Emmerson: Final Results

30th April 2020 | Emmerson PLC

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 2019.

The Group’s Annual Report which includes an unqualified audit report and audited Financial Statements for the year ended 31 December 2019 will be made available on the Company’s website at www.emmersonplc.com.


With the world’s population estimated to grow to over nine billion people by 2050, food production, according to the Food and Agricultural Organization of the United Nations, will need to increase by 70%. Naturally, this will drive the need for potash, a key plant nutrient essential to increasing food production and quality over a broad range of crops; average global potash demand growth is estimated at 2-3% per annum.

For targets to be met, new sources of potash will need to come on stream. Whilst there are other notable projects advancing worldwide, not all potash deposits are created equal. We believe that our own Khemisset Potash Project (“Khemisset” or “the Project”) in Morocco stands head and shoulders above the competition with potentially world class attributes including a long mine life, industry leading low capital cost to production, high margins and compelling economics.

As the Scoping Study announced towards the end of 2018 demonstrated, the Project has a potential post-tax NPV10 of US$1.14 billion based on industry expert price forecasts and an average EBITDA over the 20 year life of mine of over US$230 million per annum. During the period under review, we built on this economic value with preliminary studies on two additional projects: the sale of salt by product and the production of sulphate of potash (“SOP”). Including these projects takes the total attributable NPV10 for Emmerson to over US$1.8 billion, with life of mine average annual post tax free cash of around US$300 million per annum.

We are not the only ones who hold the view that Khemisset has stand-out credentials. During H1 2019, we formalised key partnerships fundamental to the eventual financing of the Project. These included a memorandum of understanding (“MoU”) with Afriquia Gaz to evaluate the various options available to supply gas to the Project; a MoU with Euronext listed international, integrated, renewable energy developer, Voltalia, to look at options to provide cost-saving electricity options at Khemisset; and a Heads of Terms with a large fertiliser industry player with respect to offtake from Khemisset covering 100% of the phase 1 production of 800,000 tonnes of MOP per annum for an initial five-year period.

In addition to this, during the summer we were approached by a large European commercial bank with an indicative offer for debt financing for Khemisset. The indication was based on highly conservative assumptions applied by the bank, including a delivered potash price in Brazil of US$235/tonne, a 40% discount to the spot price at the time. Despite these conservative assumptions, the bank indicated the Project could comfortably sustain leverage of US$230 million, or approximately 60% of the total project capital cost. We strongly believe that, with negotiation, this number can be significantly improved.

Other advances made during the year included positive results from both the environmental baseline study and the comprehensive metallurgical test work programme. The latter confirmed the technical viability of the processing method selected in the Scoping Study as well as the recovery rate assumptions used and has also helped our process design engineers identify any areas of risk and areas where they believe significant improvements from the Scoping Study can be made.

Furthermore, mid 2019, our study consultants conducted an end to end site visit to review all aspects of the Project and its potential execution. This included inspecting the local project infrastructure (electrical, roads, rail), potential plant sites and ports to provide vital information for the Options Study portion of the Feasibility Study that assesses all parts of the Project both quantitatively and qualitatively, to ensure that the optimal development strategy is identified.

Following this, later in September, we elected to use the Port of Casablanca as our go-forward port option; this has advantages over our Scoping Study assumption, including an approximate US$7.5 million reduction in capital cost.

Other progress during the year included the consolidation of several permits into a single, larger area, which will simplify the upcoming mining permit application. We were delighted with the strong support we received during this process from the Moroccan Government and, in particular, the Ministry of Energy, Mines and Sustainable Development.

On the corporate side, Emmerson remains well funded having raised an additional £2.25 million (pre costs) to continue both fast tracking development and discussions with strategic partners; at 31 December 2019, Emmerson had a £2,071,000 cash position. Having provided strong support in the capital raise, we appointed Shard Capital as joint broker.

As we advance Emmerson’s transition from developer to producer, our focus is first and foremost on the completion of the Feasibility Study and associated studies during H2 2020, while other 2020 work streams include the commencement of the mine permitting process, financing discussions, supply negotiations, and the commencement of detailed design and engineering as well as engagement with potential EPC/EPCM and contract mining partners.

To this end, 2020 has already seen the team maintain a fast paced development schedule. A preferred site has been chosen, as has a secondary site, both of which provide access to local infrastructure. Capital cost estimates required to connect our preferred plant site to the local road infrastructure have been provided, which indicated a cost of only US$2 million, including a 15% contingency, a significant cost saving relative to more remote potash projects globally. And the full IFC compliant Environmental and Social Impact Assessment (“ESIA”) has commenced, which will enable us to set an H2 2020 target date for the application for a Mining Permit for the Project. As part of this programme, we have established a scientific partnership with the Rabat Scientific Institute with the purpose of providing scholarships to students to study animal species in the local area around Khemisset. Furthermore, constructive discussions with several potential partners for the future development of the Project including financing options and technical partnerships are ongoing.

The unique combination of the potential for very high margins together with its proximal location to numerous high-price end markets, excellent infrastructure and logistics options already in place as well as favourable mining code and strong support from the Moroccan Government, underpins our confidence that Khemisset is set to become a major supplier of potash to the African market for many years to come. Indeed, there is little to rival the Project in the global potash development space based on capital cost per tonne of production.

While COVID-19 cannot be ignored and may impact us to a degree, having moved quickly to cut down expenditure, we believe that 2020 will be another year of significant milestones for Emmerson as we move ever closer to our goal of becoming part of the small group of potash producers in the world.

Finally, I would like to thank our shareholders as well as management team and advisers for all their support and dedication, none more so than our CEO Hayden Locke who has worked tirelessly on behalf of the Company over the past year. Therefore, it was with great pleasure to hear the news that Hayden had been nominated for CEO of the year at the Mining Journal’s annual awards; he is a deserving candidate.

Mark Connelly



The Directors present their report and the audited financial statements for the year ended 31 December 2019.

General information

Emmerson PLC (“the Company”), was incorporated in the Isle of Man under the Laws with registered number 013301V on 1 March 2016. All of the Company’s Ordinary Shares were admitted to the London Stock Exchange’s Main Market and commenced trading on 15 February 2017.

Emmerson PLC’s primary focus is on developing the Khemisset Potash Project located in Northern Morocco.

Results for the year and dividends

The total comprehensive income attributable to the equity holders of the Group for the year was a loss of £1,164,000 (2018: loss of £1,703,000).

The Company paid no dividend during the year (2018: £nil).

Business performance for the year

As detailed in the Chairman’s Statement, development of the Khemisset Potash Project continued during the period, with several significant milestones achieved.

Having received the results of the Scoping Study at the end of 2018, which confirmed the potential for a low capex high margin mine, Emmerson further strengthened the Project’s economic value during 2019. Notably, with the addition of preliminary studies on two projects (the sale of salt by product and the production of sulphate of potash), Emmerson increased the NPV10 of US$1.14 billion over a minimum 20-year life of mine (“LOM”) stated in the Scoping Study to +US$1.8 billion.

The Company also advanced key logistical, infrastructure, off-take, and financing options, all of which ensured the identification of the optimal development strategy and brought the Group closer to achieving its target of becoming a potash producer in 2021. These included amongst others, the signing of a Heads of Terms with a large fertiliser industry player regarding an off-take agreement, as well as an indicative offer for debt financing. Furthermore, the Company received positive results from both the environmental baseline study and the comprehensive metallurgical test work programme, and, as we look ahead to applying for our mining permit, we also consolidated several permits into a single, larger area, which will simplify this process.

Naturally, COVID-19 must be considered in all future strategies, however, we remain confident in hitting our 2020 targets. These include completing the Feasibility Study during H2, starting the mine permitting process, advancing financing and supply negotiations, commencing detailed design and engineering plans, and engaging with potential EPC/EPCM and contract mining partners.

During the financial year, the Group made a loss per share of 0.17 pence (2018: a loss per share of 0.49 pence per share). Given the current stage of the Group’s exploration project, the Directors do not consider there to be any other financial key performance indicators. The Group is well funded; as at 31 December 2019, it had a £2,071,000 cash position.

Principal risks and uncertainties

The Group operates in an uncertain environment and is subject to a number of risk factors. The Directors have carried out a robust assessment of the principal risks facing the Group, including those that threaten its business model, future performance, solvency or liquidity. They consider that the following are the principal risk factors that could materially and adversely affect the Group’s future operating results or financial position:

Deterioration in Moroccan economic conditions or in the potash market in particular

There is a risk that changes in the relevant law and legislation could have an adverse effect on the Group’s future performance, expected return and or feasibility of the project.

The Group is also exposed to general economic risk, including changes in the economic outlook in its principal markets and government changes in industrial, fiscal, monetary or regulatory policies.

The Board continues monitoring developments in the market in order to adapt. The management team has wide-ranging expertise in mineral exploration which, together with a flexible cost structure, enable the Group to adapt its organisation to changes in circumstances.

Funding risk

Although the Group has sufficient working capital for at least 12 months from the date of this report, the Group may not be able to obtain additional financing as and when needed which could result in a delay or indefinite postponement of exploration and development activities.

In common with many exploration entities, the Group will need to raise further funds in order to progress the Group from the exploration phase into feasibility and eventually into production of revenues.

Dependence on key personnel

The Company has a small management team and the loss of a key individual could have an adverse effect on the future of the Group’s business. The Group’s future success will also depend in large part upon its ability to attract and retain highly skilled personnel. There can be no assurance that the Group will be successful in attracting and retaining such personnel.

The Group seek to create a workplace that attracts, retains and engages its workforce. Efforts are also made to attract new talent and skilled people.

Environmental risk

There may also be unforeseen environmental liabilities resulting from both future or historic exploration or mining activities, which may be costly to remedy. In addition, potential environmental liabilities as a result of unfulfilled environmental obligations by the previous owners may impact the Group. If the Group is unable to fully remedy an environmental problem, it may be required to stop or suspend operations or enter into interim compliance measures pending completion of the required remedy.

Environmental management systems are in place to mitigate environmental hazard risks. The Group uses advisors with specialist knowledge in mining and related environmental management for reducing the impacts of environmental risk.

Estimates of mineral reserves and resources

Mineral resources are estimates and no assurance can be given that any particular grade or tonnage will be realised or that they will be converted into ore reserves or will ever qualify as a commercially mineable (or viable) deposit which can be legally and economically exploited. As a result of these uncertainties, there can be no assurance that any potential mineral resources defined by the Group’s exploration programmes will result in profitable commercial mining operations.

The Directors are confident that they have put in place a strong management team capable of dealing with the above issues as they arise.

Corporate Responsibility

We have defined the scope of our Group’s responsible business practices as falling within the following key focus areas:

  • Health and Safety – ensuring the safety and well-being of our staff
  • Environment – managing our environmental impact areas of waste, energy and water
  • Employees – supporting our people to develop and flourish within the business
  • Community – positive interaction with the communities in which we operate
  • Ethical Standards – operating to the highest ethical standards

We remain committed to ensuring these activities become embedded in how we operate and contribute towards the success of our business. This includes not only identifying and managing business risk but exploring opportunities to add value to the business.

Corporate Governance

The statement on corporate governance can be found in the corporate governance report below. The corporate governance report forms part of this Directors report and is incorporated into it by cross reference.

Financial risk management

The Group has exposure to the following risks from its use of financial instruments:

  • Liquidity risk
  • Market price risk
  • Interest rate risk: cash flow interest rate risk
  • Foreign exchange risk
  • Credit risk

Further details on the financial risks and suitable risk management system put in place by the management are in note 11.

Events after the reporting period

Details of significant events that have occurred since 31 December 2019 are provided in note 17 to these financial statements.

Going concern

The financial statements have been prepared on a going concern basis. The Group has not yet earned revenues and is still in the exploration phase of its business. The operations of the Group are currently financed from funds raised from shareholders. In common with many exploration entities, the Group will need to raise further funds in order to progress the Group from the exploration phase into feasibility and eventually into production of revenues.

The Directors are reasonably confident that funds will be forthcoming as and when they are required and have received assurances to this effect as described in the Chairman’s Statement. However, the Group has cash and cash equivalents of £2,071,000 at 31 December 2019 and the Directors are of the view this is sufficient to fund the Group’s committed expenditure and maintain good title to the exploration licences over the next 12 months from the date of approval of these financial statements, without raising funds in this period.

As part of their assessment, the Directors have prepared cash-flow forecasts on the basis that cost reduction and deferral measures are implemented over the going concern period as a result of the current worldwide COVID 19 pandemic. The Directors have agreed, if circumstances require, to defer payment of their fees until such time as adequate funding is received and if necessary, scale back discretionary exploration activity.

RNS in full

Emmerson PLC investor relations video

Five Minute Pitch TV recently filmed Hayden Locke, CEO of Emmerson. He provides an investors overview of business in the video below – the interview focuses on Emmerson’s operations, the geopolitical situation in Morocco, the global potash market and the companies forward strategy.

Emmerson PLC Investor Relations

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

Click here to view Emmerson Investors Videos