Emmerson gets positive reaction to phased approach to development of Khemisset potash project

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Emmerson PLC (LON:EML) has completed a concept study to examine the potential to develop its Khemisset potash project in Morocco using a four-phased approach.

The company said the phased approach will reduce upfront capital costs and execution risk.

The idea is to start with a smaller scale start-up operation producing muriate of potash (MOP), to be followed by a series of expansion phases to increase the level of MOP produced while adding in the production of de-icing salt in increasing quantities as well as premium potash product, sulphate of potash (SOP).

The estimated upfront capital expenditure of the first phase is US$287mln.

Emmerson told investors that subsequent phases through to full production would likely be financed from internal cash flows.

In full production, the Khemisset Project could produce 800,000 tonnes per annum (TPA) of MOP, 240,000 TPA of SOP and 4mln TPA of de-icing salt, resulting in annual underlying earnings (EBITDA) in the first year of full production of US$491mln. This production rate is a significant increase to that envisaged in the feasibility study published in June of last year. Emmerson believes the increase is justified given the scale and quality of the Khemisset orebody.

“This work demonstrates that the project has the flexibility to be developed in phases, whilst further proving the world-class nature of Khemisset. With significant expansion potential that adds huge value to the project, we are now confident that we could develop Khemisset using a staged approach potentially reducing upfront capital costs and equity requirements from the market and, therefore, dilution to our existing shareholders as we grow to our full potential,” said Graham Clarke, the chief executive officer of Emmerson.

“2021 continues to be a pivotal year for Emmerson as we move forward in the development of what is to become the first large scale potash mine in Africa,” he added.

Shares in Emmerson were up 6.0% at 6.15p in early deals.

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