TIDMEML
RNS Number : 3635X
Emmerson PLC
29 April 2019
Emmerson Plc / Ticker: EML / Index: LSE / Sector: Mining
29 April 2019
Emmerson Progresses the Development of Khemisset Project with
Memorandum of Understanding with Afriquia Gaz
Highlights
-- Memorandum of Understanding ("MoU") signed with Afriquia Gaz
("Afriquia") to establish a sustainable partnership between the two
parties including:
o Agreement to work towards a long-term supply agreement for gas
to Khemisset Potash Project ("Khemisset" or "the Project")
o Agreement to evaluate the best method for supply of gas to
Khemisset, including pipeline or regular truck delivery
o Agreement to assess the most appropriate source of gas,
including the evaluation of existing infrastructure, producing and
proposed gas fields in Morocco
-- Afriquia is the leading distributor of gas in Morocco, and
currently delivers significant quantities of Liquified Petroleum
Gas to numerous major industrial consumers across the country
-- Emmerson believes that a number of attractive options are
available for the economical supply of gas to Khemisset resulting
in significant improvements to several assumptions in the Scoping
Study
-- Potential to improve on already outstanding economics for
Khemisset including its post-tax NPV(10) of US$1.14 billion using
industry expert potash price forecasts
-- MoU reinforces Emmerson's commitment to identify the best
partners for Khemisset as well as additional opportunities for cost
savings as development progresses at the project
Emmerson Plc ("Emmerson" or "the Company"), focused on
developing the low cost, high margin Khemisset Potash Project, is
pleased to announce that it has signed an MoU with Morocco's
largest gas distributor.
The MoU outlines the framework under which the two parties will
work towards a long-term gas supply agreement for the world class
Khemisset Potash Project.
The MoU states that the groups will work together to assess
various methods of gas delivery to the Project, with both a gas
pipeline and truck delivery under consideration, as well as the
most appropriate source of gas from existing and proposed Moroccan
gas fields. Afriquia will work with the Company to review the
technical specifications of the drying and steam generation
facility to deliver an optimal solution in terms of gas
characteristics and the required infrastructure at site.
The Khemisset Scoping Study (see announcement dated 20 November
2018) demonstrated that the Project will have sector leading
capital cost to production, supported by onsite gas storage,
provided by its gas supply partner at very low cost to Emmerson.
The projected economics for Khemisset are outstanding with an
initial 20-year life of mine, average EBITDA of approximately
US$240 million per annum, and a post-tax NPV(10) of US$1.14 billion
using industry expert potash price forecasts.
Under the current proposal, Afriquia would design, supply,
install, and maintain onsite storage facility at its cost, while
Emmerson would provide civil works, electricity and other support
services required for the facility's operation.
While this option remains viable, the Company is committed to
optimising the economics of the project wherever possible and is
optimistic that other options may be available that significantly
reduce operating cost with only limited capital cost increases.
In particular, Emmerson will examine the potential to act as a
cornerstone customer to allow Afriquia to expand its growing
pipeline distribution business, which could allow for a cheaper
long-term gas price with an equally low-cost capital solution. This
possibility will be explored in detail as part of the upcoming
Feasibility Study.
To view this announcement with illustrative images, please use
the following link:
http://www.rns-pdf.londonstockexchange.com/rns/3635X_1-2019-4-29.pdf
Hayden Locke, CEO of Emmerson, commented:
"Energy is a major operating cost for the Project and, as a
result, even slight improvements in this key area can result in
significant improvements for the Project overall. Signing an MoU
for gas supply with a counterparty of Afriquia's capability is an
important step for the Company as we commence engagement with
utilities suppliers for the world class Khemisset Potash Project.
Afriquia is a leading African energy company with significant
distribution and delivery capabilities throughout Morocco, making
it an ideal partner for Emmerson."
"We believe that our energy needs will be supplied via low
capital cost solutions at competitive long-term operational prices,
further supporting Emmerson's potential to become one of the
World's lowest cost and highest margin potash producer."
"Strong in-country partners will be fundamental to underpinning
the capital and operating costs of our upcoming Feasibility Study,
and this MoU demonstrates the willingness of leading companies in
Morocco to work with Emmerson. The comprehensive metallurgical test
work programme is progressing well in addition to ongoing
discussions with potential strategic partners. I look forward to
continuing to update shareholders with details of our progress as
we advance towards the publication of the Feasibility Study."
About Afriquia Gaz
Afriquia is Morocco's leading distributor of Liquified Petroleum
Gas ("LPG"), butane and propane with an annual distribution of
nearly 1 million tonnes via pipeline and truck, representing a
market share of more than 60%. Afriquia is also the largest
importer of gas and has a storage capacity Morocco-wide of nearly
100,000 tonnes.
Afriquia offers high-performance energy solutions that cover
both domestic and professional needs with five brands marketing
products in Morocco: Afriquia Gaz, Tissir Gaz, Campingaz, Ultragaz
and National Gaz.
Since its IPO in 1999, Afriquia Gaz has continued its
development through both organic and acquisition led growth. In
2005, the company acquired Tissir Gaz. In 2008 and 2009, in
response to growing demand, the company expanded its butane and
propane storage centers and terminals in Jorf Lasfar. Afriquia
acquired National Gaz, representing 30% of the eastern market, as
well as the brand Butafric, widely distributed in Tangier, covering
the northern region of Morocco.
Figure 1: Afriquia's Moroccan Facilities and Moroccan Gas
Infrastructure Relative to
the Khemisset Potash Project
**ENDS**
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
Gaby Jenner St Brides Partners Ltd Tel: +44 (0) 20 7236
Melissa Hancock Financial PR/IR 1177
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.
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
MSCDMGZDFLVGLZG
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