TIDMEML
RNS Number : 3646Z
Emmerson PLC
18 September 2020
Emmerson Plc / Ticker: EML / Index: LSE / Sector: Mining
18 September 2020
Emmerson Plc ('Emmerson' or 'the Company')
Interim Results for the six-month period to 30 June 2020
Emmerson Plc, the Moroccan focused potash development company,
is pleased to announce its interim results for the six-month period
ended 30 June 2020.
Highlights During & Post Period End
-- Announced Feasibility Study confirming Khemisset Potash
Project's ('Khemisset' or 'the Project') potential to be a world
class, low capital cost, high margin potash mine:
o EBITDA margins in excess of 61% over a minimum mine life of 19
years
o Outstanding project economics including a Post Tax NPV(8) of
US$1.4 billion and IRR of 38.5%
-- Shifted focus to moving Khemisset towards "shovel ready"
status including operational capability build-out, further
technical work and project de-risking, Front End Engineering and
Design ("FEED") and financing
-- Appointed Mr. Graham Clarke as CEO effective from 1 July 2020
- a highly experienced fertiliser industry executive with 26 years'
experience in underground potash mining
-- Raised GBP1.72 million through an oversubscribed placing to
rapidly develop the Project through the delivery of key work
streams
-- Appointed Shore Capital Stockbrokers Limited ("Shore
Capital") to act as Corporate Broker to the Company
-- Published Socio-economic Study results, which showed that t
he economic impact of the Project will increase the local GDP per
capita by an estimated 40%
-- Currently progressing multiple workstreams to further de-risk
the Project and provide confidence in the ongoing project finance
and due diligence processes
o Advancing permitting processes - on track for main permits to
be in place in H1 2021
o Investigating options for staged development to reduce upfront
capital costs and provide financing flexibility
o Engaging positively with potential strategic partners, debt
providers and anchor investors
Graham Clarke, CEO of Emmerson, commented, "This key period for
Emmerson has resulted in a number of significant developments that
have moved us ever closer to production while enhancing shareholder
value. The Feasibility Study announced in early June was the
highlight of the period, confirming Khemisset's potential to be a
world-class, low capital cost, high margin potash mine, which is a
very rare asset in the global fertiliser industry.
"I joined Emmerson shortly after this study was released and
have hit the ground running as the Company's focus shifted to
moving Khemisset towards "shovel ready" status. To this end, we are
progressing permitting activities, technical reviews and
optimisation of the declines and mine planning, further process
work in parallel with working with our advisors on multiple
potential funding routes.
"I am delighted to be part of Emmerson's journey at such a
critical stage in its history and look forward to providing regular
updates on its progress."
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
Jerry Keen Shore Capital Tel: +44 (0)20 7408
Toby Gibbs 4090
John More
Damon Heath Shard Capital Partners Tel: +44 (0) 20 7186
9950
Isabella Pierre
Megan Dennison St Brides Partners Ltd Tel: +44 (0) 20 7236
Susie Geliher Financial PR/IR 1177
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.
Chairman's Statement
The period under review was dominated by the Feasibility Study
('FS') announced towards the end of the period in early June. This
confirmed the compelling investment case that Khemisset represents:
a post-tax NPV8 of US$1.4 billion and robust financials including
over US$300 million in annual EBITDA and IRR of 38.5%. The project
is robust enough to weather all foreseeable commodity cycles with
IRRs remaining over 15% even at potash prices well below the
current contracted potash price in its target markets of Brazil,
North West Europe, the USA, central America and Morocco.
With numbers such as these, we are keen to realise the Project's
potential to become a leading supplier of potash to the
agricultural industry at the earliest opportunity. Accordingly, we
are now working to secure strategic financing partners to develop
the Project as well as actively advance other workstreams to help
achieve our aim.
Obtaining the various permits, including mining, environmental,
water, occupation, and construction, for Khemisset is naturally key
to the process and, accordingly, several major workstreams have
been undertaken or are underway. The ESIA is the next box to tick
ahead of submitting our application for a Mining Permit; this is on
track to complete early in Q4 2020.
In tandem, we are examining a variety of options to ensure the
optimal financing structure for the Project. In line with this, we
are in discussions and/or in more detailed due diligence phases
with a diverse range of potential longer-term financing partners
including banks, other debt funds, non-traditional financing
partners and strategic partners.
Operationally, whilst we continue to adhere to Emmerson's
operating philosophy of running a lean team with low overheads, we
also recognise the need to build out a suitably skilled operations
team as Emmerson moves closer towards production. Our first
appointee was Graham Clarke, a highly experienced fertiliser
industry executive with 26 years' experience in underground potash
mining, who joined at the end of the period under review. With his
proven ability to build operating teams with the capability to
deliver large, complex projects in the fertiliser space, we look
forward to further strengthening the team.
Additionally, we continue to pursue other potentially value
adding projects, which complement the core Khemisset Potash Project
and deliver significant economic and strategic upside, whilst also
reducing overall business risk through the diversification of
future product mix. Two key projects are particularly exciting:
-- The Sulphate of Potash ('SOP') project, for which we released
a Scoping Study in November last year, is financially robust and
could deliver strong NPVs and cashflows through a range of SOP
prices. We are now advancing the next phase of development for this
project, comprising a PFS encompassing more detailed engineering
and further site investigations in Jorf Lasfar.
-- The FS confirmed both the technical and economic viability of
the sale of 1Mtpa of salt by-product produced from Khemisset. The
Project produces, on average, a total of approximately 4.5Mtpa of
salt by-product over the life of the mine. As a result, there is
clear potential for significant increases in the tonnages of salt
which could be sold into the US de-icing salt market. As the salt
at Khemisset is a by-product of potash production, the operating
cost associated with its production is very low and Emmerson is,
therefore, expected to be a very competitive producer on a
delivered cost basis to the US market.
Finally, continuing the theme of growth prospects, we anticipate
extending the mine life of Khemisset. The FS showed a 19-year life
of mine, which was achieved using only 43% of the total Mineral
Resource Estimate ("MRE") of 537 million tonnes with an average
grade of 9.24% K2O and is concentrated in the north eastern extent
of the current MRE. Our aim is to access an additional deposit, the
South West deposit, which is only 450m below surface and has a
similar sized resource (190 million tonnes) to the current FS mine
plan. Additionally, we aim to undertake further work to understand
the Central Area MRE, some of which may not be extractable, but
contains nearly 150 million tonnes of additional resource.
Given we are operating in an unusual time in history with
COVID-19 playing a major role in the way businesses are run, we are
delighted with the Company's progress and anticipate an equally
busy and successful second half of the year. This half has already
kicked off with the results of the socio-economic study, proving
that Khemisset combines the appropriate attributes for sustainable
development, namely its location, outstanding economic metrics,
corporate policies and standards, and government support. The
bottom line is that Khemisset will have a significant positive
impact on the Moroccan economy with a total of 2,385 direct and
indirect jobs created during the construction of the project. Once
fully operational, a total of 1,500 jobs will be created with 760
being direct employees and the Company is targeting to fill 90% of
roles at the mine with employees living within Khemisset and the
surrounding communes.
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 2019.
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
17 September 2020
Condensed Consolidated Statement of Comprehensive Income for the
six month period ended 30 June 2020
6 months ended 6 months 12 months ended
30 Jun 2020 ended 31 Dec 2019
30 Jun 2019
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
Administrative expenses 3 (375) (524) (985)
Net foreign exchange gain/(loss) 56 (12) (161)
Operating loss (319) (536) (1,146)
Finance income 4 9 14
Finance cost - - -
Loss before tax 4 9 (1,132)
Income tax - -
---------------------------------------------------------- ------ --------------- ------------- ----------------
Loss for the period attributable to equity owners (315) (527) (1,132)
---------------------------------------------------------- ------ --------------- ------------- ----------------
Other comprehensive income
Items that may be subsequently reclassified to profit or
loss:
Exchange gain/(loss) on translating foreign operations 162 (6) (32)
Total comprehensive income attributable to equity owners (153) (533) (1,164)
---------------------------------------------------------- ------ --------------- ------------- ----------------
Loss per share (pence) 4 (0.05) (0.08) (0.17)
Condensed Consolidated Statement of Financial Position
as at 30 June 2020
30 June 2020 30 June 2019 31 Dec 2019
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 5 7,182 4,993 6,172
Property, plant and equipment 34 49 38
--------------------------------------------------- ------ -------------
Total non-current assets 7,216 5,042 6,210
Current assets
Trade and other receivables 270 206 271
Cash and cash equivalents 793 1,636 2,071
--------------------------------------------------- ------ ------------- ------------- ------------
Total current assets 1,063 1,842 2,342
Total assets 8,279 6,884 8,552
--------------------------------------------------- ------ ------------- ------------- ------------
Current liabilities
Trade and other payables 205 337 414
Total current liabilities 205 337 414
Net assets 8,074 6,547 8,138
--------------------------------------------------- ------ ------------- ------------- ------------
Shareholders equity attributable to equity owners
Share capital 10,419 8,265 10,408
Share reserves 464 307 386
Reverse acquisition reserve 1,651 1,651 1,651
Translation reserve 74 (62) (88)
Retained earnings (4,534) (3,614) (4,219)
--------------------------------------------------- ------ ------------- ------------- ------------
Total equity 8,074 6,547 8,138
--------------------------------------------------- ------ ------------- ------------- ------------
Condensed Consolidated Statement of Changes in Equity
for the six month period ended 30 June 2020
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 31 December
2018 8,265 229 1,651 (3,087) (56) 7,002
Share option and warrant
issue - 78 - - - 78
Other comprehensive loss - - - (527) (6) (533)
Balance as at 30 June
2019 8,265 307 1,651 (3,614) (62) 6,547
--------- --------- ------------- ---------- ------------ ---------
Balance as at 31 December
2018 8,265 229 1,651 (3,087) (56) 7,002
Loss for the year - - - (1,132) - (1,132)
Other comprehensive loss - - - - (32) (32)
--------- --------- ------------- ---------- ------------ ---------
Total comprehensive loss - - - (1,132) (32) (1,164)
Share option and warrant
issue - 157 - - - 157
Share issue - 3rd parties 2,250 - - - - 2,250
Share issue costs (107) - - - - (107)
--------- --------- ------------- ---------- ------------ ---------
Balance as at 31 December
2019 10,408 386 1,651 (4,219) (88) 8,138
--------- --------- ------------- ---------- ------------ ---------
Loss for the period - - - (315) - (198)
Other comprehensive loss - - - - 162 45
--------- --------- ------------- ---------- ------------ ---------
Total comprehensive loss - - - (315) 162 (153)
Share option and warrant
issue - 78 - - - 78
Share issue - 3rd parties 11 - - - - 11
--------- --------- ------------- ---------- ------------ ---------
Balance as at 30 June
2020 10,419 464 1,651 (4,534) 74 8,074
--------- --------- ------------- ---------- ------------ ---------
Condensed Consolidated Statement of Cash Flows
for the six month period ended 30 June 2020
6 months ended 6 months 12 months ended
30 June 2020 ended 31 Dec 2019
30 June 2019
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Loss before tax (315) (527) (1,132)
Finance cost - - -
Share based payment 78 78 157
Reverse acquisition expense - - -
Changes in working capital
Decrease/(increase) in trade and other receivables 1 146 81
(Decrease)/increase in trade and other payables (209) (103) (26)
------------------------------------------------------------- --------------- -------------- ----------------
Net cash flows used in operating activities (445) (406) (920)
------------------------------------------------------------- --------------- -------------- ----------------
Cash flows from investing activities
Exploration expenditure (1,006) (1,294) (2,473)
Cash acquired on acquisition - - -
Property, plant and equipment purchase 4 (9) 2
------------------------------------------------------------- --------------- -------------- ----------------
Net cash flow (used in)/generated from investing activities (1,002) (1,303) (2,471)
------------------------------------------------------------- --------------- -------------- ----------------
Cash flows from financing activities
Shares issued (net of issue costs) 11 - 2,143
Net cash flow generated from financing activities 11 - 2,143
------------------------------------------------------------- --------------- -------------- ----------------
(Decrease)/increase in cash and cash equivalents (1,436) (1,709) (1,248)
Cash and cash equivalents at beginning of period 2,071 3,351 3,351
Foreign exchange on cash and cash equivalent 158 (6) (32)
------------------------------------------------------------- --------------- -------------- ----------------
Cash and cash equivalents at end of period 793 1,636 2,071
------------------------------------------------------------- --------------- -------------- ----------------
Notes to the Condensed Consolidated Financial Statements for the
six month period ended 30 June 2020
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 2020 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 2019. 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 2020 are
not necessarily indicative of the results to be expected for the
full year ending 31 December 2020. 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 2020 30 Jun 2019 31 Dec 2019
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Directors' fees 66 66 162
Share based payments 78 78 157
Travel and accommodation 12 54 128
Auditors remuneration 17 27 41
Professional and consultancy
fees 202 299 497
Total 375 524 985
------------------------------ ------------- ------------- -------------
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 2020 30 Jun 2019 31 Dec 2019
(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 (315) (527) (1,132)
Number of shares
Weighted average number of ordinary shares for the purpose of basic
and diluted earnings per
share 686,132,385 626,132,385 654,484,033
-------------------------------------------------------------------- --------------- ------------- ----------------
Basic and diluted earnings per share (pence) (0.05) (0.08) (0.17)
-------------------------------------------------------------------- --------------- ------------- ----------------
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 2020 30 Jun 2019 31 Dec 2019
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Cost:
At the beginning of the period 6,172 3,699 3,699
Additions 1,010 1,294 2,473
As at end of period 7,182 4,993 6,172
-------------------------------- ------------ ------------ ------------
6. Related party transactions
Directors consultancy fees
Hayden Locke is a Director of the Company and is a director of
Benson Capital Limited, which provide consulting services to the
Company. During the period, Benson Capital Limited received total
fees of GBP103,000 (year to 31 December 2019: GBP378,000). The
amount outstanding as at period-end is GBPnil (31 December 2019:
GBP103,416).
Robert Wrixon is a Director of the Company and also provides
consulting services to the Company. During the period, Robert
Wrixon received fees of GBP42,000 (year to 31 December 2019:
GBP84,000). The amount outstanding as at period-end is GBP nil (31
December 2019: GBP nil).
Details of directors' remuneration during the period are given
in note 3.
Other key management personnel
Phil Cleggett is the only key management personnel other than
the Directors. Fees of GBP60,000 (year to 31 December 2019:
GBP190,000) were paid during the period to Bremer Consulting Pty
Ltd, a company Phil Cleggett controls and the amount outstanding as
at period-end is GBPnil (31 December 2019: GBP45,500).
7. Events after the reporting date
As announced on 29 June 2020, the Company appointed Graham
Clarke as the CEO of the Company effective from 1 July 2020.
On 16 July 2020, the Company raised GBP1.72 million (before
expenses) through a placing of 40,470,589 new ordinary shares of
no-par value each at a price of 4.25 pence per share. The funds
raised will primarily support the Company as it continues to
rapidly develop the world class Khemisset Project through the
delivery of key work streams. Following Admission, the enlarged
issued share capital of the Company comprises of 726,602,974
ordinary shares of no-par value each.
There were no other significant subsequent events.
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