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Emmerson PLC (EML)

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Monday 15 April, 2019

Emmerson PLC

Heads of Agreement Signed for 100% Offtake

RNS Number : 1252W
Emmerson PLC
15 April 2019
 

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

15 April 2019

Heads of Agreement Signed with Global Fertiliser Group covering Offtake for 100% of production from the world class Khemisset Potash Project

Highlights

·   Heads of Agreement signed for up to 800,000 metric tonnes of K60 Muriate of Potash ("MOP") per annum over an initial 5-year period

·   Binding exclusivity period until 30 September 2019 for parties to negotiate commercial terms for binding supply and off-take agreement

·   Counterparty is a leading global fertiliser trading, distribution and marketing company with a significant footprint in the Brazilian market

·   Counterparty has a geographical focus on Brazilian, African and North Western European markets, where Khemisset has strong transport and logistics advantages, further underpinning the Project's forecast industry leading operating margins 

·   Reinforces Khemisset's status as a world class potash project ahead of conversations potential debt financing partners

 

Emmerson Plc ("Emmerson" or "the Company"), the Moroccan focused potash development company, is pleased to announce that it has signed a Heads of Agreement with respect to offtake, sales and marketing for 100% of production from the world class Khemisset Potash Project ("Khemisset" or "the Project").

The Heads of Agreement sets out a commitment for both Emmerson and the counterparty to work towards a long-term sales agreement for 100% of Khemisset's production, focusing on the Brazilian, African and North West European markets.

Once in production, Khemisset would be the closest producing potash mine to each of these key markets and, as a result of this advantageous location, it is expected that Emmerson will be one of the highest margin potash producers in the world.

The recently released Scoping Study (refer RNS 20 November 2018) confirmed Khemisset's potential for sector leading capital intensity and margins, which provided a post-tax NPV10 of US$1.14bn using independent industry expert price forecasts.

The offtake counterparty is one of the world's leading fertiliser trading, distribution and marketing companies. Importantly for Emmerson, it has a significant footprint in the lucrative Brazilian market, including fertiliser blending facilities, which makes the counterparty an ideal long-term partner for the Khemisset Project.

Hayden Locke, CEO of Emmerson, commented:

"Signing a Heads of Agreement is an important step for the Company as we commence early engagement with sales and marketing partners for product from the world class Khemisset Potash Project.

"We believe potash produced in Morocco will be in significant demand for a number of important consuming markets, and this Heads of Agreement reinforces that belief.

"Our partner's footprint in the fast growing Brazilian and more mature North West European markets makes them an ideal partner for Emmerson as we focus on those markets where we would have a strong transport and logistics advantage.

"The benefit of location has been clearly demonstrated in our Scoping Study and we continue to expect Khemisset to be among the highest margin potash projects in the world, generating outstanding returns for our shareholders. 

"Strong sales and marketing partners will be fundamental to supporting our eventual discussions with financing partners and we believe our sales partner will provide significant confidence to all potential lending syndicates for the Project."

 

 

**ENDS**

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

Hayden Locke

Emmerson Plc

Tel: +44 (0) 207 236 1177

Edward McDermott

 



James Biddle

Roland Cornish

Beaumont Cornish Limited

Financial Adviser

 

Tel: +44 (0) 207 628 3396

 

Jeremy King

 

Optiva Securities Limited

Broker

Tel: +44 (0) 3137 1904




Gaby Jenner

Melissa Hancock

St Brides Partners Ltd

Financial PR/IR

Tel: +44 (0) 20 7236 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% K2O 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.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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