset
Potash Project ("Khemisset" or the "Project").

 

Highlights

·    Updated Environmental & Social Impact Assessment (''ESIA'')
submitted, incorporating the optimisations from the Khemisset Multi-mineral
Process ("KMP"). ESIA currently under review by the Commission Régionale
Unifiée de l'Investissement ("CRUI")

·   Initial crop trials completed, successfully demonstrating the
effectiveness of KMP products as sources of phosphate. Further trials are
planned to confirm the benefits of the additional contained micro-nutrients
magnesium and iron

·   Offtake Memorandum of Understanding ("MOU") signed for KMP products,
in addition to existing MOUs for potash and salt

·    Patent application for KMP now submitted in Morocco as well as the UK

·    US$2.5 million raised from a placing at 1.75 pence in April 2024,
including US$2.2 million from the Company's largest shareholders, and US$0.3
million from an oversubscribed retail offer

 

Chief Executive Graham Clarke said: "Following the positive news at the end of
Q1 that our recourse application for the environmental approval had been
upheld and would be referred back to the CRUI for reconsideration, we were
delighted to update our ESIA to show the significant improvements brought
about by the KMP optimisations in addition to the previous design
optimisations. The overall environmental credentials of the Project are now
even more robust, and, together with the compelling economics of the KMP
update, should mean that we can obtain the necessary approvals and move
forward with the Project swiftly.

 

"While we have been holding back from any major workstreams pending timing
clarification of the ESIA approval process, we have nevertheless made some
important steps forward on the new KMP products to be marketed.

 

"The crop trials, which were completed in June, confirmed the effectiveness of
the new KMP fertiliser products as sources of phosphate and will be followed
up with further trials looking at the benefits of the other micronutrients
(magnesium and iron) they contain, as well as their slow-release properties.
We have also signed MOUs for the offtake of a significant quantity of the new
KMP products, confirming the marketability of these multi-nutrient
fertilisers."

 

Environmental Approval

In March 2024, the Commission Ministérielle de Pilotage (The "Ministerial
Committee") invited the Company to update its ESIA to incorporate the
optimisations arising from the KMP process changes, which include a
significant reduction in water consumption and the elimination of the need to
dispose of waste brines, and to resubmit this for review by the CRUI.

 

In April 2024, the Company completed these updates and resubmitted what it
hopes to be the last version of the ESIA.

 

The Company continues to pursue its engagement with the relevant authorities,
and in view of the considerable improvements to the environmental footprint of
the Project made not only through the KMP enhancements, but also other
enhancements over the previous three years, the Company remains confident that
the approval will be forthcoming.

 

Crop trials

In June 2024, the Company completed the first set of crop trials using two
multi-nutrient fertilisers produced from the new KMP optimisations. The
trials, which took place over a 10-week period with little gem lettuces in a
glass-house test environment, assessed the suitability of struvite and
vivianite products as sources of phosphate.

 

The results were positive as had been expected, as plants fed with both
products performed in line with those given traditional phosphate sources, and
considerably better than controls given no phosphate.

 

Further trials are planned to assess the additional benefits from the other
nutrients contained by the KMP products (magnesium, iron and nitrogen), as
well as the benefit of being slow-release, on various crops and for different
soil types, with a view to increasing their market value.

 

Offtake for KMP products

In June 2024, the Company entered into a non-binding MOU with Hexagon Group AG
("Hexagon") for offtake of some of the new fertiliser products resulting from
KMP.

 

Under the terms of the MOU, Hexagon would take up to 300,000 metric tonnes of
struvite-based products and 50,000 tonnes per annum of vivianite-based
products

 

All other terms of the MOU are in line with the MOUs for potash and salt
announced in November 2022, including "take or pay" provisions, and will be
delivered Free On Board ("FOB") at Casablanca, Jorf Lasfar, or Safi (unless
otherwise mutually agreed).

 

This MOU is also non-exclusive, meaning the Company can continue to engage in
ongoing offtake discussions with other wholesale customers, distributors, and
global traders for production from Khemisset for all of its products.

 

Other

Following the submission of a patent application for the new KMP processes in
the UK in September 2023, the Company also submitted an application in Morocco
during Q2 2024. These patent applications, which will be extended more widely
once approved, give important commercial protections over the intellectual
property relating to this valuable innovation.

 

Equity placing

In April, the Company announced the completion of an equity placing which
raised US$2.5 million in gross proceeds at a price of 1.75 pence per share
(the "Placing Price").

 

The bulk of this placing was with Global Sustainable Minerals Pte Ltd ("GSM")
and Gold Quay Capital Pte Ltd ("GQC") (together the "Strategic Investors"),
whereby GSM subscribed for US$2.0 million and GQC for US$175k of new shares,
at the Placing Price. As a result of this placing, GSM received 90,702,948
shares and GQC received 7,936,508, taking their holdings to 20.30% and 2.64%
respectively.

 

The Strategic Investors also received a warrant to subscribe for new Shares
("Warrants") for each new share received in this placing,  at an exercise
price of 3 pence and an expiry date of 31 December 2024.

 

In addition, the Company completed an oversubscribed retail offering on the
REX platform, raising a further US$0.3 million (£240k) at the Placing Price.

 

The funds are to be used 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.

 

Outlook

The key priority over Q3 remains obtaining environmental approval for the
Project. At the same time, the Company is continuing with low cost/high value
testwork related to KMP including crop trials, technical workshops, and
production optimisations both in Morocco and the UK.

 

**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

 Panmure Liberum 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. Updated financial estimates published in February
2024 indicated a net present value of US$2.2 billion, with an internal rate of
return of approximately 40%.

 

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