Audited Results for the year ended 31 December 2020

Emmerson Plc, focused on developing the low cost, high margin Khemisset Potash Project (“Khemisset” or “the Project”), is pleased to announce its audited results for the 12 months ended 31 December 2020. The Group’s Annual Report, which includes an unqualified audit report and audited Financial Statements for the year ended 31 December 2020, will be made available on the Company’s website at www.emmersonplc.com.

Highlights

• Significant operational, corporate and commercial progress made towards establishing Africa’s first large-scale potash mine
• Feasibility Study (“FS”) published confirming Khemisset’ s ability to become a low capex, high margin potash mine with outstanding economic metrics
• Grant of Mining Licence (post period end) providing the exclusive right to develop and mine Khemisset ahead of the anticipated initiation of construction by the end of 2021
• Socio-economic study completed that demonstrated measurable and verifiable confirmation of the significant benefits that the Project will deliver at a local, regional and national level
• Environmental and Social Impact Assessment completed to IFC standards
• Conceptual, phased development plan completed post period end demonstrating major value enhancing opportunities including significantly reduced up-front capex of US$254.6 million (pre-contingency) and potential for subsequent phases to be funded from internal cash flows
• Appointment of CEO with demonstrable experience in taking large potash mines from concept through to construction
• Appointment of new highly experienced Chairman on 27 April 2021 with 20 years of experience in the mining sector, particularly in the areas of corporate finance and financing strategy
• Completion of AIM admission on 27 April 2021 and cancellation of the Company’s ordinary shares on the Official List and from trading on the Main Market, providing Emmerson with a listing on the world’s most successful growth market
• Raised a total of £7.2 million (during and post period end) in oversubscribed placings to fund the accelerated development of Khemisset

Graham Clarke, CEO of Emmerson said:

“Never has there been a more important time to develop a world-class potash mine, and this is what we believe we have in Khemisset. Many market commentators have pointed to the emergence of a ‘structural bull market’ for commodities, and this has already seen the prices for key agricultural commodities including grains, oilseeds, sugar and dairy increasing this year and corn prices above $7 a bushel for the first time in eight years. Even cynics of this commodities supercycle should realise that potash really is a uniquely valuable commodity which will not be fuelled purely by market speculators, but ultimately by global demographics and population growth.

“Not only are we in the right place at the right time, Emmerson has assembled the right team to deliver this exceptional asset in to production. Our operational team in Morocco are exceptionally talented and diligent, driven by a desire to see this strategic national asset developed into a mining operation which will set a benchmark in the industry. Similarly, we boast a team of individuals in the UK and globally with the corporate and commercial experience to identify the optimum route to production and the means to deliver it.

“The remainder of 2021 is set to be punctuated with milestone events which will materially de-risk our asset and clearly define Khemisset as a new world-class potash mine.”

Statement from Mark Connelly (Chairman July 2018 – April 2021)

The work conducted during 2020 has ensured that Khemisset, our low capex, high margin potash mine in Morocco, is still on course to become Africa’s first large, commercial potash mine. This is an incredible achievement and testament to both the quality of our asset, and the also the dedication and skill of our team at Emmerson.

2020 began with the selection of the preferred project site following a comprehensive Options Study. As part of this, we completed road connection design and costing, which included c.3.2km of paved roads to be constructed to connect the Project to the existing highway, with an additional c.9.6km of gravel internal roads; the total budgeted cost for the construction of these is c.US$2.0 million including a 15% contingency. Following confirmation of zero capital cost required at Casablanca Port, the road connection will be the only pre-production capex required for the entire logistics solution for Khemisset.

Perhaps the standout news event of the year was the delivery of our FS in June, which demonstrated that Khemisset can become a world class, low capital cost, high margin potash mine; this is a very rare asset in the global fertiliser industry. The economics of the project are highly compelling; with an IRR of nearly 39% and a post-tax NPV8 of US$1.4 billion, it is clearly extremely robust in normal potash market conditions, generating average revenue of over US$480 million and EBITDA of over US$300 million for the life of the mine.

The results of the FS provided the catalyst for engagement with various potential financing groups, across debt, equity, and non-traditional financing products. Over the last couple of years, we have engaged with numerous potential funding partners and have identified several which we believe would make excellent partners for the Company in the development of Khemisset.

Other advances made during the year included the completion of the socio-economic study that provided measurable and verifiable confirmation of the significant benefits that the project will deliver at a local, regional, and national level. This includes the creation of 2,385 jobs, tapering into 1,500 permanent positions when production is underway. With an initial mine life of nearly 20 years, which we expect to extend once in production, these will be jobs for life. Further outputs from the study highlighted the total investment over the life of the Project estimated to be US$2.5bn with the economic impact of the Project increasing the local GDP per capita by 40%.

We also completed the baseline and all the workstreams required for Environmental and Social Impact Assessment (‘ESIA’) for the Project, which was then submitted to the relevant governmental bodies for approval. The environmental and social impact of a new major project is of real importance to any company that concerns itself with maintaining a record of sustainability, so this was done to the highest standard recommended by the World Bank. The ESIA package comes as a capstone to two concurrent phases: an extensive baseline programme, which commenced in the early stages of the project development; and the ESIA study, which commenced earlier in the year under review. We look forward to updating shareholders on the outcome during the course of 2021.

Looking now to corporate developments, we were well supported by the markets in a £1.72 million fundraising during the period, and again post period end with a £5.5 million raising in March 2021. This has put us in a very strong position as we look to finalise the detailed design and engineering work and, ultimately, move towards construction.

In terms of human capital, a key highlight during the year was the appointment of Graham Clarke as CEO in July 2020. Graham is a highly experienced fertiliser industry executive with over 25 years of experience in underground potash mining and a proven ability to attract talent and build operating teams with the capability to deliver large, complex projects in the fertiliser space. Graham’s most recent experience of taking a large, highly complex, underground mine all the way from a concept through to construction is truly unique and incredibly important for Emmerson as we transition from junior explorer into a mine developer.

With Graham’s appointment, our previous CEO Hayden Locke moved into a new role which focusses primarily on the financing negotiations and commercial aspects of moving Khemisset into production. This is an area which Hayden is exceptionally well-versed in and he remains a core member of the Emmerson team, with Graham responsible for steering the operational and corporate development of the Company.

Post period end, we appointed James Kelly to the board as non-executive director, and later as the new Chairman upon my retirement. In James, Emmerson will have a highly experienced Chairman who is well qualified to lead the board in this exciting period as we prepare the project financing. I feel truly honoured to have served as the Company’s Chairman over the past three years, a period during which Emmerson has emerged as one of the most exciting pre-production companies listed in London, with a truly exceptional asset in Khemisset.

In my parting statement as Chairman, I would like to thank the exceptionally motivated and dedicated management team and Board of Emmerson for all their hard work and skill during the year and most importantly, to our shareholders for their continued support during what was a challenging year for many. I will remain a fervent supporter of Emmerson and I look forward to celebrating the milestones the Company reaches over the coming weeks and months in the lead up to construction.

Statement from James Kelly (Chairman from April 2021)

It gives me great pleasure to provide my inaugural statement as the new Chairman of Emmerson. Although newly appointed, I have watched the Emmerson story unfold with great interest over the past three years. From the acquisition of Khemisset in 2018, a compelling asset with a JORC compliant resource, to the asset we have today, a pre-production asset with robust fundamentals proven in the FS, a Mining Licence secured and ESIA completed; it is clear that the Emmerson team has delivered an exceptional project to the market. Now, with anticipated construction in the near future, I am extremely excited to be part of the Emmerson team as we move into this, our most defining stage of development.

The first few months of 2021 have set the pace for news flow for the remainder of the year, with multiple high impact developments, both operational and corporate, demonstrating how Emmerson is moving through the gears towards financing, construction and ultimately production.

In February 2021, the Company was delighted to receive the Mining Licence for the project from the Moroccan Ministry of Energy, Mines and the Environment. Importantly, this encompasses the full resource base allowing simple expansion of the operations in the future without the requirement to re-permit. This was a highly significant development for the Company, which followed months of close collaboration with the Government of Morocco to ensure that we deliver the optimum mining operation to benefit all stakeholders.

With this in mind, the recent months have seen the team focus on multiple additional workstreams aimed at further de-risking the project and preparing for funding due diligence. These included an assessment to confirm the opportunities for phased development of the project aimed at materially reducing the upfront capital cost with the flexibility around potentially phased development. Post period end, in April 2021 we announced the completion of a conceptual phased development plan; results demonstrated major value enhancing opportunities, including significantly reduced up-front capex of US$254.6 million (pre-contingency). This phased development plan shows the inherent optionality in the Khemisset project providing us with significant flexibility in both the initial production rate as well as how the operation evolves once in production. This optionality could prove instrumental in ensuring Khemisset reaches full production potential whilst minimising dilution to our existing shareholders by reducing the upfront capex.

Emmerson’s commitment to the project and Morocco is in line the Government of Morocco’s initiatives to invigorate the economy. Specifically, the development of Khemisset aligns well with the strategic plan of making Morocco a hub for fertiliser industry, primarily in the context of Africa. Morocco is already a major fruit and vegetable supplier, growing produce for many of the Northern African markets and agriculture now contributes 14.8% to Morocco’s total GDP. This is an area of significant growth, with vegetable exports increasing by 26% and fruit exports by +54% in the five years to 2019. Bringing Khemisset into production will establish Morocco as Africa’s largest vertically integrated fertiliser producer and is clearly of significant strategic as well as economic importance to the country.

The support that we have received from the Government of Morocco, from regional regulatory bodies and from local communities has been of vital importance and really feeds in to the Company’s vision of “doing the right things in the right way”. I believe that the work that the Emmerson team has achieved over the past three years has established our business as a very solid and conscientious corporate citizen and I look forward to continuing this close cooperation with the people and Government of Morocco as we move forwards into our construction and production phases, becoming a major regional employer offering long-term stable employment.

Our development proposition for Khemisset has also resonated with those outside of Morocco, and we have enjoyed strong support from the market over the past 18 months. The Company has conducted two placings since the beginning of 2020, which has brought over £7.2 million to the business and we have welcomed several new institutional shareholders to the register. Our second placing, conducted after the period end in March 2021, was announced in conjunction with our intention to list on AIM. This move to AIM, which took effect on 27 April, provides Emmerson with access to a market and environment which is more suited to the Group’s current size and strategy. Indeed, AIM is cited as the world’s most successful growth market and I believe that it is the right exchange for us to achieve our objectives with Khemisset over the coming months.

And it is with this time horizon in mind, that I look forward with such enthusiasm. We are truly on the cusp of delivering a world-class low capex, high margin potash mine at a time when the market dynamics are particularly powerful. The combination of a rapidly increasing world population together with shrinking available arable land has established that the use of potash in fertiliser production is vitally important to ensure global food security. Many market participants expect potash prices to follow agricultural commodities and continue to rise throughout 2021 and beyond and Emmerson is ideally placed to benefit from the opportunities this presents.

I would like to take this opportunity to firstly thank Mark Connelly, my predecessor for his guidance and counsel thus far, and to the entire Emmerson team and our partners and advisers for their determination and resolve to establish Africa’s first commercial potash mine. Finally, my thanks to our new and long-standing shareholders for their support and vision as we strive to unlock the full economic and strategic potential of Khemisset for all stakeholders.

In the film below CEO Graham Clarke outlines the potential of the Khemisset potash project and its impact on the local economy