Emmerson Plc / Ticker: EML / Index: LSE / Sector: Mining

30 September 2021

Emmerson Plc ("Emmerson" or the "Company")

Interim Results for the six-month period to 30 June 2021

Emmerson Plc, the Moroccan focused potash development company, is pleased to announce its interim results for the six-month period ended 30 June 2021.

Chairman's Statement

The Emmerson team set its sights on establishing the first commercial potash mine in Africa, and the activities and deliverables achieved so far this year have ensured that we are well positioned to accomplish this.  We are now making good progress with the financing process for our Khemisset Potash Project in Morocco ('Khemisset' or the 'Project'), which will enable us to capitalise on the highly encouraging demand and pricing fundamentals we see in the market now, and I believe will continue to steer the industry for decades to come.

There is expected to be annual potash demand growth of around 2.5%, which means some 1.5 million tonnes per year of additional potash needing to be produced every year. In context, the entire output from Khemisset would only cover six months of this demand growth. Many mines will need to be brought forward, from brownfield, greenfield and as yet undiscovered projects, to keep pace with demand. Being independent, as we are, means to be able to supply the local markets which are in most need and have the highest pricing as a result. At this point, that market is Brazil, which is growing its demand by about 1 million tonnes per year and currently paying around $700/t for granular potash, as against the consensus long term price of $412/t, which is below the actual price in most markets now. In the medium term that market may well be Africa. But this strong pricing we are seeing gives us confidence that the numbers we published in our 2020 Feasibility Study are at this point looking decidedly conservative. We have a tailwind, and we intend to use it to move our project into production as efficiently as we can.

The period under review was shaped by both operational and corporate developments, including the completion of an AIM admission in April, providing Emmerson with a listing on the world's most successful growth market.  We were also shown strong support from some significant new investors as well as a number of our existing investors, through the raising of £5.5 million which ensures we are well positioned to deliver our additional workstreams in the lead up to the commencement of construction at Khemisset.

Operationally, the team in Morocco produced the Company's Sustainability Summary with a forward-looking view on the development and construction of Khemisset.  This Sustainability Summary was the result of extensive analysis on the potential impacts on people, local communities, and the environment in the different project development workstreams. The highest standards were adopted to reflect on the Company's vision and values, and to ensure the development of Khemisset serves as benchmark for the responsible development of large mining projects in Morocco.

The Sustainability Summary highlighted that the Khemisset Project will not only contribute to the overarching agenda of enriching agricultural soils to provide affordable food for the world's growing population but will have a positive impact on the local area.  The Emmerson team will ensure that material benefits are maximised while mitigating the impact of mining on the environment, both in the construction and production phases.

The Company continues to enjoy constructive relations with the Government of Morocco and its various regulatory bodies overseeing the development of significant projects such as Khemisset.  As shareholders will be aware, the Company received the Mining Licence for Khemisset in February 2021 from the Moroccan Ministry of Energy, Mines and the Environment.  The Company is working towards achieving approval of its Environmental and Social Impact Assessment (ESIA), which has now progressed to its final stage.  Following the recent elections, we are looking forward to continuing our work with the new coalition government and building a strong, mutually beneficial partnership with Morocco over the coming years. I believe that the Khemisset Project can make a valuable contribution to economic growth, local development and job creation in the kingdom.  The development of Khemisset will also help to consolidate the kingdom's emerging position as a hub for fertiliser industry, particularly in the context of Africa.

The various workstreams and deliverables are coming together ahead of securing the ESIA, a strategic investor and project debt finance in order to move forward with construction.  The financing piece is a complex aspect of our current work however we have made very encouraging progress.  Securing funding for a project on this scale is a delicate process, ensuring that the optimal blend of debt and equity is delivered and on the right terms to benefit all existing shareholders.  We benefit from a team which boasts several people with many years of mining finance experience and a deep understanding of financing strategy.

During the period, we further bolstered our team through the appointment of Rupert Joy, an experienced diplomat and former Ambassador & Head of the EU Delegation to Morocco.  Rupert has had a diplomatic career spanning more than 25 years, with seven years' experience as a diplomat in Morocco, as Deputy Head of Mission at the British Embassy in Rabat from 2000-03 and as EU Ambassador and Head of the EU Delegation in Rabat from 2013-17. As EU Ambassador, he worked to build on Europe's multi-faceted strategic partnership with Morocco at a senior level in a wide range of areas, with a strong focus on sustainable development.  Rupert hit the ground running and he has already shown the value of his experience we are confident that he will continue to prove himself invaluable as we move forward in earnest with construction in Morocco.

I would like to take this opportunity to thank our highly skilled and exceptionally committed management team and to my fellow board members for their continued guidance and experience as we approach the next chapter in Emmerson's development.  I would also like to thank our shareholders, both new and old, for their support and I look forward to the coming weeks and months as activity in Morocco intensifies.

James Kelly

Non-executive Chairman

29 September 2021

Condensed Consolidated Statement of Comprehensive Income

for the six month period ended 30 June 2021

Condensed Consolidated Statement of Financial Position
as at 30 June 2021

Condensed Consolidated Statement of Changes in Equity
for the six month period ended 30 June 2021

Condensed Consolidated Statement of Cash Flows
for the six month period ended 30 June 2021

Notes to the Condensed Consolidated Financial Statements

for the six month period ended 30 June 2021

1.        General information

Emmerson Plc (the "Company") is a company incorporated and domiciled in the Isle of Man, whose shares were admitted to the Standard Listing segment of the Main market of the London Stock Exchange on 15 February 2017.

The principal activity of the Group is the exploration, development and exploitation of a potash development project in Morocco.

2.        Basis of preparation

2.1    General

The Condensed Consolidated Financial Statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.  The Condensed Consolidated Financial Statements for the six months ended 30 June 2021 are unaudited and have not been reviewed by the Group's auditor, and do not include all of the information required for full annual financial statements.

They should be read in conjunction with the Company's annual financial statements for the year ended 31 December 2020.  The principal accounting policies applied in the preparation of the Condensed Consolidated Financial Statements are unchanged from those disclosed in those statements. These policies have been consistently applied to each of the periods presented.

The financial information of the Group is presented in UK Sterling, which is also the functional currency of the Company and has been prepared under the historical cost convention. The individual financial statements of each of the Company's wholly owned subsidiaries are prepared in the currency of the primary economic environment in which it operates (its functional currency).

2.2    Basis of consolidation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments at fair value through profit or loss which are measured at fair value in the statement of financial position.

All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions that are recognised in assets, are eliminated in full.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

The subsidiaries' financial statements have been translated in to Pound Sterling in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates. This standard requires that assets and liabilities be translated using the exchange rate at period end, and income, expenses and cash flow items are translated using the rate that approximates the exchange rates at the dates of the transactions (i.e. the average rate for the period). The foreign exchange differences on translation are recognised in other comprehensive income.

2.3    Going concern

The Directors have reviewed the Group's ongoing activities and have a reasonable expectation that the Group has adequate resources to continue operating for the foreseeable future. For this reason, they have adopted the going concern basis in preparing the Interim Financial Statements. The Board continues to monitor the impact of COVID-19 on the ability of the Group to pursue its strategy and will make appropriate changes should they be required.  There is not considered to be any material impacts on the financial position or results of the Group as a result of COVID-19 at this reporting date.

2.4    Future changes in accounting policies

The Directors have reviewed the IFRS standards in issue which are effective for annual accounting periods ending on or after the stated effective date. In their view, none of these standards would have a material impact on the financial reporting of the Group.

2.5    Segment reporting and cyclicality

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.

The Directors consider the Group is engaged in a single segment of business being the exploration activity of potash in one geographical area, being Morocco.

The interim results for the six months ended 30 June 2021 are not necessarily indicative of the results to be expected for the full year ending 31 December 2021. Due to the nature of the entity, the operations are not affected by seasonal variations at this stage.

3.      Administrative fee and other expenses

4.      Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

5.    Intangible assets

The intangible assets consist of capitalised exploration and evaluation expenditure, including the cost of acquiring the mining license and research permits held by the Company's subsidiaries. The potash properties are currently unproved reserves. Once properties have been classified as proven reserves, they will be transferred from intangible assets to tangible assets, and amortised over the life of the area according to the rate of depletion of the economically recoverable costs.

6.   Related party transactions

Directors consultancy fees

Hayden Locke is a Director of the Company and is a director of Benson Capital Limited, which provide consulting services to the Company. During the period, Benson Capital Limited received total fees of £51,000 (year to 31 December 2020: £246,000). The amount outstanding as at period-end is £nil (31 December 2020: £83,500).

Robert Wrixon is a Director of the Company and also provides consulting services to the Company. During the period, Robert Wrixon received fees of £42,000 (year to 31 December 2020: £84,000). The amount outstanding as at period-end is £ nil (31 December 2020: £ nil).

Graham Clarke is a Director of the Company and is a director of GCUK Consulting Limited, which provides consulting services to the Company. During the period, GCUK Consulting Limited received total fees of £50,000 (year to 31 December 2020: £ 170,000). The amount outstanding as at period-end is £nil (2020: £ 20,000l)

Details of directors' remuneration during the period are given in note 3.

Other key management personnel

Phil Cleggett is the only key management personnel other than the Directors.  Fees of £60,000 (year to 31 December 2020: £170,000) were paid during the period to Bremer Consulting Pty Ltd, a company Phil Cleggett controls and the amount outstanding as at period-end is £nil (31 December 2020: £60,000).

7.    Events after the reporting date

There were no other significant subsequent events.

**ENDS**

For further information, please visit www.emmersonplc.com, follow us on Twitter (@emmerson_plc), or contact:

Notes to Editors

Emmerson's primary focus is on developing the Khemisset project ("Khemisset" or the "Project") located in Northern Morocco.  The Project has a large JORC Resource Estimate (2012) of 537Mt @ 9.24% K2O and significant exploration potential with an accelerated development pathway targeting a low capex, high margin mine. Khemisset is perfectly located to capitalise on the expected growth of African fertiliser consumption whilst also being located on the doorstep of European markets. This unique positioning means the Project will receive a premium netback price compared to existing potash producers. The need to feed the world's rapidly increasing population is driving demand for potash and Emmerson is well placed to benefit from the opportunities this presents. The Feasibility Study released in June 2020 indicated Khemisset has the potential to be among the lowest capital cost development stage potash projects in the world and also, as a result of its location, one of the highest margin projects. This delivered outstanding economics including a post-tax NPV10 of approximately US$1.4 billion using industry expert, Argus', price forecasts.