TIDMEML
RNS Number : 9758G
Emmerson PLC
21 November 2022
Emmerson PLC / Ticker: EML / Index: AIM / Sector: Mining
21 November 2022
Emmerson PLC ("Emmerson" or the "Company")
Potash and Salt Offtake MOUs with Keytrade AG and Hexagon Group
AG
Emmerson, the Moroccan-focused potash development company, is
pleased to announce the signing of non-binding Memoranda of
Understanding ("MOUs") relating to the offtake of potash and salt
to be produced at its Khemisset Mine in Morocco ("Khemisset"), as
follows:
-- With Keytrade AG for the sale of a minimum of 245,000 metric
tonnes per year of Muriate of Potash ("MOP") for a period of 10
years; and
-- With Hexagon Group AG for the sale of a minimum of 245,000
metric tonnes per year of MOP and a minimum of 500,000 metric
tonnes per year of salt product ("NaCl"), both for a period of 10
years.
The MOUs are non-binding and set out the key terms for
subsequent formal bankable offtake agreements.
The prices for MOP (minimum of 60% K(2) O) and NaCl are expected
to be derived from the market or as quoted in independent expert
reports, such as Argus Research, averaged to form a monthly price
in the month prior to bill of lading, and after deducting a
marketing fee.
Importantly, the MOUs contemplate "take or pay" provisions
whereby the offtakers will market the product to end users and
compensate the Company for any quantities not taken by end users or
otherwise sold by the offtakers.
The MOUs envisage that all MOP and salt products sold will be
delivered Free On Board (currently Casablanca), unless otherwise
agreed by the parties. They are also non-exclusive, and Emmerson
will continue to engage in ongoing offtake discussions with other
wholesale customers, distributors, and global traders for the
remaining production capacity from Khemisset.
Graham Clarke, CEO of Emmerson commented: "I am delighted to
present our first offtake MOUs to the market as we continue our
process of advancing towards construction readiness at Khemisset.
These MOUs are an important milestone in this process and will
account for more than 65% of MOP production and 50% of salt
production. Underpinning a significant proportion of future potash
and salt sales on a take or pay basis is a strong endorsement for
the project, de-risking the development for debt and other
financiers. They are also a clear signal of the critical importance
of potash in the context of international food security, and we
look forward to advancing further negotiations as we continue to
lay the foundations for establishing Africa's first commercial
potash mine."
Keytrade AG is a large Swiss based agri-trader that was first
established in 1997. Keytrade AG has substantial experience working
with all types of suppliers, distributors, retailers, and end-users
across all fertiliser products and is active in more than 115
countries across the globe with key offices in Zurich, Madrid,
Tampa, São Paulo, New Delhi, and Beijing amongst others.
Hexagon Group AG is commodity trading company established in
Switzerland in 2018. The company specialises in trading, marketing,
and logistics in the area of bulk fertilizers and commodities for a
wide range of different industries. Hexagon Group AG, together with
its subsidiaries, has 19 offices worldwide and its core operations
in fertilizers are concentrated in Asia, Europe, and the
Mediterranean countries including North Africa.
**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 / William King 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 second 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, and the spot
price for granular MOP fertiliser has since risen, further
enhancing the valuations.
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END
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