Emmerson inches closer to building Morocco potash project

The AIM-traded firm, which remains pre-revenue, said discussions around the environmental permit to establish optimum water management routes ahead of final approval were ongoing.

Enhanced designs, incorporated in 2022, included sourcing water from the Khemisset wastewater treatment plant, rather than reservoirs.

The board said the selection of dry stacking for tailings had also been made, which would be a more “environmentally robust” solution.

Pre-construction technical workstreams, including basic engineering, had seen “significant progress” during 2022 and the first quarter of 2023, with most of those workstreams now largely complete.

In addition, a syndicate of international and Moroccan banks had been appointed as initial mandated lead arrangers during the first quarter, to co-ordinate and fund debt financing facilities for the development of Khemisset.

Emmerson noted that potash prices remained “well above” long-term averages, with a long-term outlook that remained attractive.

“A significant amount of work was completed during 2022 and in the first quarter of 2023, and we move closer to obtaining the environmental approval for our project,” said chief executive officer Graham Clarke.

“Our efforts to finalise the remaining outstanding items with the relevant authorities in Morocco ahead of the granting of our environmental impact assessment continue to be rewarded with constructive meetings and encouragement from the various agencies involved.

“I had hoped to be in position to provide a definitive update on this process, however the finer technical details of the water management proposals, in particular our use of recycled water from the Khemisset wastewater treatment plant, and our brines and dry tailings solutions, are awaiting final approvals from the environmental and water agencies.”

Clarke said it remained Emmerson’s “absolute priority” to finalise that as quickly as possible, in conjunction with the Moroccan authorities, with the objective of moving into construction this year.

“The company achieved a key milestone during the period in the form of the appointment of a syndicate of international and Moroccan banks to act as mandated lead arrangers, to co-ordinate and fund debt financing facilities for Khemisset.

“This is a huge step for Emmerson, and one that provides a clear and tangible route for us to deliver on the requisite financing for this large and strategically important asset.”

Securing institutions including ING Bank, Banque Centrale Populaire and Bank of Africa, together with UK Export Finance, which would lead an Export Credit Agency tranche of $230m, was described by Graham Clarke as a “significant endorsement” of the project and its future earnings potential.

“I believe that this is also a clear signal to the market and our various stakeholders in Morocco, that ours is a project with the commercial clout and operational robustness to merit being fast-tracked into production.”

At 1411 BST, shares in Emmerson were down 1.76% at 4.47p.

Reporting by Josh White for Sharecast.com.