Litigation Funding Secured

Emmerson PLC

02 January 2025

 

Emmerson Plc / Ticker: EML / Index: LSE / Sector: Mining

2 January 2025

Emmerson PLC

("Emmerson" or the "Company")

Litigation Funding Secured

and

Litigation Counsel Confirmed

Emmerson Plc, the Moroccan focused potash development company, is pleased to announce that it has signed a Capital Provision Agreement ("CPA") with a specialist litigation funding firm to provide up to US$11,000,000 in both litigation finance capital and working capital for the Company (the "Funding") and has confirmed Boies Schiller Flexner LLP ("BSF") as its litigation counsel. The Company has also put a Management Incentive Plan into place.

Litigation funding

The Funding shall primarily be used to progress the Company's dispute with the Government of the Kingdom of Morocco under the Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Kingdom of Morocco for the Promotion and Protection of Investments, which entered into force on 14 February 2002, being a Bilateral Investment Treaty (the "BIT").

Emmerson's CPA funding counterparty (the "Funding Party") is one of the world's largest and most successful litigation finance companies and a significant institution within the legal financing industry. The detailed terms of the CPA are confidential but, in summary:

·    Up to US$11,000,000 can be drawn down in tranches, at the Company's request, to satisfy litigation funding requirements and for general working capital purposes;

·    The Funding shall be provided on a non-recourse basis and the Funding Party shall receive no return if the arbitration claim is unsuccessful; and

·    In the case of a successful settlement or award, the return to the Funding Party shall be based upon the greater of a multiple of the final drawn-down amount or a percentage of the final award.

The Company notes that it has obtained litigation funding for its potential arbitration proceedings under the BIT within two months from the original Notification of Dispute, a process that can typically take six to nine months, oftentimes longer. The Company is of the opinion that the Funding will provide the platform to provide the best long-term return for shareholders.

Litigation Counsel

The Company has confirmed the appointment of Boies Schiller Flexner LLP ("BSF") as its litigation counsel. BSF have a highly successful track record in similar BIT arbitration cases, including some recent high-profile awards. The funding is now in place for BSF to commence work in the New Year on our case.

Management Incentive Plan (MIP)

To retain the services of certain Directors and members of the Company's management team who are important to the Company's ongoing management and the progress of the litigation, and who have important historical information and knowledge to contribute towards the litigation, the Company has established a long-term Management Incentive Program (the "MIP"). The retention of the assistance of the Directors and member of the Company's management team for the litigation through the MIP will allow the Company to maintain its compliance with the terms of the CPA.

In line with recent litigation funding cases, the named members of the MIP will be entitled to 6%, in aggregate, of any monies awarded as damages to the Company ("Management Entitlement Amount") through arbitration or any other means, including early settlement.

After the final determination of each participant's entitlement to the Management Entitlement Amount, any remaining balance of the Management Entitlement Amount which has not been distributed to participants will be returned to the Company.

Graham Clarke, Managing Director of Emmerson PLC commented:

"The Company has undertaken a tremendous amount of work and effort in a short period of time to secure substantial financing from a reliable funding partner. This CPA secures the medium-term future of the Company and we can now move forward with BSF as our legal partners to deliver the best possible outcome for the Company and its shareholders. BSF tend to only take on winning cases and their confidence in the case reinforces our confidence in the outcome".

**ENDS**

For further information, please visit www.emmersonplc.com, follow us on Twitter (@emmerson_plc), or contact:  Emmerson Plc Graham Clarke / Hayden Locke [phone] Panmure Liberum Limited (Nominated Adviser and Joint Broker) Scott Mathieson / Will King [phone] Shard Capital Partners LLP (Joint Broker) Damon Heath / Isabella Pierre [phone]

Notes to Editors

Emmerson has been 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 has been working towards significant international investment over the life of the mine.

Morocco is one of the leading phosphate producers globally 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 additional 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. Updated financial estimates published in February 2024 indicated a net present value of US$2.2 billion, with an internal rate of return of approximately 40%.

Market Abuse Regulation (MAR) Disclosure

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.

 

END