27 September 2024

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

Interim Results for the six months ended 30 June 2024 and Q3 update

Emmerson, which is developing the world class Khemisset Potash Project in Morocco ("Khemisset" or the "Project"), is pleased to announce its Interim Results for the six-month period ended 30 June 2024 (the "Period") and an update on its activities during Q3 2024.

Q3 2024 highlights

·    Updated Environmental & Social Impact Assessment (''ESIA'') submitted in Q2 2024, incorporating the optimisations from the Khemisset Multi-mineral Process ("KMP"). Awaiting final examination by the Commission Régionale Unifiée de l'Investissement ("CRUI").

·    Re-evaluation of JORC Resource taking account of the impact of the KMP is underway, targeted to be complete during Q4 2024.

·    Second crop trials completed successfully, with final results pending.

·    Cash balance at 30 June 2024 was US$2.4 million, and US$1.7 million as at the time of this report.  

Environmental approval

As previously announced, in March 2024, the Commission Ministérielle de Pilotage (The "Ministerial Committee") invited the Company to update its ESIA to incorporate the optimisations arising from the KMP changes, which include a significant reduction in water consumption and the elimination of the need to dispose of waste brines concurrently with its positive transformational impact on the Project economics, and to resubmit this to the Centre Regional de l'Investissement ("CRI") for review by the CRUI. In April 2024, the Company completed these updates and resubmitted what it expects to be the final version of the ESIA.

During Q3, the Company continued to engage with the relevant Moroccan authorities to ensure there is acceptance that all technical issues previously raised by the authorities, mainly around preservation of water resources, have now been properly addressed prior to a final examination by the CRUI.

It is now understood that the approval process is reaching its conclusion, and the Company hopes to be able to announce the outcome, which it is confident will be positive, during this quarter.

Crop trials

After the successful completion of the first crop trials, a second round of agronomic trials looking at how effective the KMP products are at providing phosphates to lettuces was completed in September. Final laboratory results are expected in the coming weeks, but visual indications are that the new products perform in line with traditional phosphate sources, and considerably better than controls with no phosphate provided.

These trials are important to confirm the large body of research into struvite and vivianite. First and foremost, farmers require the products to provide phosphates for their crops. However, the KMP products also offer the additional advantages of being multi-nutrient and slow-release, allowing for lower usage rates and counteracting the negative environmental effects of phosphate run-off, which sets them apart as a higher-value product.

Other KMP upsides

Although the KMP enhancements arose from investigations to address brine management, the economic benefits of the new products (struvite and vivianite) have transformed the value of the Project compared with the original design (more than doubling the NPV₈ to US$2.2 billion as announced in February 2024).

This increase was based on the economic contribution of the new products, but the KMP offers further benefits over and above those included in the February 2024 estimates. In particular, the Company has begun work on a revised Resource, as the improvements in recovery of potash and the ability to monetise the other micro-nutrients previously considered waste elements should allow a considerable increase in economically extractable ore. An updated JORC Mineral Resource Estimate is targeted to be announced during Q4 2024.

As well as increasing the size of the Resource (and extending the mine life), the KMP offers the potential to re-visit the mine sequencing, as areas high in magnesium and iron, which were previously considered deleterious elements, could be more profitable than pure potash zones, allowing the mine plan to be fundamentally reworked and improved. This work will follow once the Resource update has been confirmed.

In addition, the KMP process changes will mean that a portion of the salt produced as a by-product will be at industrial grade, which is more valuable than de-icing salt, and commands a higher price. This will provide an additional revenue stream for minimal marginal cost, and will also reduce further the quantity of salt to be disposed on the dry tailings. 

Further value-adding optimisations enabled by the KMP are also being considered, although some of these may form modular enhancements later in the project. The overall impact of the KMP on Khemisset cannot be overstated, from an environmental or economic perspective, and will undoubtedly make the Project more attractive to investors and project financiers.

Resignation of CFO

Jim Wynn, the CFO of the Company, has announced that he has accepted another opportunity elsewhere, and will be leaving Emmerson on 30 September 2024. The company thanks Jim for his contribution since joining in February 2022. The process for identifying a successor will take place once the ESIA approval has been received, as a cost-saving measure.

Jim said: "Although the past couple of years have been frustrating for shareholders and management, I believe that Khemisset, particularly with the optimisations brought about through the KMP, is a unique Project that combines compelling economics with technical innovation, and strong sustainability credentials through contributing to African self-reliance and food security. I am genuinely confident the Project will proceed and remain a committed shareholder. I would like to wish Graham and his team the very best for the future".

Financial review

With the focus on obtaining the ESIA, external consultancy costs have been minimised and fieldwork in the period was limited to specific low-cost workstreams including crop trials for some of the new KMP products, and work related to the filing of patent applications. The loss for the period of US$1.6 million (30 June 2023: US$1.6 million), reflects administration and corporate costs, while capitalised intangible costs amounted to US$0.2 million.

After accounting for net proceeds after costs from the equity placing of US$2.3 million, the net cashflow for the period was US$0.5 million, leaving the cash balance at 30 June 2024 at US$2.4 million (31 December 2023: US$1.9 million). At the time of this report, the Company has cash reserves of US$1.7 million.

Outlook for 2024

For the balance of the year, the Company's focus will remain on obtaining the environmental approval for the Project, as well as advancing the various technical studies, including a Resource update, targeted for announcement during Q4 2024. 

Chief Executive Graham Clarke said: "We have continued to prioritise engagement with the Moroccan authorities towards the granting of the ESIA approval while pursuing technical workstreams to maximise integration of the KMP's benefits into the Project design. We have continued engaging with relevant authorities to ensure acceptance that the technical issues previously raised are well addressed by the optimisations adopted for the project, mainly from the KMP.

"Water is a precious resource in Morocco particularly in the context of droughts that have affected the country over the recent years, and the benefits of the KMP, together with previous improvements including the use of recycled water and the switch to dry stack tailings, underline the Company's commitment to delivering a project with robust environmental and social credentials, thus contributing to the country's efforts in minimising the impact of new projects on water resources.

"We understand that the approval process is reaching its conclusion, and we are hopeful to be able to announce the outcome, which we are confident will be favourable, within this quarter.

"I wanted to say thank you to Jim on behalf of the Board. We are grateful to Jim for all of the work carried out whilst he has served as CFO and wish him all the best in his future endeavours.

"As ever, thank you for your patience, and I look forward to providing further updates as and when appropriate."

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. Updated financial estimates published in February 2024 indicated a net present value of US$2.2 billion, with an internal rate of return of approximately 40%.

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

Condensed Consolidated Statement of Comprehensive Income

for the six months ended 30 June 2024

Condensed Consolidated Statement of Financial Position at 30 June 2024