Emmerson PLC / Ticker: EML / Index: AIM / Sector: Mining

21 September 2023

Emmerson PLC ("Emmerson" or the "Company")

Q3 2023 and Financing update

Emmerson, which is developing the world class Khemisset Potash Project in Morocco ("Khemisset" or the "Project"), is pleased to provide an update on activities during Q3 2023 and financing discussions relating to its strategic investors.

Highlights

·  Emmerson expresses its deepest condolences to all those affected by the devastating earthquake of 8 September in Morocco.

·   The earthquake has not directly impacted the Project or Emmerson staff and their families, although further delays to the environmental approval process are possible as the Government focuses on the aftermath and humanitarian relief efforts.

·  Environmental approval is awaiting session of the Commission Ministérielle de Pilotage (''Ministerial Committee'' or the ''Committee'') chaired by the Moroccan Head of Government.

·   The Company's strategic investors, being Global Sustainable Minerals Pte Ltd ("GSM") and Gold Quay Capital Pte Ltd ("GQC"), have confirmed their intention to replace the existing convertible loan note facility (due to expire 30 September 2023) with a more suitable financing support once environmental approval in place, subject to finalisation of terms.

·    Technical workstreams finalising optimisation designs ahead of incorporation into a Bankable Feasibility Study.

Chief Executive Graham Clarke said: "The earthquake in Morocco shocked us all and on behalf of the Company, I would reiterate our expression of condolences and our sympathy for everyone affected. Understandably, relief efforts will dominate government focus in the near term, as we await the Ministerial Committee meeting to approve our environmental permit, but we remain confident of a favourable outcome.

The existing financing facility with our strategic investors was due to expire at the end of the month. Given the long stop date required all permits and funding for construction to be in place, this deadline will not be met. In addition, the facility is now two years old, and various elements of the agreement now need to be revisited. The right time to do this is once the environmental approval is in place, and our strategic investors, who are also our largest shareholders, remain committed to the project, and are working with us to put in place something more appropriate as soon as possible."

Mark Zhou, director of GSM, commented: "We are happy to confirm our commitment to the Khemisset Project as Emmerson's largest shareholders and look forward to negotiating new funding which works for both parties at the appropriate time, in order to move the Project forwards towards construction as quickly as possible."

Earthquake

On Friday 8 September 2023, a magnitude 6.8 earthquake struck Morocco. The epicentre was located in the High Atlas Mountains, approximately 70km south of Marrakech. Emmerson's project and offices are located some distance away and were not affected directly. The Company has expressed its deepest sympathies to the people of Morocco at this difficult time and has made contributions both to the British Moroccan Society's fundraise, and the Moroccan Special Fund for the Management of the Effects of the Earthquake.

Environmental approval

The Company's primary focus during 2023 has been on obtaining the Environmental & Social Impact Assessment (''ESIA'') approval for its Khemisset Project. As previously communicated, the main sensitivities have centred around the potential impact of the Project on regional water resources in the context of climate change and recent droughts, and considerable effort has been undertaken by the Company and the relevant authorities to identify solutions satisfactory to all stakeholders.

In July 2023, the environmental approval for the Project was referred by the Company to the Ministerial Committee to enable the decision to be taken at a national level on the basis that the Project is of strategic significance, and in the context of the sensitivity of water resources in Morocco.

Further to ongoing discussions, the Company remains confident that approval will be forthcoming and is not aware of any significant outstanding issues to be resolved.

The Ministerial Committee was unable to sit ahead of the summer recess and was due to reconvene at a suitable time once government departments returned to work in late August. The precise timing of the Committee meeting remains to be determined, and it is likely that government resources are prioritised in the coming weeks on humanitarian relief and rehabilitation efforts following the recent earthquake.

Strategic Investor

In November 2021, the Company signed a financing agreement with Global Sustainable Minerals Pte Ltd ("GSM") and Gold Quay Capital Pte Ltd ("GQC") (together the "Strategic Investors") for U$5.8 million of equity at 6 pence and up to US$40 million of Convertible Loan Notes ("CLNs") at a conversion price of 8.2 pence. The original CLN agreement had a long stop date of 30 September 2022 (the "Long Stop Date"). In September 2022, this facility was extended with substantially the same terms for a year until 30 September 2023 (the "Extended Long Stop Date"), with a further US$6 million of equity subscribed by GSM, also at 6 pence.

Drawdown of the funds under the Convertible Loan Notes is subject to satisfaction of conditions precedent by the Long Stop Date, including inter alia, (i) the Company obtaining all requisite Government licences and approvals for the construction of the Project; and (ii) the Company having signed definitive agreements and satisfied all conditions precedent for the drawdown of all project finance (debt, equity and other components) for the funding of the Project. As these conditions precedent and others (see 10 November 2021 announcement for full details) will not be satisfied by the Extended Long Stop Date, and will not be capable of being fully satisfied in the near term, the Company and the Strategic Investors, have agreed that the financing commitment will lapse on the Extended Long Stop Date.

However, the Strategic Investors, who are the Company's largest shareholders with a combined interest of 15.5%, remain supportive and have confirmed their intention to engage with the Company in relation to a cornerstone contribution to the Project's construction financing requirements. It is the preference of the Company and the Strategic Investors to revisit the form of this financing support once the timing of the environmental approval is clear and the permit received.

Technical workstreams

Basic Engineering for the Khemisset project is now almost complete, with final designs and reports remaining in certain areas including the recent design optimisations in relation to water in-take and tailings management. Once environmental approval has been obtained, the Company will complete any remaining optimisation work, and look to provide updated indicative financials for the Project incorporating any new design elements. Thereafter, work will begin on a Bankable Feasibility Study ("BFS"), which will be based on the 2020 Feasibility Study, updated to bankable level in all areas, and incorporating design changes, an updated mine plan, and revised pricing assumptions.

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

**ENDS**

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

Notes to Editors

Emmerson is focused on advancing the Khemisset project ("Khemisset" or the "Project") in Morocco into a low cost, high margin supplier of potash, and the first primary producer on the African continent. With an initial 19-year life of mine, the development of Khemisset is expected to deliver long-term investment and financial contributions to Morocco including the creation of permanent employment, taxation, and a plethora of ancillary benefits. As a UK-Moroccan partnership, the Company is committed to bringing in significant international investment over the life of the mine.

Morocco is widely recognised as one of the leading phosphate producers globally, ranking third in the world in terms of tonnes produced annually, and the development of this mine is set to consolidate its position as the most important fertiliser producer in Africa. The Project has a large JORC Resource Estimate (2012) of 537Mt @ 9.24% K2O, with significant exploration potential, and is perfectly located to support the expected growth of African fertiliser consumption whilst also being located on the doorstep of European markets. The need to feed the world's rapidly increasing population is driving demand for potash and Khemisset is well placed to benefit from the opportunities this presents. The Feasibility Study released in June 2020 indicated the Project 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 NPV₈ of approximately US$1.4 billion using industry expert Argus' price forecasts.