TIDMEML
RNS Number : 4615N
Emmerson PLC
30 September 2021
Emmerson Plc / Ticker: EML / Index: LSE / Sector: Mining
30 September 2021
Emmerson Plc ("Emmerson" or the "Company")
Interim Results for the six-month period to 30 June 2021
Emmerson Plc, the Moroccan focused potash development company,
is pleased to announce its interim results for the six-month period
ended 30 June 2021.
Chairman's Statement
The Emmerson team set its sights on establishing the first
commercial potash mine in Africa, and the activities and
deliverables achieved so far this year have ensured that we are
well positioned to accomplish this. We are now making good progress
with the financing process for our Khemisset Potash Project in
Morocco ('Khemisset' or the 'Project'), which will enable us to
capitalise on the highly encouraging demand and pricing
fundamentals we see in the market now, and I believe will continue
to steer the industry for decades to come.
There is expected to be annual potash demand growth of around
2.5%, which means some 1.5 million tonnes per year of additional
potash needing to be produced every year. In context, the entire
output from Khemisset would only cover six months of this demand
growth. Many mines will need to be brought forward, from
brownfield, greenfield and as yet undiscovered projects, to keep
pace with demand. Being independent, as we are, means to be able to
supply the local markets which are in most need and have the
highest pricing as a result. At this point, that market is Brazil,
which is growing its demand by about 1 million tonnes per year and
currently paying around $700/t for granular potash, as against the
consensus long term price of $412/t, which is below the actual
price in most markets now. In the medium term that market may well
be Africa. But this strong pricing we are seeing gives us
confidence that the numbers we published in our 2020 Feasibility
Study are at this point looking decidedly conservative. We have a
tailwind, and we intend to use it to move our project into
production as efficiently as we can.
The period under review was shaped by both operational and
corporate developments, including the completion of an AIM
admission in April, providing Emmerson with a listing on the
world's most successful growth market. We were also shown strong
support from some significant new investors as well as a number of
our existing investors, through the raising of GBP5.5 million which
ensures we are well positioned to deliver our additional
workstreams in the lead up to the commencement of construction at
Khemisset.
Operationally, the team in Morocco produced the Company's
Sustainability Summary with a forward-looking view on the
development and construction of Khemisset. This Sustainability
Summary was the result of extensive analysis on the potential
impacts on people, local communities, and the environment in the
different project development workstreams. The highest standards
were adopted to reflect on the Company's vision and values, and to
ensure the development of Khemisset serves as benchmark for the
responsible development of large mining projects in Morocco.
The Sustainability Summary highlighted that the Khemisset
Project will not only contribute to the overarching agenda of
enriching agricultural soils to provide affordable food for the
world's growing population but will have a positive impact on the
local area. The Emmerson team will ensure that material benefits
are maximised while mitigating the impact of mining on the
environment, both in the construction and production phases.
The Company continues to enjoy constructive relations with the
Government of Morocco and its various regulatory bodies overseeing
the development of significant projects such as Khemisset. As
shareholders will be aware, the Company received the Mining Licence
for Khemisset in February 2021 from the Moroccan Ministry of
Energy, Mines and the Environment. The Company is working towards
achieving approval of its Environmental and Social Impact
Assessment (ESIA), which has now progressed to its final stage.
Following the recent elections, we are looking forward to
continuing our work with the new coalition government and building
a strong, mutually beneficial partnership with Morocco over the
coming years. I believe that the Khemisset Project can make a
valuable contribution to economic growth, local development and job
creation in the kingdom. The development of Khemisset will also
help to consolidate the kingdom's emerging position as a hub for
fertiliser industry, particularly in the context of Africa.
The various workstreams and deliverables are coming together
ahead of securing the ESIA, a strategic investor and project debt
finance in order to move forward with construction. The financing
piece is a complex aspect of our current work however we have made
very encouraging progress. Securing funding for a project on this
scale is a delicate process, ensuring that the optimal blend of
debt and equity is delivered and on the right terms to benefit all
existing shareholders. We benefit from a team which boasts several
people with many years of mining finance experience and a deep
understanding of financing strategy.
During the period, we further bolstered our team through the
appointment of Rupert Joy, an experienced diplomat and former
Ambassador & Head of the EU Delegation to Morocco. Rupert has
had a diplomatic career spanning more than 25 years, with seven
years' experience as a diplomat in Morocco, as Deputy Head of
Mission at the British Embassy in Rabat from 2000-03 and as EU
Ambassador and Head of the EU Delegation in Rabat from 2013-17. As
EU Ambassador, he worked to build on Europe's multi-faceted
strategic partnership with Morocco at a senior level in a wide
range of areas, with a strong focus on sustainable development.
Rupert hit the ground running and he has already shown the value of
his experience we are confident that he will continue to prove
himself invaluable as we move forward in earnest with construction
in Morocco.
I would like to take this opportunity to thank our highly
skilled and exceptionally committed management team and to my
fellow board members for their continued guidance and experience as
we approach the next chapter in Emmerson's development. I would
also like to thank our shareholders, both new and old, for their
support and I look forward to the coming weeks and months as
activity in Morocco intensifies.
James Kelly
Non-executive Chairman
29 September 2021
Condensed Consolidated Statement of Comprehensive Income
for the six month period ended 30 June 2021
6 months ended 6 months 12 months ended
30 Jun 2021 ended 31 Dec 2020
30 Jun 2020
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
Administrative expenses 3 (816) (375) (1,586)
Net foreign exchange gain/(loss) (19) 56 61
Operating loss (835) (319) (1,525)
Finance income - 4 4
Finance cost (4) -
Loss before tax (839) (315) (1,521)
Income tax -
---------------------------------------------------------- ------ --------------- ------------- ----------------
Loss for the period attributable to equity owners (839) (315) (1,521)
---------------------------------------------------------- ------ --------------- ------------- ----------------
Other comprehensive income
Exchange gain/(loss) on translating foreign operations (176) 162 97
Total comprehensive income attributable to equity owners (1,015) (153) (1,424)
---------------------------------------------------------- ------ --------------- ------------- ----------------
Loss per share (pence) 4 (0.11) (0.05) (0.22)
Condensed Consolidated Statement of Financial Position
as at 30 June 2021
30 June 2021 30 June 2020 31 Dec 2020
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 5 8,699 7,182 8,142
Property, plant and equipment 9 34 12
--------------------------------------------------- ------ -------------
Total non-current assets 8,708 7,216 8,154
Current assets
Trade and other receivables 354 270 314
Cash and cash equivalents 4,600 793 1,143
--------------------------------------------------- ------ ------------- ------------- ------------
Total current assets 4,954 1,063 1,457
Total assets 13,662 8,279 9,611
--------------------------------------------------- ------ ------------- ------------- ------------
Current liabilities
Trade and other payables 150 205 498
Total current liabilities 150 205 498
Net assets 13,512 8,074 9,113
--------------------------------------------------- ------ ------------- ------------- ------------
Shareholders equity attributable to equity owners
Share capital 17,388 10,419 12,030
Share reserves 1,216 464 1,163
Reverse acquisition reserve 1,651 1,651 1,651
Translation reserve (167) 74 9
Retained earnings (6,576) (4,534) (5,740)
--------------------------------------------------- ------ ------------- ------------- ------------
Total equity 13,512 8,074 9,113
--------------------------------------------------- ------ ------------- ------------- ------------
Condensed Consolidated Statement of Changes in Equity
for the six month period ended 30 June 2021
Reverse
Share Share Acquisition Retained Translation Total
Capital reserve reserve earnings reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 January
2020 10,408 386 1,651 (4,219) (88) 8,138
Loss for the period - - - (315) - (198)
Other comprehensive loss - - - - 162 45
--------- --------- ------------- ---------- ------------ ---------
Total comprehensive loss - - - (315) 162 (153)
Share option and warrant
issue - 78 - - - 78
Share issue - 3rd parties 11 - - - - 11
Balance as at 30 June
2020 10,419 464 1,651 (4,534) 74 8,074
--------- --------- ------------- ---------- ------------ ---------
Balance as at 1 January
2020 10,408 386 1,651 (4,219) (88) 8,138
Loss for the year - - - (1,521) - (1,521)
Other comprehensive income:
Exchange loss on translating
foreign operations 97 97
--------- --------- ------------- ---------- ------------ ---------
Total comprehensive income - - - (1,521) 97 (1,424)
Issue of share options
and warrants - 777 - - - 777
Issue of shares for cash 1,731 - - - - 1,731
Share issue costs (109) - - - - (109)
--------- --------- ------------- ---------- ------------ ---------
Balance as at 31 December
2020 12,030 1,163 1,651 (5,740) 9 9,113
--------- --------- ------------- ---------- ------------ ---------
Loss for the period - - - (839) - (839)
Other comprehensive loss - - - - (176) (176)
--------- --------- ------------- ---------- ------------ ---------
Total comprehensive loss - - - (839) (176) (1,015)
Share option and warrant
issue - 114 - - - 114
Share option and warrant
expiry - (3) - 3 - -
Share option and warrant
exercised 58 (58) - - - -
Issue of shares for cash 5,803 - - - - 5,803
Share issue costs (503) - - - - (503)
--------- --------- ------------- ---------- ------------ ---------
Balance as at 30 June
2021 17,388 1,216 1,651 (6,576) (167) 13,512
--------- --------- ------------- ---------- ------------ ---------
Condensed Consolidated Statement of Cash Flows
for the six month period ended 30 June 2021
6 months ended 6 months 12 months ended
30 June 2021 ended 31 Dec 2020
30 June 2020
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Loss before tax (839) (315) (1,521)
Share based payment 114 78 777
Depreciation of property, plant & equipment 3 - -
Changes in working capital
Decrease/(increase) in trade and other receivables (40) 1 (43)
(Decrease)/increase in trade and other payables (348) (209) 84
Net cash flows used in operating activities (1,110) (445) (703)
------------------------------------------------------------- --------------- -------------- ----------------
Cash flows from investing activities
Exploration expenditure (554) (1,006) (1,970)
Property, plant and equipment purchase - 4 -
Net cash flow (used in)/generated from investing activities (554) (1,002) (1,970)
------------------------------------------------------------- --------------- -------------- ----------------
Cash flows from financing activities
Shares issued (net of issue costs) 5,300 11 1,622
Net cash flow generated from financing activities 5,300 11 1,622
------------------------------------------------------------- --------------- -------------- ----------------
(Decrease)/increase in cash and cash equivalents 3,636 (1,436) (1,051)
Cash and cash equivalents at beginning of period 1,143 2,071 2,071
Foreign exchange on cash and cash equivalent (179) 158 123
------------------------------------------------------------- --------------- -------------- ----------------
Cash and cash equivalents at end of period 4,600 793 1,143
------------------------------------------------------------- --------------- -------------- ----------------
Notes to the Condensed Consolidated Financial Statements
for the six month period ended 30 June 2021
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.
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 IAS 34 Interim Financial Reporting as
adopted by the EU. The Condensed Consolidated Financial Statements
for the six months ended 30 June 2021 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 2020. 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 UK
Sterling, 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 have been prepared on the
historical cost basis except for financial instruments at fair
value through profit or loss which are measured at fair value in
the statement of financial position.
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.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control
ceases.
The subsidiaries' financial statements have been translated in
to Pound Sterling in accordance with IAS 21 The Effects of Changes
in Foreign Exchange Rates. This standard requires that assets and
liabilities be translated using the exchange rate at period end,
and income, expenses and cash flow items are translated using the
rate that approximates the exchange rates at the dates of the
transactions (i.e. the average rate for the period). The foreign
exchange differences on translation are recognised in other
comprehensive income.
2.3 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. The Board continues to monitor the impact of
COVID-19 on the ability of the Group to pursue its strategy and
will make appropriate changes should they be required. There is not
considered to be any material impacts on the financial position or
results of the Group as a result of COVID-19 at this reporting
date.
2.4 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.
2.5 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 Morocco.
The interim results for the six months ended 30 June 2021 are
not necessarily indicative of the results to be expected for the
full year ending 31 December 2021. 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 12 months
ended ended ended
30 Jun 2021 30 Jun 2020 31 Dec 2020
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Directors' fees 191 66 150
Share based payments 158 78 777
Travel and accommodation 6 12 33
Auditors remuneration 17 17 33
Professional and consultancy
fees 361 202 577
Other 83 - -
Total 816 375 1,570
------------------------------ ------------- ------------- -------------
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 2021 30 Jun 2020 31 Dec 2020
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Earnings
Loss from continuing operations for the period attributable to the
equity holders of the Company (839) (315) (1,521)
Number of shares
Weighted average number of ordinary shares for the purpose of basic
and diluted earnings per
share 794,971,631 686,132,385 704,759,944
-------------------------------------------------------------------- --------------- ------------- ----------------
Basic and diluted earnings per share (pence) (0.11) (0.05) (0.22)
-------------------------------------------------------------------- --------------- ------------- ----------------
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.
The potash properties are currently unproved reserves. Once
properties have been classified as proven reserves, they will be
transferred from intangible assets to tangible assets, and
amortised over the life of the area according to the rate of
depletion of the economically recoverable costs.
30 Jun 2021 30 Jun 2020 31 Dec 2020
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Cost:
At the beginning of the period 8,142 6,172 6,172
Additions 557 1,010 1,970
As at end of period 8,699 7,182 8,142
-------------------------------- ------------ ------------ ------------
6. Related party transactions
Directors consultancy fees
Hayden Locke is a Director of the Company and is a director of
Benson Capital Limited, which provide consulting services to the
Company. During the period, Benson Capital Limited received total
fees of GBP51,000 (year to 31 December 2020: GBP246,000). The
amount outstanding as at period-end is GBPnil (31 December 2020:
GBP83,500).
Robert Wrixon is a Director of the Company and also provides
consulting services to the Company. During the period, Robert
Wrixon received fees of GBP42,000 (year to 31 December 2020:
GBP84,000). The amount outstanding as at period-end is GBP nil (31
December 2020: GBP nil).
Graham Clarke is a Director of the Company and is a director of
GCUK Consulting Limited, which provides consulting services to the
Company. During the period, GCUK Consulting Limited received total
fees of GBP50,000 (year to 31 December 2020: GBP 170,000). The
amount outstanding as at period-end is GBPnil (2020: GBP
20,000l)
Details of directors' remuneration during the period are given
in note 3.
Other key management personnel
Phil Cleggett is the only key management personnel other than
the Directors. Fees of GBP60,000 (year to 31 December 2020:
GBP170,000) were paid during the period to Bremer Consulting Pty
Ltd, a company Phil Cleggett controls and the amount outstanding as
at period-end is GBPnil (31 December 2020: GBP60,000).
7. Events after the reporting date
There were no other significant subsequent events.
**S**
For further information, please visit www.emmersonplc.com ,
follow us on Twitter (@emmerson_plc), or contact:
Emmerson Plc
Graham Clarke
+44 (0) 20 7236 1177
Shore Capital (Nominated Adviser and
Joint Broker)
Toby Gibbs / John More (Corporate Advisory) +44 (0)20 7408 4090
Jerry Keen (Corporate Broking)
Shard Capital (Joint Broker)
Damon Heath / Isabella Pierre +44 (0)20 7186 9927
St Brides Partners (Financial PR/IR)
Susie Geliher / Isabel de Salis +44 (0)20 7236 1177
Notes to Editors
Emmerson's primary focus is on developing the Khemisset project
("Khemisset" or the "Project") located in Northern Morocco. The
Project has a large JORC Resource Estimate (2012) of 537Mt @ 9.24%
K2O and significant exploration potential with an accelerated
development pathway targeting a low capex, high margin mine.
Khemisset is perfectly located to capitalise on the expected growth
of African fertiliser consumption whilst also being located on the
doorstep of European markets. This unique positioning means the
Project will receive a premium netback price compared to existing
potash producers. The need to feed the world's rapidly increasing
population is driving demand for potash and Emmerson is well placed
to benefit from the opportunities this presents. The Feasibility
Study released in June 2020 indicated Khemisset 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 NPV10 of approximately US$1.4 billion using
industry expert, Argus', price forecasts.
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