TIDMEML
RNS Number : 1385N
Emmerson PLC
21 September 2023
Emmerson PLC / Ticker: EML / Index: AIM / Sector: Mining
21 September 2023
Emmerson PLC ("Emmerson" or the "Company")
Q3 2023 and Financing update
Emmerson, which is developing the world class Khemisset Potash
Project in Morocco ("Khemisset" or the "Project"), is pleased to
provide an update on activities during Q3 2023 and financing
discussions relating to its strategic investors.
Highlights
-- Emmerson expresses its deepest condolences to all those
affected by the devastating earthquake of 8 September in
Morocco.
-- The earthquake has not directly impacted the Project or
Emmerson staff and their families, although further delays to the
environmental approval process are possible as the Government
focuses on the aftermath and humanitarian relief efforts.
-- Environmental approval is awaiting session of the Commission
Ministérielle de Pilotage ("Ministerial Committee" or the
"Committee") chaired by the Moroccan Head of Government.
-- The Company's strategic investors, being Global Sustainable
Minerals Pte Ltd ("GSM") and Gold Quay Capital Pte Ltd ("GQC"),
have confirmed their intention to replace the existing convertible
loan note facility (due to expire 30 September 2023) with a more
suitable financing support once environmental approval in place,
subject to finalisation of terms.
-- Technical workstreams finalising optimisation designs ahead
of incorporation into a Bankable Feasibility Study.
Chief Executive Graham Clarke said: "The earthquake in Morocco
shocked us all and on behalf of the Company, I would reiterate our
expression of condolences and our sympathy for everyone affected.
Understandably, relief efforts will dominate government focus in
the near term, as we await the Ministerial Committee meeting to
approve our environmental permit, but we remain confident of a
favourable outcome.
The existing financing facility with our strategic investors was
due to expire at the end of the month. Given the long stop date
required all permits and funding for construction to be in place,
this deadline will not be met. In addition, the facility is now two
years old, and various elements of the agreement now need to be
revisited. The right time to do this is once the environmental
approval is in place, and our strategic investors, who are also our
largest shareholders, remain committed to the project, and are
working with us to put in place something more appropriate as soon
as possible. "
Mark Zhou, director of GSM , commented: "We are happy to confirm
our commitment to the Khemisset Project as Emmerson's largest
shareholders and look forward to negotiating new funding which
works for both parties at the appropriate time, in order to move
the Project forwards towards construction as quickly as
possible."
Earthquake
On Friday 8 September 2023, a magnitude 6.8 earthquake struck
Morocco. The epicentre was located in the High Atlas Mountains,
approximately 70km south of Marrakech. Emmerson's project and
offices are located some distance away and were not affected
directly. The Company has expressed its deepest sympathies to the
people of Morocco at this difficult time and has made contributions
both to the British Moroccan Society's fundraise, and the Moroccan
Special Fund for the Management of the Effects of the
Earthquake.
Environmental approval
The Company's primary focus during 2023 has been on obtaining
the Environmental & Social Impact Assessment ("ESIA") approval
for its Khemisset Project. As previously communicated, the main
sensitivities have centred around the potential impact of the
Project on regional water resources in the context of climate
change and recent droughts, and considerable effort has been
undertaken by the Company and the relevant authorities to identify
solutions satisfactory to all stakeholders.
In July 2023, the environmental approval for the Project was
referred by the Company to the Ministerial Committee to enable the
decision to be taken at a national level on the basis that the
Project is of strategic significance , and in the context of the
sensitivity of water resources in Morocco.
Further to ongoing discussions, the Company remains confident
that approval will be forthcoming and is not aware of any
significant outstanding issues to be resolved.
The Ministerial Committee was unable to sit ahead of the summer
recess and was due to reconvene at a suitable time once government
departments returned to work in late August. The precise timing of
the Committee meeting remains to be determined, and it is likely
that government resources are prioritised in the coming weeks on
humanitarian relief and rehabilitation efforts following the recent
earthquake.
Strategic Investor
In November 2021, the Company signed a financing agreement with
Global Sustainable Minerals Pte Ltd ("GSM") and Gold Quay Capital
Pte Ltd ("GQC") (together the "Strategic Investors") for U$5.8
million of equity at 6 pence and up to US$40 million of Convertible
Loan Notes ("CLNs") at a conversion price of 8.2 pence. The
original CLN agreement had a long stop date of 30 September 2022
(the "Long Stop Date"). In September 2022, this facility was
extended with substantially the same terms for a year until 30
September 2023 (the "Extended Long Stop Date"), with a further US$6
million of equity subscribed by GSM, also at 6 pence.
Drawdown of the funds under the Convertible Loan Notes is
subject to satisfaction of conditions precedent by 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 drawdown 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 Extended Long Stop Date, and will not be capable of being
fully satisfied in the near term, the Company and the Strategic
Investors, have agreed that the financing commitment will lapse on
the Extended Long Stop Date.
However, the Strategic Investors, who are the Company's largest
shareholders with a combined interest of 15.5%, remain supportive
and have confirmed their intention to engage with the Company in
relation to a cornerstone contribution to the Project's
construction financing requirements. It is the preference of the
Company and the Strategic Investors to revisit the form of this
financing support once the timing of the environmental approval is
clear and the permit received.
Technical workstreams
Basic Engineering for the Khemisset project is now almost
complete, with final designs and reports remaining in certain areas
including the recent design optimisations in relation to water
in-take and tailings management. Once environmental approval has
been obtained, the Company will complete any remaining optimisation
work, and look to provide updated indicative financials for the
Project incorporating any new design elements. Thereafter, work
will begin on a Bankable Feasibility Study ("BFS"), which will be
based on the 2020 Feasibility Study, updated to bankable level in
all areas, and incorporating design changes, an updated mine plan,
and revised pricing assumptions.
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.
**S**
For further information, please visit www.emmersonplc.com ,
follow us on Twitter (@emmerson_plc), or contact:
Emmerson PLC +44 (0) 207 138
Graham Clarke / Jim Wynn / Charles Vaughan 3204
Liberum Capital Limited (Nominated Advisor
and Joint Broker) +44 (0)20 3100
Scott Mathieson / Matthew Hogg / Kane Collings 2000
Shard Capital (Joint Broker) +44 (0)20 7186
Damon Heath / Isabella Pierre 9927
BlytheRay (Financial PR and IR) +44 (0) 207 138
Tim Blythe / Megan Ray / Said Izagaren 3204
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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