Emmerson: Interim Results

29th September 2021 | Emmerson PLC

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 £5.5 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

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

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