ESIA Process, Board Changes, and Cash Management

Emmerson PLC

28 October 2024

 

Emmerson PLC / Ticker: EML / Index: AIM / Sector: Mining

28 October 2024

Emmerson PLC

("Emmerson" or the "Company")

ESIA Approval Process, Changes to the Board and Cash Management Initiatives

Emmerson, the Moroccan focused potash development company, provides an update on the ESIA approval process, changes to its Board and various cash management initiatives.

ESIA Approval

As previously announced, the Company was made aware of an unfavourable recommendation regarding its ESIA application.

Following discussions with the Company's Moroccan advisors, the Company filed an appeal with the Wali of Rabat-Salé-Kénitra region (which encompasses the province of Khemisset) with respect to the unfavourable recommendation from the Commission Régionale Unifiée de l'Investissement ("CRUI").

The Centre Régional d'Investissement of the region Rabat-Salé-Kénitra ("CRI") has subsequently responded that the CRUI does not have the ability to examine the ESIA submission again and it did not provide any indication of further avenues of appeal to the Company.

Emmerson continues to examine its options with respect to the approvals process and will update the market shortly on its next steps.

Changes to the Board

James Kelly (Non-Executive Chairman) and Rupert Joy (Non-Executive Director) will both step down from the Board of Directors, with immediate effect.

Hayden Locke will assume the role of Chairman to support management during the next phase of work.

Cash Management Initiatives

The permitting delays have put Emmerson's balance sheet under pressure and limited its future financing options. As a result, the Company has implemented a comprehensive review to significantly reduce its cash burn rate while it assesses its strategic and appeal options with respect to the recent unfavourable recommendation.

In addition to the streamlining of the Board, from 1 November 2024, the two remaining non-executive directors (Mr Locke and Mr Wrixon) will suspend taking their cash fees and will, instead, take fees in the form of shares to continue to align them with the interests of other shareholders.

Graham Clarke, the Managing Director and CEO, will reduce his base cash compensation by 40%, which will be reviewed on an ongoing quarterly basis with respect to the Company's financial position and ongoing prospects. Mr Clarke will also take a portion of the reduction in shares.

The majority of the remaining ongoing costs within the business, with the exception of core administrative and regulatory functions, are being reviewed and will be significantly reduced. Unfortunately, this will mean, for the time being, that virtually no further progress can be made on the various value-adding project development workstreams underway.

Hayden Locke, in-coming Chairman of Emmerson, commented:

"I would like to thank both James and Rupert for their wise counsel and commitment to Emmerson during what has been a very challenging period for the Company. Both are disappointed with the outcome and are reticent to leave at this important juncture, but they also recognise a restructuring is necessary to preserve optionality for the Company, and any remaining potential for value for our stakeholders.

"Thank you to Graham for his continued commitment to the Company, taking a significant reduction in remuneration while continuing to work incredibly hard as we assess our options. Many investors mistake silence for lack of activity but, in our current situation, it is difficult to make appropriate and conclusive statements when we have no clarity on our position, without prejudicing our potential future options.

"Graham, Rob and I are working hard to assess our next steps, and I look forward to updating the market when our path becomes clear.

"We thank our remaining shareholders for their patience."

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

**ENDS**

For further information, please visit www.emmersonplc.com, follow us on Twitter (@emmerson_plc), or contact:

Emmerson PLC Graham Clarke / Charles Vaughan	[phone]
Panmure Liberum Limited (Nominated Advisor and Joint Broker) Scott Mathieson / Matthew Hogg	[phone]
Shard Capital (Joint Broker) Damon Heath / Isabella Pierre	[phone]
BlytheRay (Financial PR and IR) Tim Blythe / Megan Ray / Said Izagaren	[phone]

Notes to Editors

Emmerson is focused on advancing the Khemisset project ("Khemisset" or the "Project") in Morocco into a low cost, high margin supplier of potash, and the first primary producer on the African continent. With an initial 19-year life of mine, the development of Khemisset is expected to deliver long-term investment and financial contributions to Morocco including the creation of permanent employment, taxation, and a plethora of ancillary benefits. As a UK-Moroccan partnership, the Company is committed to bringing in significant international investment over the life of the mine.

Morocco is widely recognised as one of the leading phosphate producers globally, ranking third in the world in terms of tonnes produced annually, and the development of this mine is set to consolidate its position as the most important fertiliser producer in Africa. The Project has a large JORC Resource Estimate (2012) of 537Mt @ 9.24% K2O, with significant exploration potential, and is perfectly located to support the expected growth of African fertiliser consumption whilst also being located on the doorstep of European markets. The need to feed the world's rapidly increasing population is driving demand for potash and Khemisset is well placed to benefit from the opportunities this presents. The Feasibility Study released in June 2020 indicated the Project 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 NPV₈ of approximately US$1.4 billion using industry expert Argus' price forecasts.

 

END