REG - Emmerson PLC - Renewal of Strategic Investment & Equity Placing

EmmersonAnnouncement

26/09/2022 07:16

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220926:nRSZ5393Aa&default-theme=true

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 £5.4 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 £1 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.

 

**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
 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 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.

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  MSCLAMLTMTITBLT