TIDMEML

RNS Number : 5392A

Emmerson PLC

26 September 2022

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

26 September 2022

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

Interim Results for the six months ended 30 June 2022

Emmerson, which is developing the world class Khemisset Potash Project in Morocco ("Khemisset" or the "Project"), is pleased to announce its interim results for the six-month period ended 30 June 2022.

Highlights

-- Strong progress at Khemisset in basic engineering and drilling campaigns, positioning the Company to proceed rapidly towards the construction of the mine in 2023 after financial close

-- Enhancements made to the Project to reduce further its environmental impact, including sourcing of waste water for processing, and the selection of dry tailings storage

-- Potash prices remain high due to tight supply and growing demand - food security becoming a major global issue

-- Further support for the Project from strategic investors, with US$40 million financing commitment extended for a further 12 months, and a new subscription of US$6.0 million at 6.0 pence per share (see separate announcement)

-- Emmerson now funded for remaining technical and other workstreams to deliver Khemisset through to construction decision and financial close, currently expected to be during H2 2023

-- Positive discussions around environmental approvals as Emmerson continues to work with the relevant authorities to receive full approval.

Chief Executive Graham Clarke said: "I am pleased to report that we have made strong progress in 2022 to date towards completing the basic engineering and technical workstreams as part of finalising the design of the Khemisset project. We are now well placed to move rapidly towards concluding the financing for the construction of the mine, once the final environmental approvals are received. Although these approvals have been taking longer than we had originally anticipated, the Moroccan authorities have assured us of their support for the Project, which all parties recognise has a significant role to play in the context of the global crisis around food security, of which potash supply is a key element.

"Today we announce the extension of our US$40 million financing commitment with Global Sustainable Minerals Pte Ltd and Gold Quay Capital Pte Ltd, together with a US$6 million placing for new equity. These agreements demonstrate the ongoing support of our strategic investors and leave us funded for our remaining technical workstreams up to financial close. Once we receive the final environmental approvals, we expect financial close to take around six months if all goes well, and construction to commence soon thereafter. Subject to progress in the coming months on the environmental permit, we would hope to be able to commence construction in the second half of 2023. "

Financing

The Company announces today that it has received further support from its strategic investors Global Sustainable Minerals Pte Ltd ("GSM") and Gold Quay Capital Pte Ltd ("GQC") (together the "Strategic Investors") in the form of an extension to its existing Convertible Loan Notes agreement, and a new US$6.0 million subscription for new shares at a price of 6.0 pence per share by GSM. Further details of this important and positive development, and the opportunity for existing shareholders to participate alongside the GSM subscription are covered in separate announcements published immediately following this announcement.

Discussions have continued regarding the financing package for the construction project at Khemisset. A range of international and Moroccan banks have expressed interest in participating in the debt funding, while there has also been considerable interest in the equity portion, which is corner-stoned by the Strategic Investors' renewed commitment for up to US$64 million, comprising US$12 million of equity subscriptions to date (including US$6 million announced today), up to US$40 million of convertible notes, and potential additional funding of US$12 million from warrant exercises.

The combination of strong economics, solid jurisdiction, an experienced management team and a compelling investment case for potash have attracted significant attention from a variety of investors, in spite of some challenging market conditions.

Khemisset

Emmerson is committed to making Khemisset the first potash producer in Africa. Achieving this will enhance Morocco's status as a fertiliser hub supporting food security for Africa and the rest of the world and will confirm the country's growing reputation as an attractive destination for foreign investment. Emmerson's management is committed to working proactively with Morocco to ensure that the development of the Project aligns with the Kingdom's economic strategy through a mutually beneficial relationship that maximises local and national benefits. It will continue to engage closely with a wide range of Moroccan stakeholders to ensure the optimum route to production is achieved.

Technical Workstreams

The Emmerson team in Morocco continues to progress towards achieving construction readiness at Khemisset. The work undertaken during the period, in partnership with Moroccan partners Reminex Engineering on the general infrastructure, and Barr Engineering on the process plant, has ensured that the Company is well positioned to move quickly to the next stage once the final permits and financing are in place.

Recent geotechnical work has driven the adjustment of the mine site location, with decline alignment drilling conducted during the period demonstrating better than anticipated ore conditions at the end of the decline. Information gathered from boreholes and Electrical Resistance Tomography ("ERT") surveys has led to the selection of a more suitable area for construction of the site and the decline, as well as reducing the use of private land.

Additional deep drill holes, supplemented by directional drilling and four further ERT surveys, were completed in order to provide further insights into the lithography around the declines, and will assist in finalising the precise siting of key infrastructure to take advantage of the most competent ground conditions. One of the holes was extended to provide detailed data to feed into the design of the Deep Well Injection ("DWI") which will help minimise surface tailings. The 8km of ERT surveys have covered the tailings storage facility area and the Mining Infrastructure Area, for best understanding of rock competence for foundations.

As previously reported, the Company has determined that a dry tailings system will now be employed at Khemisset. 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, a key environmental benefit.

Workstreams relating to the process plant have also progressed well, with process flow diagrams, piping and instrumentation diagrams, and function specifications now completed. Infrastructure and service investigations are now well advanced, and an improved solution for process plant water supply has been identified whereby water will 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.

Potash market

During the first half of 2022 the significant rise in the price of potash, especially in the large growth market of Brazil, became more broad-based, with prices reaching US$1,000/t in many markets around the world. These prices reflect the tightening of supply following many years of underinvestment in mining, a situation brought sharply into focus by the war in Ukraine, with sanctions imposed on both Russia and Belarus (which together account for nearly 40% of global potash production).

Although prices have settled back slightly in recent weeks at lower levels, at approximately US$800/t they remain considerably higher than the assumptions included at the time of the Khemisset Feasibility Study in 2020, which estimated a project net present value of US$1.4 billion. While supply issues related to the Ukraine crisis are likely to remain for the foreseeable future, the longer-term drivers of potash demand, in particular population growth and pressure on land usage in the context of climate change, are expected to sustain high prices for some time.

Permitting Update

As shareholders will be aware, the Company's Environmental and Social Impact Assessment ("ESIA") is awaiting final approval. Emmerson is committed to meeting the highest environmental standards in Morocco and this will remain a core principle at the heart of its work throughout the construction phase and during the subsequent life of the mine. The Company has addressed all the ESIA issues raised by the relevant Moroccan authorities. It has enhanced and upgraded various aspects of its proposed development plan, far surpassing the minimum requirements of the ESIA and working to International Finance Corporation Performance Standards, including, as stated above, in its water sourcing and tailings management strategies.

Corporate

Emmerson has continued to make significant strides towards securing the funding need to bring Khemisset into construction and has strengthened its internal and advisory teams with a view to finalising these steps. In February 2022, Emmerson announced the appointed of Jim Wynn as CFO, and Liberum Capital as a joint broker, and Matt Wilmott was recruited as Technical Services Manager.

Condensed Consolidated Statement of Comprehensive Income for the six months ended 30 June 2022

 
                                                                     6 months ended       6 months   12 months ended 
                                                                        30 Jun 2022          ended       31 Dec 2021 
                                                                                       30 Jun 2021 
                                                                        (Unaudited)    (Unaudited)         (Audited) 
                                                             Notes          US$'000        US$'000           US$'000 
 
 Administrative expenses                                       3            (1,244)          (897)           (2,349) 
 Share-based payment expense                                                   (53)          (217)              (33) 
 Net foreign exchange loss                                                     (81)           (26)             (388) 
 Operating loss                                                             (1,378)        (1,140)           (2,770) 
 
 Finance cost                                                                     -            (5)               (7) 
 Loss before tax                                                            (1,378)        (1,145)           (2,777) 
 Income tax                                                                       -              -                 - 
----------------------------------------------------------  ------  ---------------  -------------  ---------------- 
 Loss for the period attributable to equity owners                          (1,378)        (1,145)           (2,777) 
----------------------------------------------------------  ------  ---------------  -------------  ---------------- 
 
 Other comprehensive income 
 Exchange loss on translating foreign operations                               (84)          (169)             (693) 
 Total comprehensive income attributable to equity owners                   (1,462)        (1,314)           (3,470) 
----------------------------------------------------------  ------  ---------------  -------------  ---------------- 
 
 Loss per share (cents)                                        4             (0.15)         (0.14)            (0.34) 
 

Condensed Consolidated Statement of Financial Position as at 30 June 2022

 
                                                              30 June 2022   30 June 2021   31 Dec 2021 
                                                               (Unaudited)    (Unaudited)     (Audited) 
                                                      Notes        US$'000        US$'000       US$'000 
 Non-current assets 
 Intangible assets                                      5           16,489         12,032        13,555 
 Property, plant and equipment                                          39             12            41 
---------------------------------------------------  ------  ------------- 
 Total non-current assets                                           16,528         12,044        13,596 
 
 Current assets 
 Trade and other receivables                                         1,126            490           771 
 Cash and cash equivalents                                           4,535          6,362        10,032 
---------------------------------------------------  ------  -------------  -------------  ------------ 
 Total current assets                                                5,661          6,852        10,803 
 
 Total assets                                                       22,189         18,896        24,399 
---------------------------------------------------  ------  -------------  -------------  ------------ 
 
 Current liabilities 
 Trade and other payables                                          (1,005)          (207)       (1,835) 
 Total current liabilities                                         (1,005)          (207)       (1,835) 
 
 Net assets                                                         21,184         18,689        22,564 
---------------------------------------------------  ------  -------------  -------------  ------------ 
 
 Shareholders equity attributable to equity owners 
 Share capital                                                      29,025         23,223        28,774 
 Share-based payment reserve                                         2,163          1,572         2,048 
 Reverse acquisition reserve                                         2,234          2,198         2,198 
 Retained earnings                                                (11,867)        (8,650)      (10,278) 
 Translation reserve                                                 (371)            346         (178) 
---------------------------------------------------  ------  -------------  -------------  ------------ 
 Total equity                                                       21,184         18,689        22,564 
---------------------------------------------------  ------  -------------  -------------  ------------ 
 

Condensed Consolidated Statement of Changes in Equity for the six months ended 30 June 2022

 
 US$'000           Share Capital       Share-based           Reverse          Retained       Translation  Total equity 
                                   payment reserve       acquisition          earnings           reserve 
                                                             reserve 
 Balance as at 1 
  January 2021            15,755             1,499             2,198           (7,508)               515        12,459 
 Loss for the 
  period                       -                 -                 -           (1,145)                 -       (1,145) 
 Other 
 comprehensive 
 loss: 
 Exchange loss on 
  translating 
  foreign 
  operations                   -                 -                 -                 -             (169)         (169) 
                   -------------  ----------------  ----------------  ----------------  ----------------  ------------ 
 Total 
  comprehensive 
  loss                         -                 -                 -           (1,145)             (169)       (1,314) 
 Share option and 
  warrant issue                -               166                 -                 -                 -           166 
 Transfer                      -               (3)                 -                 3                 -             - 
 Share issue - 
  3rd parties              8,223              (90)                 -                 -                 -         8,133 
 Share issue 
  costs                    (755)                 -                 -                 -                 -         (755) 
 Balance as at 30 
  June 2021               23,223             1,572             2,198           (8,650)               346        18,689 
                   -------------  ----------------  ----------------  ----------------  ----------------  ------------ 
 
 Balance as at 1 
  January 2021            15,755             1,499             2,198           (7,508)               515        12,459 
 Loss for the 
  year                         -                 -                 -           (2,777)                 -       (2,777) 
 Other 
 comprehensive 
 loss: 
 Exchange loss on 
  translating 
  foreign 
  operations                   -                 -                 -                 -             (693)         (693) 
                   -------------  ----------------  ----------------  ----------------  ----------------  ------------ 
 Total 
  comprehensive 
  income                       -                 -                 -           (2,777)             (693)       (3,470) 
 Issue of share 
  options and 
  warrants                    90             (104)                 -                 -                 -          (14) 
 Transfer                      -               (7)                 -                 7                 -             - 
 Issue of shares 
  for cash                14,345               660                 -                 -                 -        15,005 
 Share issue 
  costs                  (1,416)                 -                 -                 -                 -       (1,416) 
                   -------------  ----------------  ----------------  ----------------  ----------------  ------------ 
 Balance as at 31 
  December 2021           28,774             2,048             2,198          (10,278)             (178)        22,564 
                   -------------  ----------------  ----------------  ----------------  ----------------  ------------ 
 Adjustment for 
  change in 
  functional 
  currency 1/1/22            219                65                36             (211)             (109)             - 
 Balance as at 1 
  January 2022            28,993             2,113             2,234          (10,489)             (287)        22,564 
 Loss for the 
  period                       -                 -                 -           (1,378)                 -       (1,378) 
 Other 
 comprehensive 
 loss: 
 Exchange loss on 
  translating 
  foreign 
  operations                   -                 -                 -                 -              (84)          (84) 
                   -------------  ----------------  ----------------  ----------------  ----------------  ------------ 
 Total 
  comprehensive 
  loss                         -                 -                 -           (1,378)              (84)       (1,462) 
 Issue of share 
  options                      -                53                 -                 -                 -            53 
 Share option and 
  warrant 
  exercised                    3               (3)                 -                 -                 -             - 
 Issue of shares 
  for cash                    29                 -                 -                 -                 -            29 
 Balance as at 30 
  June 2022               29,025             2,163             2,234          (11,867)             (371)        21,184 
                   -------------  ----------------  ----------------  ----------------  ----------------  ------------ 
 

Condensed Consolidated Statement of Cash Flows for the six month period ended 30 June 2022

 
                                                          6 months ended        6 months   12 months ended 
                                                            30 June 2022           ended       31 Dec 2021 
                                                                            30 June 2021 
                                                             (Unaudited)     (Unaudited)         (Audited) 
                                                                 US$'000         US$'000           US$'000 
 Cash flows from operating activities 
 Loss before tax                                                 (1,378)         (1,145)           (2,777) 
 Add back: Foreign exchange                                           81           (324)             (448) 
 Add back: Share-based payment                                        53             167                33 
 Add back: Depreciation                                                2               4                 5 
 Changes in working capital 
 Increase in trade and other receivables                           (355)            (60)             (351) 
 (Decrease)/increase in trade and other payables                   (821)           (473)             1,182 
----------------------------------------------------  ------------------  --------------  ---------------- 
 Net cash flows used in operating activities                     (2,418)         (1,831)           (2,356) 
----------------------------------------------------  ------------------  --------------  ---------------- 
 
 
 Cash flows from investing activities 
 Exploration expenditure                                         (2,934)           (766)           (2,671) 
 Property, plant and equipment purchase                                -               -              (30) 
----------------------------------------------------  ------------------  --------------  ---------------- 
 Net cash flows used in investing activities                     (2,934)           (766)           (2,701) 
----------------------------------------------------  ------------------  --------------  ---------------- 
 
 Cash flows from financing activities 
 Proceeds from issuing shares and warrants                            29           8,133            14,958 
 Cost of issuing shares                                                -           (755)           (1,416) 
 Net cash flows generated from financing activities                   29           7,378            13,542 
----------------------------------------------------  ------------------  --------------  ---------------- 
 
 (Decrease)/increase in cash and cash equivalents                (5,323)           4,781             8,485 
 Cash and cash equivalents at beginning of period                 10,032           1,563             1,563 
 Foreign exchange on cash and cash equivalents                     (174)              18              (16) 
----------------------------------------------------  ------------------  --------------  ---------------- 
 Cash and cash equivalents at end of period                        4,535           6,362            10,032 
----------------------------------------------------  ------------------  --------------  ---------------- 
 
 
 
 

Notes to the Condensed Consolidated Financial Statements for the six months ended 30 June 2022

   1.         General information 

Emmerson PLC (the "Company") is a company incorporated and domiciled in the Isle of Man, whose shares were admitted to the Standard Listing segment of the Main market of the London Stock Exchange on 15 February 2017. On 27 April 2021, the Ordinary Shares of the Company were admitted to trading on AIM and the listing of the Company's ordinary shares on the Official List and their trading on the Main Market were cancelled.

The principal activity of the Group is the exploration, development and exploitation of a potash development project in Morocco .

   2.         Basis of preparation 
   2.1     General 

The Condensed Consolidated Financial Statements have been prepared in accordance with UK-adopted International Accounting Standards. The Condensed Consolidated Financial Statements for the six months ended 30 June 2022 are unaudited and have not been reviewed by the Group's auditor, and do not include all of the information required for full annual financial statements.

They should be read in conjunction with the Company's annual financial statements for the year ended 31 December 2021. The principal accounting policies applied in the preparation of the Condensed Consolidated Financial Statements are unchanged from those disclosed in those statements. These policies have been consistently applied to each of the periods presented.

The financial information of the Group is presented in US Dollars, which is also the functional currency of the Company and has been prepared under the historical cost convention. The individual financial statements of each of the Company's wholly owned subsidiaries are prepared in the currency of the primary economic environment in which it operates (its functional currency).

   2.2     Basis of consolidation 

The Consolidated Financial Statements comprise the financial statements of the Company, Moroccan Salts Limited and Moroccan Salts Limited's subsidiaries (the "MSL Group") following the business combination which took place on 4 June 2018.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

   --      The contractual arrangement with the other vote holders of the investee; 
   --      Rights arising from other contractual arrangements; and 
   --      The Group's voting rights and potential voting rights 

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the Group Financial Statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions that are recognised in assets, are eliminated in full.

All the Group's companies have 31 December as their year-end. Consolidated financial statements are prepared using uniform accounting policies for like transactions.

   2.3     Functional and presentational currency 

The financial information of the Group is presented in US dollars. The functional currency of the Company Emmerson PLC changed on 1 January 2022 from GBP to US$ reflecting the stage in development of activities whereby the cost base of the Group changed from GBP to US$. The effect of a change in functional currency is accounted for prospectively. All items were translated into the new functional currency using the exchange rate at the date of the change .

The individual financial statements of each of the Company's wholly-owned subsidiaries are prepared in the currency of the primary economic environment in which they operate (functional currency ).

   2.4     Change in Functional and Presentation Currency 

The Group presented its results in US dollars for the first time for the year to 31 December 2021 having previously reported in GBP. This change should help to provide a clearer understanding of the Group's financial position as the future corporate development activity is likely to be US focused.

In order to satisfy the requirements of IAS 21 with respect to a change in presentation currency, the statutory financial information as previously reported in the Group's Annual Reports have been restated from UK Sterling into US Dollars using the procedures outlined below:

-- Assets and liabilities were translated to US Dollars at the closing rates of exchange at each respective balance sheet date.

-- Share capital, share premium and other reserves were translated at the historic rates prevailing at the dates of transactions.

-- Income and expenses were translated to US Dollars at an average rate at each of the respective reporting years. This has been deemed to be a reasonable approximation.

   --      Differences resulting from the retranslation were taken to reserves. 
   --      All exchange rates used were extracted from the Group's underlying financial records. 
   2.5     Going concern 

The Directors have reviewed the Group's ongoing activities and have a reasonable expectation that the Group has adequate resources to continue operating for the foreseeable future. For this reason, they have adopted the going concern basis in preparing the Interim Financial Statements.

   2.6     Future changes in accounting policies 

The Directors have reviewed the IFRS standards in issue which are effective for annual accounting periods ending on or after the stated effective date. In their view, none of these standards would have a material impact on the financial reporting of the Group.

   2.7     Segment reporting and cyclicality 

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.

The Directors consider the Group is engaged in a single segment of business being the exploration activity of potash in one geographical area, being the Khemisset Project in Morocco.

The interim results for the six months ended 30 June 2022 are not necessarily indicative of the results to be expected for the full year ending 31 December 2022. Due to the nature of the entity, the operations are not affected by seasonal variations at this stage.

   3.         Administrative fee and other expenses 
 
                                                                      6 months 
                                                 6 months ended          ended   12 months ended 
                                                    30 Jun 2022    30 Jun 2021       31 Dec 2021 
                                                    (Unaudited)    (Unaudited)         (Audited) 
                                                        US$'000        US$'000           US$'000 
 Project costs                                                -              7                 7 
 Directors' fees                                            292            263               635 
 Travel and accommodation                                    61              9                59 
 Auditors' remuneration including associates: 
   Current year                                              22             15                25 
   Adjustment for prior year                                 12              -                 - 
 Employment costs                                           298            105               455 
 Professional and consultancy fees                          559            498             1,168 
 Total                                                    1,244            897             2,349 
----------------------------------------------  ---------------  -------------  ---------------- 
 
   4.         Earnings per share 

The calculation of the basic and diluted earnings per share is based on the following data:

 
                                                                                            6 months 
                                                                       6 months ended          ended   12 months ended 
                                                                          30 Jun 2022    30 Jun 2021       31 Dec 2021 
                                                                          (Unaudited)    (Unaudited)         (Audited) 
                                                                              US$'000        US$'000           US$'000 
 Earnings 
 Loss from continuing operations for the period attributable to the 
  equity holders of the Company                                               (1,378)        (1,145)           (2,777) 
 Number of shares 
 
 Weighted average number of ordinary shares for the purpose of basic 
  and diluted earnings per 
  share                                                                   915,425,829    794,971,631       822,875,086 
--------------------------------------------------------------------  ---------------  -------------  ---------------- 
 Basic and diluted loss per share                                          0.15 cents     0.14 cents        0.34 cents 
--------------------------------------------------------------------  ---------------  -------------  ---------------- 
 
   5.         Intangible assets 

The intangible assets consist of capitalised exploration and evaluation expenditure, including the cost of acquiring the mining license and research permits held by the Company's subsidiaries.

 
                                   30 Jun 2022   30 Jun 2021   31 Dec 2021 
                                   (Unaudited)   (Unaudited)     (Audited) 
                                       US$'000       US$'000       US$'000 
 Cost: 
 At the beginning of the period         13,555        11,132        11,132 
 Additions                               2,934           766         2,671 
 Effects of changes in foreign 
  exchange rates                             -           134         (248) 
 As at end of period                    16,489        12,032        13,555 
--------------------------------  ------------  ------------  ------------ 
 
   6.         Related party transactions 

Directors' consultancy fees

Hayden Locke is a Director of the Company and is a director of Benson Capital Limited, which provided consulting services to the Company. During the period, Benson Capital Limited received total fees of US$65k (year to 31 December 2021: US$244k). The amount outstanding as at period end was US$nil (31 December 2021: US$nil).

Robert Wrixon is a Director of the Company and also provided consulting services to the Company. During the period, Robert Wrixon received fees of US$ 55k (year to 31 December 2021: US$116k). The amount outstanding as at period-end was US$ nil (31 December 2021: US$ nil).

Graham Clarke is a Director of the Company and is a director of GCUK Consulting Limited, which provided consulting services to the Company during 2021 for US$99k. No services were provided during the period and no amounts were outstanding at 30 June 2022 or 31 December 2021.

The total Directors' fees during the period is shown in note 3.

   7.         Post-balance sheet events 

On 26 September 2022, the Company announced it had entered into an agreement with Global Sustainable Minerals Pte Ltd ("GSM") and Gold Quay Capital Pte Ltd ("GQC") 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, as well as extending the expiry date for the 82.4 million warrants at 8.2 pence due to expire on 6 December 2022 for a further 12 months. GSM received a renewal fee of 50 million warrants at 8.2 pence with an expiry date of 6 December 2023.

GSM also agreed to subscribe for 89.3 million shares at a price of 6.0 pence per Ordinary share representing aggregate proceeds of US$6.0 million before expenses.

   8.         Change in Functional and Presentation Currency 

The Directors believe that US dollars are a more appropriate currency in which to present the Group's consolidated results, on the basis that, along with most international mining groups, the majority of financing and pricing discussions and presentations are undertaken in that currency.

Consequently, the Group opted for the financial results to be presented in US dollars for the year ended 31 December 2021. The change in presentation currency was applied retrospectively.

In re-presenting the Group Financial Statements for the year ended 31 December 2021, the reported information was converted to US dollars from GBP using the following procedures:

-- Assets and liabilities were translated to US dollars at the closing rates of exchange at each respective balance sheet date (31 December 2021: GBP1: US$1:3532; 31 December 2020: GBP1:US$1.367).

-- Share capital, share premium and other reserves were translated at the historic rates prevailing at the dates of transactions.

-- Income and expenses were translated to US dollars at an average rate at each of the respective reporting periods. This has been deemed to be a reasonable approximation (31 December 2021: GBP1: US$1.377; 31 December 2020: GBP1: US$1.276).

   --      Differences resulting from the retranslation were taken to reserves. 

With effect from 1 January 2022 the Company changed the functional currency to US dollars from GBP. This was deemed appropriate as the Company moves from a prospecting stage to the development of the mining asset. As a consequence, the expense base for the Group has changed from GBP to US$.

In accordance with IAS 21, the change in functional currency is applied prospectively with all balances being converted to US$ at the rate of exchange on the appropriate date.

To assist shareholders during this change, the impact on the prior period results, closing balance sheet and the numerator for earnings per share as originally reported is set out below:

Condensed Consolidated Statement of Comprehensive Income for the six months ended 30 June 2021 (represented)

 
                                              As originally reported 6 months to      Re-presented 6 months to 30 June 
                                                                    30 June 2021                                  2021 
                                       Note                              GBP'000                               US$'000 
 Continuing Operations 
 Administrative expenses               3                                   (658)                                 (897) 
 Share-based payment expense                                               (158)                                 (217) 
 Net foreign exchange loss                                                  (19)                                  (26) 
 Operating loss                                                            (835)                               (1,140) 
 
 Finance cost                                                                (4)                                   (5) 
 Loss before tax                                                           (839)                               (1,145) 
 Income tax                                                                    -                                     - 
                                             -----------------------------------  ------------------------------------ 
 Loss for the year attributable to 
  equity owners                                                            (839)                               (1,145) 
                                             -----------------------------------  ------------------------------------ 
 
 Other comprehensive income 
 Items that may be subsequently 
 reclassified to profit or loss: 
 Exchange gain on translating 
  foreign operations                                                       (176)                                 (169) 
 Total comprehensive income 
  attributable to equity owners                                          (1,015)                               (1,314) 
                                             -----------------------------------  ------------------------------------ 
 
 Loss per share - Basic and diluted    4                            (0.11 pence)                          (0.14 cents) 
 

Consolidated Statement of Financial Position at 30 June 2021 (represented)

 
                                                      As originally presented 30 June 2021   Re-presented 30 June 2021 
                                               Note                                GBP'000                     US$'000 
 Non-current assets 
 Intangible assets                              5                                    8,699                      12,032 
 Property, plant and equipment                                                           9                          12 
 Total non-current assets                                                            8,708                      12,044 
 
 Current assets 
 Trade and other receivables                                                           354                         490 
 Cash and cash equivalents                                                           4,600                       6,362 
                                                     -------------------------------------  -------------------------- 
 Total current assets                                                                4,954                       6,852 
 
 Total assets                                                                       13,662                      18,896 
                                                     -------------------------------------  -------------------------- 
 
 Current liabilities 
 Trade and other payables                                                            (150)                       (207) 
 Total current liabilities                                                           (150)                       (207) 
 
 Net assets                                                                         13,512                      18,689 
                                                     -------------------------------------  -------------------------- 
 
 Shareholders equity attributable to equity 
 owners 
 Share capital                                                                      17,388                      23,223 
 Share-based payment reserve                                                         1,216                       1,572 
 Reverse acquisition reserve                                                         1,651                       2,198 
 Translation reserve                                                                 (167)                         346 
 Retained earnings                                                                 (6,576)                     (8,650) 
 Total equity                                                                       13,512                      18,689 
                                                     -------------------------------------  -------------------------- 
 

**ENDS**

For further information, please visit www.emmersonplc.com , follow us on Twitter (@emmerson_plc), or contact:

 
 Emmerson PLC                                   +44 (0) 20 7236 
  Graham Clarke / Jim Wynn / Charles Vaughan          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                                          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% 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.

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(END) Dow Jones Newswires

September 26, 2022 02:01 ET (06:01 GMT)

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