Shares in Emmerson PLC (AIM:EML) were up 14% in afternoon trade after the mine developer landed US$46.75mln of strategic investment from Singapore.
The company called it a “major endorsement” of its Khemisset potash asset in northern Morocco.
“We really are pleased with where we’ve got to,” said Graham Clarke, the company’s chief executive in an interview with Proactive’s Katie Pilbeam. “It really is a significant step forward for the project.”
Global Sustainable Minerals (GSM) is taking a direct stake in the business, acquiring new shares at an 8% premium to the 30-day average price.
It is also providing a US$40mln loan convertible into equity at an 8.2p a share, or a 48% premium to the average price over the last month.
Importantly, the convertible loan notes allow Emmerson ‘further discussions’ with potential funders of Khemisset, including banks, sovereign wealth funds and royalty streaming providers.
“A major investment, at a premium to our current valuation, and long-term strategic commitment by an investment group of this calibre, is a major endorsement of the Khemisset Project,” chief executive Graham Clarke.
“We have already formed a strong partnership with the investors who share our vision of creating a new, independent, and highly profitable and environmentally sustainable potash company. We look forward to working closely with them to achieve our shared vision.”
The company expects to invest well over US$500mln over the project’s initial 19-year life of mine, while the pre-production capital expenditure is put at US$387mln.
Significantly, that latter figure marks the project among the lowest-cost operations in the fertiliser space and puts it at less than half of the global peer average for capital intensity.
A feasibility study valued Khemisset at US$1.4bn on a post-tax net present value basis giving an estimated internal rate of return of 38.5% over an initial 19-year mine life.
This initial mine life is based on a mine plan that so far addresses only 43% of the total mineral resource, which comprises a total of 537mln tonnes with an average grade of 9.24% K2O.
GSM is described as a Singapore domiciled investment vehicle backed by a significant south-east Asian investor.
Emmerson shares, up 17% in the last six months, were changing hands for 6.5p each, valuing the business at GBP54mln.
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