Emmerson confident in progress at potash project

Morocco-focussed potash developer Emmerson updated the market on progress in the fourth quarter of 2022 on Monday, reporting that discussions with authorities on its environmental permit had moved “closer towards approval”.

The AIM-traded firm said the focus in those talks was on the management of water.

Other technical workstreams, focussed on basic engineering, had also progressed, and were now said to be near completion as well.

The company signed offtake memoranda of understanding in November, while noting “strong expressions of interest” from debt, equity financiers and potential strategic partners.

Potash prices fell back in the quarter from historic peaks, but remained “well above” long-term averages, the board said.

Emmerson had also appointed Liberum Capital as its nominated adviser.

“At the end of the third quarter we announced that we had renewed our strategic investment for a further 12 months, and had strengthened our balance sheet with the raising of a further $6.1m, which will fund our planned activities in 2023 ahead of construction,” said chief executive officer Graham Clarke.

“During the fourth quarter, a considerable amount of work went into progressing discussions with regard to the environmental approval of the Khemisset project, for which I am grateful to my team and the Moroccan authorities.

“A number of important issues that had held up progress have been resolved, and discussions have moved onto the specifics of the project's water management, which is a key area of concern in Morocco following low rainfall in recent years.”

Clarke said the company’s proposals, including specific revisions, were “robust”, adding that he was “cautiously optimistic” they would be accepted, although the timing of approvals was in the hands of authorities.

“We appreciate the patience of our shareholders and are committed to doing everything that is needed to get this over the line.

“Work in other areas has continued - our technical workstreams, which of course include key elements relevant to water management such as sourcing water and tailings facilities, are now nearing completion, and we were also able to sign memoranda of understanding for around two-thirds of our potash production on a take-or-pay basis, demonstrating the strength of demand for potash.”

Discussions with financiers were continuing, Graham Clarke added, with the company set to provide updates “at the appropriate times”, although the environmental approvals would unlock progress, particularly on the equity side.

“I am confident we will be able to provide some substantive updates over the course of the first quarter, and that 2023 will be a transformative year for Emmerson.”

At 1233 GMT, shares in Emmerson were down 2.56% at 5.7p.

Reporting by Josh White for Sharecast.com.