Emmerson PLC: Final Results

30th April 2019

Emmerson Plc (“Emmerson” or “the Company”), focused on developing the low cost, high margin Khemisset Potash Project, is pleased to announce its audited results for the 12 months ended 31 December 2018. The Group’s Annual Report which includes an unqualified audit report and audited Financial Statements for the year ended 31 December 2018, will be made available on the Company’s website at www.emmersonplc.com


  • Strategy focused on the rapid advancement of the Khemisset Potash Project through the de-risking and development milestones towards production;
  • Scoping Study confirmed the robust economics of the Khemisset Potash Project confirming its potential to be one of the world’s lowest cost and highest margin potash projects:
    • NPV10 of US$1.14 billion using independent industry analyst Price Forecasts over a minimum 20-year mine life
    • Life of mine average EBITDA margins of c.64% and average life of mine post-tax cash flow of US$184 million
    • Capital requirement of the Project is less than half of global peer average
  • Seismic study conducted across the Khemisset basin demonstrated that there was no major faulting that could impact underground mining operations
  • Preliminary design and cost estimates for mine access confirmed that conventional access to mineralisation is feasible
  • Additional research permits covering land adjacent to existing resource granted and an independent verified exploration target of between 264-616 million tonnes was established
  • Drill programme commenced with the objective of upgrading current JORC Inferred Resource to the higher confidence Indicated and Measured categories

Chairman Statement

The rapid advancement of the Khemisset Potash Project (“Khemisset” or “the Project”) has been the key objective for the period and the Group has delivered on this by achieving several significant development milestones including the release of the Scoping Study in November 2018, some months ahead of schedule.

The results of the Scoping Study were, simply put, outstanding; an NPV10 of US$1.14 billion using independent industry analyst Price Forecasts over a minimum 20-year mine life, life of mine (“LOM”) average EBITDA margins of nearly 64% and average LOM post-tax cashflow of US$184 million per annum. Importantly, the sector leading capital requirement of the Project, which was less than half of the global peer average, allows Emmerson to overcome potentially the most important barrier to entry for junior potash projects – development capital cost. The results of the Scoping Study give the team the confidence to continue to progress the development programme at Khemisset.

The Scoping Study which, based on my industry experience, reflected the level of detail evident in a Pre-Feasibility Study, was the culmination of a significant amount of work completed by the Emmerson management team. A basin wide seismic study was conducted demonstrating that the Khemisset Project was free of major seismic faulting that could impact underground mining operations, an important de-risking of the future development of the project. The completion of the preliminary design and cost estimates for the mine access confirmed that a conventional access to mineralisation was feasible, minimising the technical risk involved in development and reducing the capital development costs. The Project’s fundamentals are very positive, with a long mine life, with the fundamentals to deliver significant value to all of our stakeholders.

The exploration growth potential of Khemisset is significant, which could add considerable scope to the project life. We applied for, and received, additional research permits for land adjacent to the existing resource and, based on the historical geological data, published an independently signed off, JORC compliant, Exploration Target in August 2018. We commenced a drilling programme in November 2018, which is ongoing, with the objectives of upgrading the current JORC Inferred Resource to Indicated and Measured categories, with the potential to expand the Mineral Resource Estimate. The Group is undertaking a comprehensive metallurgical testwork programme to confirm the processing flowsheet for the project.

Work completed to date has provided confirmation of the potential of the Khemisset Project. Our belief in Khemisset’s potential has been supported by independent analyst’s research published in support of the Group’s technical and commercial work. Align Research, in its initiation note, identified that the conservative NPV10 figure included in the scoping study suggested a potential upside of 290% and an additional note published by Shard Capital Partners included a forecast price target of 106p, representing considerable upside to the Company’s share price.

A key advantage of the Khemisset Project is its prime location in northern Morocco. Having extensive experience working in different African jurisdictions, the comparative ease of working in Morocco is evident to the Board. Morocco has established high-quality infrastructure, essential for reducing capital and logistics costs, a government that is fully supportive of direct foreign investment and a mining fiscal and regulatory code which provides financial incentives to companies like Emmerson and sets a clear development path for the Project. Being situated in Morocco also means that the project is located in one of the fastest growing potash consumption markets in the world and is also ideally located to supply four other large established markets. When Khemisset commences production, in addition to the Moroccan domestic market, Emmerson will be a key potash producer to the Brazilian, South African and other European markets.

With our ambitious objectives, targeting production in 2022/2023, we believe that Emmerson will be entering the market at an optimum time in the potash market cycle. Since the low point in the cycle, in July 2016, the market has seen a strong rebound in both demand and pricing. The 2017 and 2018 saw record years in terms of global demand for potash, with market participants now agreeing 2019 is likely to be another record year. This demand pressure, combined with limited supply, is likely to improve prices. The scale of the fertiliser opportunity has piqued the interest of global organisations that wish to participate in the underlying growth thematic. However, in order to become a competitive producer of value added NPK fertilisers it is essential to secure a supply of potash – a market traditionally controlled by a very small group of producers. Emmerson, and the Khemisset project, therefore has become an attractive proposition with high strategic value to fertiliser producers looking to secure the supply of potash. Preliminary conversations with strategic partners has to date indicated that this value is recognised.

In January 2019, we outlined the Group’s milestones for the 2019 calendar year, including a drill programme to expand and upgrade the JORC mineral resource at Khemisset, a metallurgical test work programme, the commencement of a Pre-Feasibility Study and an Environmental and Social Impact Assessment. In addition, the Group is advanced with strategic discussions with offtake and sales partners and in-country service providers, and identifying opportunities for project development cost reductions. Management continues to advance the progression of Khemisset and significant news flow will continue on these milestones. Much has been achieved already and we are on track to complete our planned work programme as scheduled.

We believe that 2019 will be a transformational year for the Group, as we continue to advance Khemisset towards production.

I would like to take this opportunity to thank the management of Emmerson. Hayden Locke and his team have done an exceptional job of guiding the Group and completing a successful year of achievements, and the board of Directors express their gratitude to Hayden and his team.

To all stakeholders, on behalf of the board I would like to say thank you for your support, patience and confidence in the team at Emmerson.

We look forward to a successful and exciting 2019 and the continuing positive journey of Emmerson as the Group advances the development of the Khemisset Potash Project.

Mark Connelly


29 April 2019

Emmerson PLC Investor Relations

Hayden Locke, CEO of Emmerson PLC in an investor relations video for Five Minute Pitch TV

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