TIDMEML
RNS Number : 9709C
Emmerson PLC
24 June 2021
Emmerson Plc / Ticker: EML / Index: LSE / Sector: Mining
24 June 2021
Emmerson Plc ("Emmerson" or the "Company")
Khemisset Potash Project Update
Emmerson plc, the Moroccan focused potash development company,
is pleased to provide an update on progress made at its world class
Khemisset Potash Project (the 'Project') in Morocco during the
first six months of 2021.
Overview
-- Environmental approval process reaching completion.
o All technical work completed, submissions made, and review
meeting held with the Environmental Evaluation Committee ("EEC")
(referred to in Morocco as the "Commission Regionale Unifiée de
l'Investissement").
o Public enquiry process completed successfully with full
support from local stakeholders.
o Continue to work in accordance with the process of the
governmental entities that are members of EEC.
o Awaiting final approval to be called for the evaluation
meeting by the EEC, expected to be received imminently, subject to
COVID restrictions in Morocco.
-- Lodged applications for renewal for the remaining research
permits that were not part of the Mining Licence area, with a
positive outcome expected in Q3 2021.
-- Completed geological work to further improve understanding of
the general structures, update various geological plans and maps
and, advance the Deep Well Injection plan.
-- Completed a work programme and commenced a tender process for
technical field works with the objective of addressing risks and
recommendations identified in the FS as well as preparing the data
set to be used in the engineering design workstreams.
-- Completed work relating to the technical aspects of the
design and engineering to take the Project towards construction
readiness.
-- Confirmed initially indicated power cost savings and secured
preferred supply option following detailed discussions with several
renewable energy providers in Morocco.
-- Commenced FS for the Sulphate of Potash project with a view
to diversifying product offering and enhancing margins.
-- Project team continues to be strengthened in preparation for
the engineering design and construction phase.
-- Ongoing strategic partner discussions and debt funding due diligence.
-- Altogether, the planned workstreams are on course to meet the
target of commencing early construction work by year end.
Graham Clarke, CEO of Emmerson, commented:
"Excellent progress has been made on many fronts as we look to
fast-track the Project to production and take advantage of the
strong potash market fundamentals, particularly in Africa given we
are ideally located to supply this market.
"I would like to take this opportunity to thank the team and our
consultants for the exceptional work that has brought our ESIA
application to the final step of approval, particularly when the
impact of COVID on the ability to conduct face to face meetings is
taken into account.
"Notably, we are also continuing positive discussions with
strategic investors and due diligence for the wider project debt
finance, as we focus on achieving our overall timeline to commence
early construction works in Q4 2021."
Permitting & Licensing
Having completed the baseline and all the workstreams required
for Environmental and Social Impact Assessment ('ESIA') for the
Project, the study was submitted in Q4 2020 for review by the
Environmental Evaluation Committee. The ESIA package comprises a
full Project baseline study built over two years, the ESIA report,
and the Environmental and Social Monitoring Program ("ESMP"). The
package covers the Project underground works and surface
installation, external infrastructure such as powerlines, highway
access, and raw water intake.
The review meeting with the EEC was held in December 2020 where
valuable advice and guidance was given by the committee members to
better prepare for the evaluation meeting. The EEC comprises the
relevant Government stakeholders in the Project including the
Ministry of Energy and Mines, Regional Department of the
Environment, and the water agency (l'Agence du Bassin Hydraulique
de Sebou).
Following the positive feedback of the review meeting, the
month-long Public Consultation phase was launched covering the
three local communes where the Project installations are planned.
No concerns or objections were recorded by the local population.
This is a reflection on the social license to operate that the
Project team has been building amongst the local communities as
they support the Project to become a catalyst for socio-economic
development.
In parallel with this, the Company has been following up with
the relevant Government entities to prepare for the evaluation
meeting. Complementary technical work was carried out and shared
with some of these entities. This comprised of the following:
-- Water agency:
o Improvement of the water intake scheme by changing the intake
installation to the newly commissioned Ouljet Es-Soltane dam
instead of the Oued Beht river. The Ouljet Es-Soltane dam is
upstream of the Project site by some 20km and presents a more
reliable and sustainable water supply option.
o The Company completed a scoping level study and a specific
baseline study covering the intake installation and the pipeline
design prior to integrating this infrastructure into the ESIA
package.
o Additional engineering detail on the Tailings Storage Facility
("TSF") including scenario analysis for risk management and
mitigation was completed by Golder Associates to the standard
required by the Government agencies. This study presents design
fundamentals which are based on the most stringent international
standards that are applicable to such installations and shows
accordingly the very low risk associated with its design
contemplated and assesses possible mitigation strategies that could
be implemented.
-- Department of Environment:
o Supplementary work on the Deep Well Injection ("DWI") plan was
completed by local engineering consultants Sigma Plus.
o The results were shared with the Department of Environment to
give more confidence in and demonstrate the sustainability
advantage of the approach as compared with the traditional methods
for brine management.
The Company has completed all significant items in the process
previously outlined, all in compliance with best international
relevant standards, and is now awaiting the confirmation for the
evaluation meeting with the EEC, following which the ESIA approval
will be granted.
Emmerson is committed to developing the Project in accordance
with the highest health, safety, and environmental standards, all
the ESIA workstreams are therefore scoped and completed in
compliance with Moroccan legislation while being topped up to
highest levels of rigour as required by International Finance
Corporation ("IFC") Performance Standards and the Equator
Principles.
Applications for renewal have been lodged for the remaining
research permits that were not part of the Mining Licence area with
a positive outcome expected in Q3 2021.
Geology & Exploration
A significant amount of geological work has been completed
including the re-processing and interpretation of two seismic
lines, undertaken by consultants, to provide better quality data
for the wider understanding of the general structures in the
vicinity of the declines and early mining area. The local team has
also undertaken additional core logging and mapping to provide
further data for refining various geological plans and maps. In
addition to this, supplementary work has been completed on the DWI
plan, resulting in a report that is being used for ongoing
discussions with the authorities regarding this key area of the
Project.
To mitigate risks identified in the FS, a new geological
investigation campaign has been scoped and commenced. This work is
split into two sections. Firstly, surface geological investigations
will focus on geotechnical and geophysical data gathering to feed
into the detail design for the surface infrastructure and the
tailing storage facility ("TSF"). Secondly, a series of deeper
holes are to be drilled along the line of the decline, one of which
is to be extended to provide data for the DWI, and two holes with
offsets are to be drilled into the orebody in the early mining
blocks. These will serve as data points for mine access engineering
design and mine design while giving more confidence on suitability
of the targeted formations for DWI.
Engineering & Design
Work relating to the technical aspects of the Project design and
engineering has been completed to address risks from the FS,
provide detail to support wider project development and commence
more comprehensive work to take the Project towards construction
readiness.
Additional ventilation modelling has also been undertaken; this
was a vital piece of work and the modelling confirmed that the air
quantities required for effective ventilation need to increase,
with the provision of vent raises necessary to achieve this.
Additionally, the modelling confirmed that air cooling will be
necessary from the early years of operation. The detailed design
can now take these modifications into account.
The Company has engaged with numerous engineering companies to
assess potential partners for the basic and detailed engineering
for the Project. A request for proposal has been issued with
regards to the MOP process facility basic engineering, and a
preferred partner selected. Final negotiations are taking place
with a view to commencing engineering soon. Further to this,
discussions continue with a Moroccan engineering company to support
the development of a contracting strategy and project
execution.
Other notable advances include completing cuttability tests on
core samples of salt and basalt to inform the detail design and
planning of the decline construction. The Company is also holding
discussions with several renewable energy providers resulting in a
supply option in addition to the current memorandum of
understanding ("MOU").
The FS for the Sulphate of Potash project ("SOP Project")
commenced during the period as the Company looks to diversify its
product offering and enhance margins. SOP is a low-chloride
fertiliser that is used in arid regions, such as the Middle East,
where chlorine can build up on the soil due to low levels of
rainfall. It is also increasingly used for higher value crops such
as soft fruits, vegetables, turf, and tobacco, which typically have
lower tolerance for chlorine. Emmerson anticipates that this FS
will be completed during August 2021.
Building the right skillset in the Project team
A Project Control Manager has been recruited and the Company is
in the process of recruiting a Project Engineering Manager. This is
to build the appropriate skillset and capacity to take the Project
through the engineering studies in preparation for construction.
The Project Control Manager will be instrumental in enabling
controlled project delivery with a focus on ensuring readiness for
Project execution.
The Project Engineering Manager will be responsible for the
engineering and technical disciplines needed to progress project
development. The individual will be responsible for the successful
integration and delivery of various design packages with a focus on
ensuring suitably constructable design packages and readiness for
operations.
Strategic Investor & Project Debt Process
The Company continues to pursue a strategy of securing a
holistic financing package and is progressing discussions with
potential strategic equity investors, debt financiers and providers
of alternative finance (such as royalties and streams).
Negotiations have continued towards securing the strategic
equity investor that is desired and on terms that will benefit
shareholders. This is one of the most important steps that the
Board needs to take in advancing the Project into construction, and
as such is being managed with all due care and the necessary
diligence and consideration. The Company can confirm that there are
several interested groups, any one of which could have a
transformational effect on the overall financing of the Project.
The Board is hopeful of being in a position to provide a more
substantial update on this, as well as the Project debt and broader
financing process in H2 2021.
Click on, or paste the following link into your web browser, to
view the associated PDF document with pictures included:
http://www.rns-pdf.londonstockexchange.com/rns/9709C_1-2021-6-24.pdf
**ENDS**
For further information, please visit www.emmersonplc.com ,
follow us on Twitter (@emmerson_plc), or contact:
Emmerson Plc
Graham Clarke
+44 (0) 20 7236 1177
Shore Capital (Nominated Adviser and Joint Broker)
Toby Gibbs / John More (Corporate Advisory)
Jerry Keen (Corporate Broking) +44 (0)20 7408 4090
Shard Capital (Joint Broker)
Damon Heath / Isabella Pierre
+44 (0)20 7186 9927
St Brides Partners (Financial PR/IR)
Susie Geliher / Isabel de Salis +44 (0)20 7236 1177
Notes to Editors
Emmerson's primary focus is on developing the Khemisset project
("Khemisset" or the "Project") located in Northern Morocco. The
Project has a large JORC Resource Estimate (2012) of 537Mt @ 9.24%
K2O 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 Feasibility
Study released in June 2020 indicated Khemisset has the potential
to be among the lowest capital cost development stage potash
projects in the world and also, as a result of its location, one of
the highest margin projects. This delivered outstanding economics
including a post-tax NPV10 of approximately US$1.4 billion using
industry expert, Argus', price forecasts.
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