TIDMEML
RNS Number : 9748G
Emmerson PLC
12 November 2018
Emmerson Plc / Ticker: EML / Index: LSE / Sector: Mining
12 November 2018
Emmerson Plc ("Emmerson" or the "Company")
Potential for Very Low Capital Cost Port Upgrade for Khemisset
Potash Project and Scoping Study Progressing Ahead of Schedule
Emmerson Plc, the Moroccan focused potash development company,
is pleased to announce that it has completed the preliminary design
and cost estimates for the port upgrade necessary to allow the
export of potash product at the Port of Mohammedia from the
Company's 100% owned Khemisset Potash Project located in northern
Morocco ("Khemisset" or "the Project"). This work has been
completed by independent Moroccan engineering consultant, Sigma
Plus ("Sigma"), a sub-consultant, as part of the forthcoming
Scoping Study which is due to be released in the near-term. The
completed estimates have confirmed the potential for further
significant capital cost savings for the Project.
In an update to previous guidance, the Company now expects the
Scoping Study to be published in Q4 2018, well ahead of
schedule.
To view the press release with the illustrative maps and
diagrams please use the following link:
http://www.rns-pdf.londonstockexchange.com/rns/9748G_1-2018-11-11.pdf
Highlights
-- Total budgeted cost for construction of port upgrades is
approximately US$7.5 million including a 30% contingency
-- Initial discussions with local authorities indicate that the
Port of Mohammedia (150km from proposed mine site) has capacity for
exports from Khemisset
-- Port of Casablanca and proposed Port of Kenitra expected to
present feasible alternative options
-- Estimated capital cost saving of approximately 95% for capex
cost for port upgrade, or over US$190 million, relative to cost of
a recently constructed potash handling port facility in
Canada[1]
-- Design and estimate completed according to AusIMM guidelines for capital cost estimates
-- Further enhances Management's strong belief in potential for
Khemisset to be a low capital cost potash mine development,
following the announcements of low capex mine access, low capex
logistics solution, and low capex electrical and gas supply which
combined have the potential to save Emmerson over US$1.2 billion
when compared to benchmark projects (refer RNS's dated 18
September, 08 October, and 23 October 2018)
-- Scoping Study to be delivered in Q4 2018, well ahead of previous schedule
Hayden Locke, CEO of Emmerson, commented:
"The Khemisset Project benefits from its proximity to a number
of existing and planned port options when the Project commences
production. Access to existing port facilities, with minimal
upgrades required, result in significant capital cost savings for
the Project. Morocco has invested heavily in all facets of
infrastructure, including world-class ports, which are already
resulting in significant benefits for Emmerson.
"Our initial discussions with authorities at the Port of
Mohammedia have confirmed that there is expected to be capacity for
the export of potash produced from Khemisset. Cost estimates
include construction of a storage warehouse and loading facility
for the handling of at least 800,000 tonnes of potash product per
annum.
"The already completed design and cost estimates for the access
to mineralisation, connection to logistics, and connection to
electricity and gas supply and port facilities have highlighted the
significant cost savings available to the Khemisset Project, which
are estimated to amount to over US$1.2 billion compared to Canadian
peers. This announcement further enhances our belief that the
Scoping Study for Khemisset will present a low capital cost, high
margin proposition which should result in compelling economic
metrics.
"The Scoping Study is well ahead of schedule and we are excited
to release the results to the market as soon as it is finalised,
which we expect to be imminently."
Comparison to Peers
The Scoping Study port upgrade design and costing for the
Khemisset Project, completed by independent engineers Sigma,
indicates that the capital cost requirement to upgrade port
facilities should be far lower than the equivalent port upgrade
capex costs for other potash projects globally. A comparison to
other potash projects is shown in Figure 1 below
Figure 1. Capital costs for Port Build or Upgrade in selected
potash projects
Port Upgrade Overview
Sigma, which was appointed by the Company to design and cost an
initial facility at port, has completed basic design and cost
estimates for the port upgrade. Designs and estimates have been
prepared in line with Scoping Study guidelines provided by the
Australasian Institute of Mining and Metallurgy ("AusIMM").
Basis of Port Upgrade
The Company has instructed Sigma to design a facility at port
which will include:
- Facilities to unload potash from trucks at 500t/h
- A warehouse with capacity of 25,000 tonnes
- Loading facilities from the warehouse onto ships at 1,000 t/h
- Able to receive, unload and reload at least 800,000 tonnes per
annum depending on truck and ship frequency
Sigma has prepared preliminary design and costings based on
these requirements.
Figures 2 and 3 below demonstrate the designed facilities.
Figure 2. Cross section of designed warehouse with Roof Mounted
Stacker
Figure 3. Cross section of reclaim and ship loading
facilities
Cost Estimation
The total budgeted capital cost required to upgrade the port
facilities to allow export of product is US$7.5 million including a
30% contingency. Cost estimation for the port upgrade has been
conducted in line with Scoping Study levels of accuracy of
approximately +/-30-50%.
A summary of the cost breakdown is presented in Table 1
below:
Item US$ millions
------------------------------ ---------------------------
Warehouse $2.2
------------------------------ ---------------------------
Truck Unloading Equipment $1.5
------------------------------ ---------------------------
Ship Loading Equipment $2.1
------------------------------ ---------------------------
Contingency (30%) $1.7
------------------------------ ---------------------------
Total Direct Costs including
Contingency $7.5
------------------------------ ---------------------------
Table 1: Summary of Direct Costs for Port Upgrade Capex
For further information, please visit www.emmersonplc.com, follow
us on Twitter (@emmerson_plc), or contact: Emmerson Plc Tel: +44 (0) 207 236
Hayden Locke 1177
Edward McDermott
James Biddle Beaumont Cornish Limited Tel: +44 (0) 207 628
Roland Cornish Financial Adviser 3396
Jeremy King Optiva Securities Limited Tel: +44 (0) 3137 1904
Broker
Lottie Wadham St Brides Partners Ltd Tel: +44 (0) 20 7236
Gaby Jenner Financial PR/IR 1177
**ENDS**
Notes to Editors
Emmerson's primary focus is on developing the Khemisset Potash
Project located in Northern Morocco. The project has a large JORC
Resource Estimate (2012) of 311.4Mt @ 10.2% K(2) O 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 information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014.
[1] Based on Pacific Coast Terminals Co. Ltd. Project
Environmental Review Document for K+S Canada Port Moody Potash
Handling and Storage System, 3 February 2015
(http://pct.ca/wp-content/uploads/2014/12/PCT-Potash-Project-Environmental-Review-Document-FINAL.pdf)
excluding contingency.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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