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Emmerson

LSE-listed resources company developing the low-cost potash Khemisset Project in Northern Morocco

(LON:EML)

Attractive project Economics

  • Post-tax NPV8 of US$1.4bn and IRR of 38.5% over initial 19-year mine life

  • Peak production of 810ktpa K60 MOP and 1mtpa de-icing salt, average annual production of 735ktpa and 1mpta respectively

  • Pre-production capex of US$387m including contingency

    • Additional US$24m capital cost for salt plant designed to produce de-icing specification salt for sale into the east coast US

    • Bottom quartile projected all-in-sustaining delivered cost to target markets in Brazil, NW Europe, Morocco and South Africa

  • Khemisset capital intensity forecast to stand at US$478/tonne compared to global peer average of US$1,142/tonne

  • Project lithology makes Khemisset suitable to an access decline to 500m rather than a deep shaft through aquifer units which is frequently the reason for high potash development costs.

Share Price

Geographic Transport Advantages

  • Location advantage of Khemisset is worth over US$80/tonne in delivered cost to Brazil

  • Significant unrealized potential in Africa which has over 60% of the world’s uncultivated arable land and among the world’s lowest fertilizer application rates

    • MOP imports to Morocco grew 120% between 2012 and 2018

    • Average global potash demand growth at 2-3% p.a.

Supportive Government in Stable Jurisdiction

  • Project is located roughly 90km from Morocco’s capital, Rabat, and planned bulk port of Kenitra Atlantique, and 150km from port of Mohammedia

  • Key infrastructure including four lane A2 toll road and 2x 225KV powerlines already in place – produces a US$1.2bn pre-production capital cost relative to average Canadian potash mine development

  • Environmental and social impact assessment currently underway with no key issues currently identified

  • Highly supportive mining jurisdiction with nominal royalties (<0.1%), 5-year tax holiday for new mining projects and 50% reduction in income tax for exported projects.

  • The Moroccan Government is supportive of the mining industry and was ranked as the 2nd most attractive jurisdiction in MENA in 2018 by BMI Research Group (Fitch).

Reserves & Resources

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