TIDMEML
RNS Number : 2670J
Emmerson PLC
09 April 2020
Emmerson Plc / Ticker: EML / Index: LSE / Sector: Mining
9 April 2020
Emmerson Newsletter - Q1 2020 CEO Review
We commenced 2020 with a great deal of purpose, making
outstanding progress on our Feasibility Study, developing a clear
plan for the future to further de-risk the Khemisset Potash Project
("Khemisset" or "the Project"), and moving us closer to becoming a
potash producer in the future.
To view the announcement with illustrative diagrams and images
please use the following link:
http://www.rns-pdf.londonstockexchange.com/rns/2670J_1-2020-4-8.pdf
Following a rigorous site selection trade-off study, which took
into consideration numerous project variables, we selected two
sites - a preferred site and a secondary site - both of which
provide a great result for the Project in terms of access to local
infrastructure, minimising decline costs and provide optimum
locations for the process plant and associated infrastructure. At
the same time, we were able to provide the capital cost estimates
required to connect our preferred plant site to the local road
infrastructure that will be used to transport our product to the
export port. This showed a cost of only US$2 million, including a
15% contingency, a significant cost saving relative to more remote
potash projects globally.
We commenced the full IFC compliant Environmental and Social
Impact Assessment ("ESIA") in January, which will be an integral
component in the eventual application for a Mining Permit for the
Project. Based on the initial timelines, the Company is targeting
this application occurring during the second half of 2020.
As part of the ESIA programme, we also announced a scientific
partnership with the Rabat Scientific Institute with the purpose of
providing scholarships to students to study animal species in the
local area around Khemisset. This will provide key data for the
ESIA and will ensure that our commitment to retain the highest
standards of corporate and social responsibility, with a target of
developing the most sustainable potash mine possible, is met and
exceeded.
Also, in January, we continued constructive discussions with
several potential partners for the future development of the
Project. These discussions covered potential financing options as
well as potential technical partnerships including EPC contractors.
Khemisset has the potential to be a world class potash project
driven by industry leading low capital costs and, as a result of
its location, very strong margins regardless of potash price. This
makes Khemisset potentially one of the most strategically valuable
potash projects globally and we're pleased that the early feedback
from our prospective partners has confirmed this viewpoint.
In March, with the global onset of COVID-19, we instituted
several measures to protect our employees and assets. We are
fortunate given the stage of our work that much of the current work
programme can be completed via desktop work, so we quickly moved to
restrict any unnecessary movement of our employees and consultants.
Our independent engineers also moved to working from home. While
this has certainly had some impact on the ability of teams to work
seamlessly together, especially at this important time in
finalising the Feasibility Study, we continue to believe that we
will be able to deliver the Feasibility on our original
timelines.
We maintain a healthy cash position of over GBP1.6 million as at
the end of February 2020, having moved quickly to manage our
budgets and cut down expenditure where possible. Based on our
updated numbers, we are confident these funds will allow us to
continue to operate until late 2021, at least. If we make further
cuts to our expenditure, we can almost certainly extend that
timeline, giving us significant breathing room in these challenging
and unprecedented market conditions. Importantly, the current
budget still allows for us to continue to deliver the Feasibility
Study and all associated work streams, while moving forward on the
permitting work streams, and continuing our discussions with
various potential strategic partners.
Notwithstanding the impact of COVID-19, 2020 will be another
year of significant milestones for Emmerson as we move ever closer
to our goal of becoming part of the small group of potash producers
in the world. We thank our shareholders for their support and look
forward to continuing to deliver on our de-risking milestones.
KEY WORKSTREAMS COMPLETED IN Q1 2020
Road Connection Capital Cost Estimates
During the period, the Company released the capital cost
estimates to connect the preferred project site to the local road
infrastructure, which will allow the shipment of product produced
at Khemisset to its export port at Casablanca. The total budgeted
cost for construction of access roads to allow product shipment via
the A2 toll road is approximately US$2.0 million, including a 15%
contingency.
The selected site location requires only approximately 3.2km of
paved roads to be constructed to connect the Project to the
existing, high-quality, A2 highway, with an additional
approximately 9.6km of gravel internal roads included in the design
estimate. Importantly, due to its proximity to both this road and a
port, there is no requirement to construct expensive rail
connections. Design and budget completed by independent engineering
group, Golder Associates ("Golder"), according to AusIMM guidelines
for capital cost estimates.
Figure 1: Road Connection to Export Port at Casablanca - See
PDF
Commencement of Environmental and Social Impact Assessment
During the early part of the year, Emmerson commenced the ESIA
for the full Khemisset Potash Project. The ESIA is a key component
of all future permitting workstreams, as outlined in the Emmerson's
permitting roadmap which was released on 22 May 2019.
The ESIA will be completed in partnership with Moroccan
headquartered firm, Phénixa S.A.R.L. ("Phénixa"). Phénixa has been
integral in all environmental and social studies carried out at
Khemisset to date and has deep experience in delivering ESIA's for
mining, and other large industrial, projects in Morocco.
The ESIA will include multiple studies on the existing area, and
the final report will conclude any forecast impacts from the
Project, and proposed mitigation measures, on:
-- Existing land uses and social settings
-- Flora and fauna
-- Air quality and noise
-- Climate, topography & elevation
-- Surface water and ground water
-- Archaeology, anthropology, and cultural heritage sites
On completion of the ESIA, the Company can commence the process
of moving to mine permitting. This involves several individual
workstreams, which must be completed to acquire all required
permits and authorisations to commence construction at Khemisset.
The major workstreams include:
-- Conversion of existing Research Permits to Mining Permits,
governed by the Ministry of Energy and Mines
o Requires the demonstration of technical and economic
feasibility, to be fulfilled by upcoming feasibility studies
-- Environmental Approval, to be governed by the Moroccan
Government Comité National de l'Evaluation de l'Impact sur
l'Environnement ("CNEIE"). The CNEIE will require the Company
deliver the ESIA which includes:
o An Environmental and Social Monitoring Programme ("ESMP") to
formalise ongoing monitoring and management of any issues
identified in the ESIA, which is included as part of the ESIA
o A Public Enquiry period, during which relevant stakeholders
can formally request information of the Company
-- Water Usage Permits, governed by the relevant Water Basin Agency
-- Temporary Occupation Permits for any Government land intended to be utilised
-- Construction Permits for all structures and tailings facilities
Figure 2: Permitting Roadmap for Khemisset - See PDF
Scholarships Programme
In early February, the Company announced a scientific
partnership with the Rabat Scientific Institute with the purpose of
funding PhD scholarship studies on animal species in the area of
the Project.
Emmerson is committed to the highest standards of corporate and
social responsibility including adopting the IFC Performance
Standards, which provide international best practice for the
sustainable development of mining projects. These studies on the
ecological aspects of the project area give us a thorough
understanding of the various species of flora and fauna and will
enable us to identify any potentially vulnerable species. The
scientific partnership with the oldest scientific institution in
Morocco has established a framework for granting honours
scholarships for two students to prepare post-graduate theses.
Figure 3: December 2019 Meeting between Company representatives
and the Rabat Scientific Institute - See PDF
Figure 4: December 2019 Initial Site Visit with PhD Candidates -
See PDF
KEY WORK STREAMS FOR 2020
The Company will be focussed on delivering the following key
workstreams in 2020:
1) Delivery of Feasibility Study in the first half of 2020
2) Completion of Environmental and Social Impact Assessment to IFC standards
3) Commencement of mine permitting process
4) Continuation of other strategic financing discussions
5) Commencement of negotiating key supply partnerships in Morocco
6) Commencement of final technical works prior to commencing
detailed design and engineering in preparation for commencement of
construction
7) Engagement with potential EPC / EPCM and contract mining partners
ENDS
For further information,
please visit
www.emmersonplc.com
, follow us on
Twitter (@emmerson_plc),
or contact: Emmerson Plc Tel: +44 (0) 20 7236
Hayden Locke 1177
Edward McDermott
Damon Heath Shard Capital Partners Tel: +44 ( 0) 20 7186
Isabella Pierre 9950
Isabel de Salis St Brides Partners Ltd Tel: +44 (0) 20 7236
Megan Dennison 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 537Mt @ 9.24% 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.
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END
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