TIDMEML
RNS Number : 9270R
Emmerson PLC
11 July 2022
Emmerson PLC / Ticker: EML / Index: AIM / Sector: Mining
11 July 2022
Emmerson PLC ("Emmerson" or the "Company")
Q2 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
Q2 2022.
Q2 2022 Key Events and Deliverables:
-- Global potash market remains strong with spot prices of US$1,100/t in Brazil
-- Discussions with debt, equity financiers and potential
strategic partners continue to progress well, with the tailwind of
high potash prices and the accepted strategic importance of new
sources of potash such as Khemisset
-- Project development work has continued in the quarter:
o Exploration work has unlocked cost effective construction
options - portal and decline location has been updated and is
expected to deliver technical benefits and capex savings
o All key infrastructure locations established following
successful completion of geotechnical drilling and additional
Electrical Resistance Tomography surveys
o Improved and environmentally friendly water solution that
increases security of supply for process water
o All engineering packages advancing, including basic
engineering with Reminex and process engineering with Barr
Engineering
Global potash market
The potash market has remained extremely strong in the quarter,
with supply issues exacerbated by the war in Ukraine. As of
mid-June, reported Muriate of Potash ("MOP") sales prices were
showing that the Brazil market had steadied at approximately
US$1,100/t, while other markets around the world were also showing
marked increases in pricing. Global shortages have led to a supply
response from producers, and analysts are predicting increased
production from Canada, specifically from BHP's Jansen project, and
from the world's largest producer, Nutrien, although these
developments will take, in some cases, several years to come
online. At the same time, production from Belarus or Russia may not
become widely available for some considerable time.
The price of all food crops has risen sharply, which has the
potential to sustain the demand for potash even at current elevated
prices. The world needs agricultural production to increase further
to control food prices globally, and it remains critical that
potash mines such as Khemisset, as well as other fertilizer
projects are brought into production to support this.
Financing update
The Company has continued to make good progress towards securing
the funding needed to bring the project into construction, with
positive dialogues with banks , equity investors and potential
strategic partners , in addition to the existing Singapore-based
cornerstone investors Global Sustainable Minerals Pte Ltd and Gold
Quay Capital Pte Ltd, wh o committed up to US$4 6.8 m in November
2021.
Project Development Update
Environmental approvals
Environmental approval for the project remains outstanding. The
Company has invested significant resources into meeting Moroccan
requirements, including various important design optimisation steps
since the submission of the Environmental and Social Impact
Assessment in 2020. No specific environmental objections have been
raised by the Moroccan authorities and the Company is not aware of
any reason why the ESIA will not be granted in due course.
Geology
The geological programme continued during Q2 with the completion
of further deep drill holes supplemented by directional drilling
and four additional Electrical Resistance Tomography (ERT) surveys.
The deeper drill holes had the dual purpose of further
understanding the lithography around the declines to assist in
finalising the precise siting of this key infrastructure to take
advantage of the most competent ground conditions. One of the holes
has been extended to provide detailed data to feed into the design
of the DWI (Deep Well Injection) for some of the process tailings.
The 8km of ERT surveys have covered the tailings storage facility
(TSF) area and the Mining Infrastructure Area (MIA), for best
understanding of rock competence for foundations.
Engineering
Following the award of the Basic Engineering packages at the end
of 2021 and in Q1 2022, the main focus has been on the seven
packages covered in the Reminex contract and the key areas of
progress are summarised below. In parallel, work is progressing
well with the process engineering being undertaken by Barr
Engineering.
Water Supply
In conjunction with Reminex, an improved solution for process
plant water supply has been investigated in detail and now approved
as the go forward case for further design work. Whereas in the 2020
Feasibility Study the mine site water supply was envisaged to be
from the Ouljet Essoltane dam, it will now be taken either
partially or fully from the Khemisset Waste Water Treatment Plant,
with the ultimate goal of requiring no fresh water for the process.
This is a scientifically robust and environmentally friendly
approach that both reduces risks of water supply to the project,
and further reduces environmental impacts with a shorter pipeline
required.
Electrical Power
The power strategy has been more clearly defined with the main
feed onto site, back up feed and substation now confirmed.
Engagement will now move forward with the state grid owner, ONEE,
to develop key design criteria.
Highway Connection
Having engaged with a specialist consultant to assist in the
design of the highway connection, a baseline study was completed to
understand local transport characteristics such as travel
directions and distances, traffic, air pollution or quality of
roads, as well as to assess the impact of the future mine. This
work is currently ongoing, and options for the location of the road
junction have been identified and are under discussion with the
relevant government bodies to achieve the best outcome.
Portals and Declines
The mine site location has been adjusted following the
geotechnical work that has been undertaken specifically for this
purpose. Early results of the decline alignment drilling had
demonstrated potentially disadvantageous geological conditions,
from a constructability perspective, for the previously proposed
portal location. Further to this, more recently completed decline
alignment drilling evidenced better than anticipated ore conditions
at the end of the decline, which would be potentially sterilised if
the existing portal and decline philosophy was adopted.
Based on further geological information, developed from
boreholes and ERT surveys, an area has been identified with more
advantageous constructability conditions, and in a location which
positions the decline in an appropriate area. The new portal
location was approved as the go forward case for more detailed
engineering.
The remaining MIA infrastructure layout was proposed and
approved. Engineering is well underway on each of the key
infrastructure areas. Civil and structural work has now commenced
following the decisions made with regards to mine site and portal
locations, as outlined above.
The revised site location uses less private land plots and more
'collective land' (i.e., the land owned by the state, which
produces a useful cost benefit in the land acquisition
programme.
Tailings Storage Facility
The location of the TSF remains unchanged. The early basic
engineering discussions were around the optimal solution for the
transport of tailings from the mineral processing facility to the
TSF (piped as a slurry or conveyed as a drier material). Although
both systems are effective and can meet project requirements, the
decision was made to progress with a dry tailings system. The key
advantages of the dry tailings system are the environmental
benefits of reduced footprint, reduced water consumption and also
reduced risk in the event of any extreme weather events.
Process Plant
Basic engineering is well advanced with process flow diagrams,
piping and instrumentation diagrams and function specifications now
completed. Specifications have been chosen for the mechanical
equipment and electrical and automation drawings are ongoing.
**S**
For further information, please visit www.emmersonplc.com ,
follow us on Twitter (@emmerson_plc), or contact:
Emmerson P LC +44 (0) 20 7236
Graham Clarke / Jim Wynn / Charles Va ughan 1177
Shore Capital (Nominated Adviser and Joint
Broker) +44 (0)20 7408
Toby Gibbs / John More 4090
Liberum Capital Limited (Joint Broker) +44 (0)20 3100
Scott Mathieson / Lydia Zychowska 2000
Shard Capital (Joint Broker) +44 (0)20 7186
Damon Heath / Isabella Pierre 9927
St Brides Partners (Financial PR/IR) +44 (0)20 7236
Susie Geliher / Charlotte Page 1177
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 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.
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