Heads of Agreement Signed with Global Fertiliser Group covering Offtake for 100% of production from the world class Khemisset Potash Project
· Heads of Agreement signed for up to 800,000 metric tonnes of K60 Muriate of Potash (“MOP”) per annum over an initial 5-year period
· Binding exclusivity period until 30 September 2019 for parties to negotiate commercial terms for binding supply and off-take agreement
· Counterparty is a leading global fertiliser trading, distribution and marketing company with a significant footprint in the Brazilian market
· Counterparty has a geographical focus on Brazilian, African and North Western European markets, where Khemisset has strong transport and logistics advantages, further underpinning the Project’s forecast industry leading operating margins
· Reinforces Khemisset’s status as a world class potash project ahead of conversations potential debt financing partners
Emmerson Plc (“Emmerson” or “the Company”), the Moroccan focused potash development company, is pleased to announce that it has signed a Heads of Agreement with respect to offtake, sales and marketing for 100% of production from the world class Khemisset Potash Project (“Khemisset” or “the Project”).
The Heads of Agreement sets out a commitment for both Emmerson and the counterparty to work towards a long-term sales agreement for 100% of Khemisset’s production, focusing on the Brazilian, African and North West European markets.
Once in production, Khemisset would be the closest producing potash mine to each of these key markets and, as a result of this advantageous location, it is expected that Emmerson will be one of the highest margin potash producers in the world.
The recently released Scoping Study (refer RNS 20 November 2018) confirmed Khemisset’s potential for sector leading capital intensity and margins, which provided a post-tax NPV10 of US$1.14bn using independent industry expert price forecasts.
The offtake counterparty is one of the world’s leading fertiliser trading, distribution and marketing companies. Importantly for Emmerson, it has a significant footprint in the lucrative Brazilian market, including fertiliser blending facilities, which makes the counterparty an ideal long-term partner for the Khemisset Project.
Hayden Locke, CEO of Emmerson, commented:
“Signing a Heads of Agreement is an important step for the Company as we commence early engagement with sales and marketing partners for product from the world class Khemisset Potash Project.
“We believe potash produced in Morocco will be in significant demand for a number of important consuming markets, and this Heads of Agreement reinforces that belief.
“Our partner’s footprint in the fast growing Brazilian and more mature North West European markets makes them an ideal partner for Emmerson as we focus on those markets where we would have a strong transport and logistics advantage.
“The benefit of location has been clearly demonstrated in our Scoping Study and we continue to expect Khemisset to be among the highest margin potash projects in the world, generating outstanding returns for our shareholders.
“Strong sales and marketing partners will be fundamental to supporting our eventual discussions with financing partners and we believe our sales partner will provide significant confidence to all potential lending syndicates for the Project.”
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