TIDMEML
RNS Number : 7378L
Emmerson PLC
10 September 2019
Emmerson Plc / Ticker: EML / Index: LSE / Sector: Mining
10 September 2019
Interim Results for the six-month period to 30 June 2019
Emmerson Plc, the Moroccan focused potash development company,
is pleased to announce its interim results for the six-month period
ended 30 June 2019.
Highlights During And Immediately Post Period End
-- Maintained strategy of rapidly advancing the Khemisset potash
Project ('Khemisset' 'the Project') towards development
-- Scoping Study confirmed that Khemisset has the potential to
be amongst the lowest capital cost potash projects in the world,
and to deliver EBITDA margins in excess of 60% over a minimum mine
life of 20 years with outstanding project economics including an
NPV(10) , using industry expert Argus FMB's price forecasts, of
more than US$1.1billion
-- Opportunities to potentially further improve project
economics identified in the period including:
o Potential capex saving of US$7.5m compared to the Scoping
Study by utilising existing storage and loading facilities in Port
of Casablanca as opposed to the Port of Mohammedia
o Simplification and optimisation of the process flow design,
which have the potential to reduce capital and operating costs, as
identified by world renowned potash processing expert Don Lamour,
who was appointed during the period
o Memorandum of Understanding signed with Afriquia Gaz to
establish a sustainable partnership including the identification of
options for the economical supply of gas to Khemisset resulting in
potential cost savings
-- Positive early engagement on offtake and financing including:
o Heads of Agreement signed with a global fertiliser group
covering offtake for 100% of production for an initial five year
period
o Indication of project finance debt of up to US$230m from a
major international bank
-- Comprehensive Environmental and Social Impact Assessment
baseline study completed, identifying no areas of concern that
could impact the scale, location, cost, or profitability of the
Project
-- Commenced Feasibility Study and appointed Golder Associates,
a global, independent engineering firm with deep experience in the
delivery of feasibility studies for complex mining projects
o Barr Engineering Co. ("Barr") appointed as Process Design
Engineers responsible for the process plant components of
Feasibility Study
-- Commenced and completed a comprehensive metallurgical test
work programme as a key input to the Feasibility Study
o Confirmed the technical viability of the proposed processing
flowsheet used in the Scoping Study
o Identified areas for potential simplification and optimisation
from an operating cost and capex perspective
o Validated the recovery rate assumptions used in the Scoping
Study
-- Completed a permitting road map for the development of the
Project confirming that construction of Khemisset can begin shortly
after completion of engineering and financing workstreams
-- Preliminary Economic Assessment for the sale of by-product
de-icing salt into the East Coast US market highlighted potential
to deliver additional nominal post tax NPV(10) of up to US$133
million based on historical US de-icing salt prices
-- Raised GBP2.25 million (before expenses) through an
oversubscribed share placement enabling the continued rapid
development of Khemisset and discussions with potential strategic
partners
-- Appointed Shard Capital Partners to act as joint broker to the Company
Hayden Locke, CEO of Emmerson, commented:
"Following the validation of the Project's outstanding potential
in the Scoping Study, delivered ahead of schedule in 2018, we have
continued to progress apace, delivering key milestones and
strategic agreements that serve to advance and de-risk the
development of Khemisset. In particular, the completion of
metallurgical testing, which confirmed the technical viability of
the processing methods proposed for Khemisset, is a significant
de-risking milestone for the Company. In addition, the early
indication of considerable debt financing availability and the
signing of an MOU for the sales of 100% of product produced at
Khemisset, are outstanding achievements at such an early stage and
are a testament to the Project's potential. I look forward to
continuing to update shareholders with our progress as we deliver a
robust Feasibility Study in the upcoming months."
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
Damon Heath Shard Capital Partners Tel: 020 7186 9950
Isabella Pierre
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.
Management Statement
Emmerson has a clear strategic objective - the rapid advancement
of the highly prospective Khemisset Potash Project ("Khemisset" or
"the Project") towards production to maximize value for all
stakeholders. Since listing on the London Stock Exchange with the
Khemisset project in June 2018 the Emmerson team has consistently
met milestones by advancing the Project's development through the
completion of key operational milestones, either on time or ahead
of schedule, substantially de-risking the Project, while also
progressing various corporate and strategic opportunities which
will be required to take Khemisset into production.
I stated previously the rarity of having such an outstanding
asset in the hands of a junior Company and this belief has
strengthened as the various work streams confirm the Project's
potential. One of the key milestones achieved was the completion of
an initial phase of metallurgical testing which confirmed the
technical viability of the processing flowsheet proposed in the
Scoping Study, identified numerous areas for potential improvement,
and validated the recovery assumptions used. While there is still a
considerable amount of work to complete, the technical progress
made to date, and the Emmerson team's broader approach to the
technical work, provides me with optimism for the future
development of this asset.
Another key de-risking milestone was the successful completion
of the Environmental Social Impact Assessment baseline study that
identified no potential adverse impacts of commercial operations at
Khemisset. It was important to the board that this work was
completed according to the highest health, safety and environmental
standards, by adhering to IFC and Equator Principle standards. We
remain committed to maintaining excellent stakeholder relations in
the region and in-country and developing Khemisset in accordance
with best practices globally.
The attention of the Company is now directed on the delivery of
a robust and comprehensive Feasibility Study that further
demonstrates the strategic potential value of the Khemisset
project. We are delighted to be working with Golder Associates and
Barr Engineering Co, organisations that share a reputation of
having a depth of technical expertise and experience required for
project delivery. We are confident that we have the team in place
to deliver on our ambitious timeline of completing the study in 1H
2020, which will lead us into the mine permitting process and one
step closer to commencing construction at Khemisset.
Development is, of course, dependent on financing. During the
period, we received an indicative proposal for project financing
from a major European bank for up to US$230m, which represents over
half of Khemisset's pre-production capital cost. I feel that it is
important to state that to have attracted such interest and levels
of commitment from a major financial institution is a testament to
both the quality of the work undertaken to date by the Emmerson
team, and the outstanding economic fundamentals of Khemisset.
Complementing the project finance discussions, we also signed an
MOU with a significant fertiliser company for the offtake of 100%
of production from Khemisset for the first five years of
production.
Emmerson is an attractive investment proposition underpinned by
strong fundamentals in the agricultural sector. Rapid population
growth - the primary demand driver for potash - is showing no sign
of abating, with the global population anticipated to reach close
to 10 billion by 2050. The need to provide food to this growing
global population has become a significant issue, and it is
anticipated to result in an increased demand for potash as a means
of increasing yield from arable land. This sentiment is confirmed
by industry majors, including BHP, anticipating that demand will
exceed supply from onstream, latent and forthcoming capacity by
mid-2020, placing positive pressure on pricing dynamics. The
Scoping Study for Khemisset confirmed the potential to be one of
the world's lowest cost, highest margin projects delivering EBITDA
margins in excess of 60% over a minimum mine life of 20 years by
virtue of its premier location in Northern Morocco, which would
make it the closest producer of MOP to all of its target markets
including Brazil, Africa and Europe.
2019 has been, and continues to be, a transformative year for
the Company and we have been thrilled with the support received
from all stakeholders in the period, including a recent increase in
holding from significant shareholder Dame Ann Gloag, and the
oversubscribed GBP2.25 million capital raise. The period ahead
promises to be a period of delivery and de-risking of the Project,
and the Company looks forward to updating investors regularly. I
would like to take this opportunity to thank the board of
Directors, our CEO Hayden Locke, and Emmerson's management and its
advisors for their hard work and commitment during the period.
Statement of Directors' Responsibilities
The Directors confirm that this condensed interim financial
information has been prepared in accordance with IAS 34 as adopted
by the European Union and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last Annual Report.
Principal risks and uncertainties
The principal risks and uncertainties as at the date of this
report are the same as those disclosed by the Company in its
consolidated financial statements for the financial year to 31
December 2018.
Future developments
The board of Directors looks forward to keeping shareholders
informed of further developments in what we believe is a very
exciting period of transition from potash explorer to project
developer.
Mark Connelly
Non-executive Chairman
9 September 2019
Condensed Consolidated Statement of Comprehensive Income for the
six month period ended 30 June 2019
6 months ended 6 months 12 months ended
30 Jun 2019 ended 31 Dec 2018
30 Jun 2018
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
Administrative expenses 3 (524) (723) (1,131)
Net foreign exchange (loss)/gain (12) 137 196
Reverse acquisition cost - (698) (698)
Operating loss (536) (1,284) (1,633)
Finance income 9 - 7
Finance cost - (157) (158)
Loss before tax 9 (157) (151)
Income tax - - -
------------------------------------------------------------ ------ --------------- ------------- ----------------
Loss for the period attributable to equity owners (527) (1,441) (1,784)
------------------------------------------------------------ ------ --------------- ------------- ----------------
Other comprehensive income
Items that may be subsequently reclassified to profit or
loss:
Exchange (loss)/gain on translating foreign operations (6) 29 81
Total comprehensive income attributable to equity owners (533) (1,412) (1,703)
------------------------------------------------------------ ------ --------------- ------------- ----------------
Loss per share (pence) 4 (0.08) (0.44) (0.49)
Condensed Consolidated Statement of Financial Position
as at 30 June 2019
30 June 2019 31 Dec 2018 30 June 2018
(Unaudited) (Audited) (Unaudited)
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 5 4,993 3,699 2,601
Property, plant and equipment 49 40 2
--------------------------------------------------- ------ -------------
Total non-current assets 5,042 3,739 2,603
Current assets
Trade and other receivables 206 352 67
Cash and cash equivalents 1,636 3,351 4,891
--------------------------------------------------- ------ ------------- ------------ -------------
Total current assets 1,842 3,703 4,958
Total assets 6,884 7,442 7,561
--------------------------------------------------- ------ ------------- ------------ -------------
Current liabilities
Trade and other payables 337 440 346
Total current liabilities 337 440 346
Net assets 6,547 7,002 7,215
--------------------------------------------------- ------ ------------- ------------ -------------
Shareholders equity attributable to equity owners
Share capital 8,265 8,265 8,265
Share reserves 307 229 151
Reverse acquisition reserve 1,651 1,651 1,651
Translation reserve (62) (56) (108)
Retained earnings (3,614) (3,087) (2,744)
--------------------------------------------------- ------ ------------- ------------ -------------
Total equity 6,547 7,002 7,215
--------------------------------------------------- ------ ------------- ------------ -------------
These financial statements were approved by the Board on 9
September 2019 and signed on their behalf by
Mark Connelly Robert Wrixon
Chairman Director
Condensed Consolidated Statement of Changes in Equity
Reverse
Share Share Acquisition Retained Translation Total
Capital reserve reserve earnings reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 January
2018 1,391 1,227 - (1,303) (137) 1,178
Loss for the period - - - (1,441) - (1,441)
Other comprehensive income:
Exchange gain on translating
foreign operations - - - - 29 29
--------------------------------- --------- --------- ------------- ---------- ------------ ---------
Total comprehensive income - - - (1,441) 29 (1,412)
--------------------------------- --------- --------- ------------- ---------- ------------ ---------
Issue of shares held in
share reserve 1,227 (1,227) - - - -
Transfer to reverse acquisition
reserve (2,618) - 2,618 - - -
Recognition of Emmerson
Plc equity at reverse
acquisition 967 - 117 - - 1,084
Issue of shares for acquisition
of subsidiary 1,084 - (1,084) - - -
Issue of shares for cash 7,338 - - - - 7,338
Share issue costs (1,124) - - - - (1,124)
Issue of share options
and warrants - 151 - - - 151
--------------------------------- --------- --------- ------------- ---------- ------------ ---------
Total contributions by
and distributions to equity
owners recognised directly
in equity 6,874 (1,076) 1,651 - - 7,449
--------------------------------- --------- --------- ------------- ---------- ------------ ---------
Balance as at 30 June
2018 8,265 151 1,651 (2,744) (108) 7,215
--------------------------------- --------- --------- ------------- ---------- ------------ ---------
Loss for the period - - - (343) - (343)
Issue of share options
and warrants - 78 - - - 78
Exchange gain on translating
foreign operations - - - - 52 52
--------------------------------- --------- --------- ------------- ---------- ------------ ---------
Balance as at 31 December
2018 8,265 229 1,651 (3,087) (56) 7,002
--------------------------------- --------- --------- ------------- ---------- ------------ ---------
Loss for the period - - - (527) - (527)
Issue of share options
and warrants - 78 - - - 78
Exchange loss on translating
foreign operations - - - - (6) (6)
--------------------------------- --------- --------- ------------- ---------- ------------ ---------
Balance as at 30 June
2019 8,265 307 1,651 (3,614) (62) 6,547
--------------------------------- --------- --------- ------------- ---------- ------------ ---------
Condensed Consolidated Statement of Cash Flows
for the six month period ended 30 June 2019
6 months ended 6 months 12 months ended
30 June 2019 ended 31 Dec 2018
30 June 2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Loss before tax (527) (1,441) (1,784)
Finance cost - 157 158
Share based payment 78 151 229
Reverse acquisition expense - 698 698
Changes in working capital
Decrease/(increase) in trade and other receivables 146 (59) (139)
(Decrease)/increase in trade and other payables (103) (421) (327)
-------------------------------------------------------------- --------------- -------------- ----------------
Net cash flows used in operating activities (406) (915) (1,165)
-------------------------------------------------------------- --------------- -------------- ----------------
Cash flows from investing activities
Exploration expenditure (1,294) (103) (1,258)
Cash acquired on acquisition - 181 181
Property, plant and equipment purchase (9) - -
------------------------------------------------------------- --------------- -------------- ----------------
Net cash flow (used in)/generated from investing activities (1,303) 78 (1,077)
-------------------------------------------------------------- --------------- -------------- ----------------
Cash flows from financing activities
Shares issued (net of issue costs) - 5,254 5,254
Net cash flow generated from financing activities - 5,254 5,254
-------------------------------------------------------------- --------------- -------------- ----------------
(Decrease)/increase in cash and cash equivalents (1,709) 4,417 3,012
Cash and cash equivalents at beginning of period 3,351 417 417
Foreign exchange on cash and cash equivalent (6) 57 (78)
-------------------------------------------------------------- --------------- -------------- ----------------
Cash and cash equivalents at end of period 1,636 4,891 3,351
-------------------------------------------------------------- --------------- -------------- ----------------
Notes to the Condensed Consolidated Financial Statements for the
six month period ended 30 June 2019
1. General information
Emmerson Plc (the "Company") is a company incorporated and
domiciled in the Isle of Man, whose shares were admitted to the
Standard Listing segment of the Main market of the London Stock
Exchange on 15 February 2017.
The principal activity of the Group is the exploration,
development and exploitation of a potash development project in
Morocco.
2. Basis of preparation
2.1 General
The Condensed Consolidated Financial Statements have been
prepared in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU. The Condensed Consolidated Financial Statements
for the six months ended 30 June 2019 are unaudited and have not
been reviewed by the Group's auditor, and do not include all of the
information required for full annual financial statements.
They should be read in conjunction with the Company's annual
financial statements for the year ended 31 December 2018. The
principal accounting policies applied in the preparation of the
Condensed Consolidated Financial Statements are unchanged from
those disclosed in those statements. These policies have been
consistently applied to each of the periods presented.
The financial information of the Group is presented in UK
Sterling, which is also the functional currency of the Company and
has been prepared under the historical cost convention. The
individual financial statements of each of the Company's wholly
owned subsidiaries are prepared in the currency of the primary
economic environment in which it operates (its functional
currency).
2.2 Basis of consolidation
The consolidated financial statements have been prepared on the
historical cost basis except for financial instruments at fair
value through profit or loss which are measured at fair value in
the statement of financial position.
All intra-group balances, transactions, income and expenses and
profits and losses resulting from intra-group transactions that are
recognised in assets, are eliminated in full.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control
ceases.
The subsidiaries' financial statements have been translated in
to Pound Sterling in accordance with IAS 21 The Effects of Changes
in Foreign Exchange Rates. This standard requires that assets and
liabilities be translated using the exchange rate at period end,
and income, expenses and cash flow items are translated using the
rate that approximates the exchange rates at the dates of the
transactions (i.e. the average rate for the period). The foreign
exchange differences on translation are recognised in other
comprehensive income.
2.3 Going concern
The Directors have reviewed the Group's ongoing activities and
have a reasonable expectation that the Group has adequate resources
to continue operating for the foreseeable future. For this reason,
they have adopted the going concern basis in preparing the Interim
Financial Statements.
2.4 Future changes in accounting policies
The directors have reviewed the IFRS standards in issue which
are effective for annual accounting periods ending on or after the
stated effective date. In their view, none of these standards would
have a material impact on the financial reporting of the Group.
2.5 Segment reporting and cyclicality
A business segment is a group of assets and operations engaged
in providing products or services that are subject to risks and
returns that are different from those of other business segments. A
geographical segment is engaged in providing products or services
within a particular economic environment that are subject to risks
and returns that are different from those of segments operating in
other economic environments.
The Directors are of the opinion that the Group is engaged in a
single segment of business being the exploration activity of potash
in one geographical area, being Morocco.
The interim results for the six months ended 30 June 2019 are
not necessarily indicative of the results to be expected for the
full year ending 31 December 2019. Due to the nature of the entity,
the operations are not affected by seasonal variations at this
stage.
3. Administrative fee and other expenses
6 months 6 months 12 months
ended ended ended
30 Jun 2019 30 Jun 2018 31 Dec 2018
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Project costs 34 32 39
Directors' fees 66 - 284
Share based payments 78 151 229
Travel and accommodation 54 57 55
Listing fees and issue costs
expensed - 123 123
Auditors remuneration 27 - 27
Professional and consultancy
fees 229 309 322
Other 36 51 52
------------------------------ ------------- ------------- -------------
Total 524 723 1,131
------------------------------ ------------- ------------- -------------
4. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
6 months
6 months ended ended 12 months ended
30 Jun 2019 30 Jun 2018 31 Dec 2018
(Unaudited) (Unaudited) (audited)
GBP'000 GBP'000 GBP'000
Earnings
Loss from continuing operations for the period attributable to the
equity holders of the Company (527) (1,441) (1,784)
Number of shares
Weighted average number of ordinary shares for the purpose of basic
and diluted earnings per
share 626,132,385 329,036,037 361,230,854
-------------------------------------------------------------------- --------------- ------------- ----------------
Basic and diluted earnings per share (pence) (0.08) (0.44) (0.49)
-------------------------------------------------------------------- --------------- ------------- ----------------
5. Intangible assets
The intangible assets consist of capitalised exploration and
evaluation expenditure, including the cost of acquiring the one
mining license and 39 research permits held by the Company's
subsidiaries. The potash properties are currently unproved
reserves. Once properties have been classified as proved reserves,
they will be transferred from intangible assets to tangible assets,
and amortised over the life of the area according to the rate of
depletion of the economically recoverable costs.
30 Jun 2019 30 Jun 2018 31 Dec 2018
(Unaudited) (Unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cost:
At the beginning of the period 3,699 2,304 2,304
Additions 1,294 99 1,258
Exchange differences - 198 137
-------------------------------- ------------ ------------ ------------
As at end of period 4,993 2,601 3,699
-------------------------------- ------------ ------------ ------------
6. Related party transactions
The total Directors' remuneration paid during the period is
given in note 3.
In addition, Hayden Locke (a Director of the Company) is a
director of Benson Capital Limited and Bentley Capital Limited,
which provide consulting services to the Company. During the
period, Benson Capital Limited and Bentley Capital Limited received
total fees of GBP103,000 (12 months to 31 December 2018:
GBP134,000). The amount outstanding as at period-end is GBP17,200
(31 December 2018: GBP nil). Subsequent to period-end, Hayden Locke
received a performance incentive for the six months to 30 June 2019
of GBP86,250.
Robert Wrixon is a Director of the Company. Subsequent to
period-end, Robert Wrixon received a performance incentive for the
six months to 30 June 2019 of GBP15,000.
Phil Cleggett is the only key management personnel other than
the Directors. Fees of GBP51,000 (12 months to 31 December 2018:
GBP137,000) were paid during the period to Bremer Consulting Pty
Ltd, a company Phil Cleggett controls and the amount outstanding as
at period-end is GBP8,500 (31 December 2018: GBP61,000). Subsequent
to period-end, Phil Cleggett received a performance incentive for
the six months to 30 June 2019 of GBP34,500.
There are no other related party transactions.
7. Events after the reporting date
On 12 July 2019, the Company raised GBP2.25 million (before
expenses) through a placing of 60,000,000 new ordinary shares of
no-par value each at a price of 3.75 pence per share. The funds
raised will primarily support the Company as it continues to
rapidly develop the Khemisset Potash Project through the delivery
of key work streams. Following Admission, the enlarged issued share
capital of the Company comprises of 686,132,385 ordinary shares of
no-par value each.
In August 2019, the remuneration committee recommended a
performance incentive for Hayden Locke Robert Wrixon and Phil
Cleggett. The board adopted the recommendations and further details
of the performance incentive are in note 6.
There were no other significant subsequent events.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR DMGGLMLVGLZZ
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