Emmerson Plc · LSE:EML
Emmerson — Investor Presentation (September 2018)
26 slides from Emmerson's investor presentation, September 2018
Slide 1: Targeting the development of a low capex, high margin potash project
Targeting the development of a low capex, high margin potash project September 2018
Slide 2: Disclaimer
Disclaimer This presentation (“Presentation”) is being provided to you (the “Recipient”) by Emmerson PLC (the “Company”) for information purposes only and does not constitute or form part of, and should not be construed as, an offer or invitation to sell or any solicitation of any offer to purchase
Slide 3: Why Do We Like Potash?
Why Do We Like Potash? Very strong, positive agricultural investment drivers remain intact The world will need Estimated growth in the Middle 76% 2 to produce 70% 1 Class of from 2015 to 2030 more food by 2050 to feed its leading to higher calorie diets and growing population increasing yield demand
Slide 4: Only Two Things Matter in Potash Development
Only Two Things Matter in Potash Development 1 Capital Cost to Production Can you make an economic return in a low or “normal” price environment? 2 Location Relative to Customer and End Prices Do you have a competitive advantage over your producing peers? Corporate Presentation Q3 2018 3
Slide 5: Bethune – Why was it the First Greenfields Potash Mine in c. 50yrs?
Bethune – Why was it the First Greenfields ` Potash Mine in c. 50yrs? Total Capital Expenditure: US$4.1 billion At today’s Phase 1 Production: 2Mpta of K60 MOP prices this Capital Intensity: mine US$2,050 per tonne MOP would not CFR Brazil MOP Price when construction commenced: be built US$550 per t
Slide 6: Barrier to Entry: Capital Intensity Iron Ore
Barrier to Entry: Capital Intensity Iron Ore Pilbara mine development options 120 US$/t Installed capital intensity Iron Ore Price: US$60/tonne 90 Average ratio of capital Koodaideri option intensity to commodity value of around 1:1 for Greenfields 60 Pilbara DSO Projects under construction 30 FMG E
Slide 7: Barrier to Entry: Capital Intensity Coal
Barrier to Entry: Capital Intensity Coal Recent Global Underground Longwall Capital Intensities Tunnel Ridge 7.5 Mtpa Met coal price: US$150-180/tonne Average White Oak No.1 8.5 Mtpa Narrabri 6.0 Mtpa Lublin Coal Project 7.7 Mtpa Average ratio of capital intensity to New Bailey 5.5 Mtpa commodity va
Slide 8: Barrier to Entry: Capital Intensity Potash
Barrier to Entry: Capital Intensity Potash Capital Intensity - US$/tonne production Bethune Jansen Brazil CFR potash Hatch Estimate for Canada price: US$330/tonne Volgakaliy Rio Colorado Average ratio of capital Usolskiy Mengo intensity to commodity Garlyk value of over 3:1 Muskowekwan Autazes Sinto
Slide 9: Why is Location so Important?
Why is Location so Important? Royalties, transport and logistics make up 60% to 70% of Canadian delivered cost to Brazil Nearly 70% of global potash supply is very Saskatchewan remote from end Royalties markets US$20-30/tonne 1,700km by Rail Saskatoon US$40-45/tonne 90km Truck to Port Nominal Royalt
Slide 10: An introduction to Emmerson
An introduction to Emmerson 9
Slide 11: Overview
Overview Emmerson PLC (EML.L) listed on the London Stock Exchange in June 2018 having raised £6 million via a significantly oversubscribed placing London Listed Large JORC resource Directors targeting Moroccan Potash and significant exploration accelerated development Development potential pathway w
Slide 12: The Khemisset potash project
The Khemisset potash project 11
Slide 13: A Large Resource with Strong Growth Potential
A Large Resource with Strong Growth Potential JORC Exploration Target* Tonnage Range Grade Range (Mt) (K2O %) 264 - 616 5.0 - 14.0 Note: The potential quantity and grade of the Exploration Target expressed in this release is conceptual in nature, there has been insufficient exploration to estimate a
Slide 14: Location and Infrastructure Drive Expected Returns
Location and Infrastructure Drive Expected Returns Khemisset has key attributes required to be a low capex, high margin potash mine Capital Cost Capital Drivers Cost Drivers Margin Drivers Margin Drivers Proximity to Shallow, starting premium priced from 450m end markets No Close to Export Unconstra
Slide 15: Access to Mineralisation a Key to Low Capex
Access to Mineralisation a Key to Low Capex US$2.6bn5 Cost of Decline or Shaft Access at Various Projects US$1.7bn4 US$327m3 US$175m2 US$22m1 Average Saskatchewan 350m 300m 380m 1,000m 1,000m 2 Declines 2 Shafts 2 Shafts 2 Shafts 2 Shafts 1) Highfield DFS 30 Mar 2015 2) Kore Potash NI43-101 17 Septe
Slide 16: Access to Infrastructure a Key to Low Capex
Access to Infrastructure a Key to Low Capex Two potential export ports, one within 90km by highway; close to rail and grid power Well established grid electricity network Extensive road and rail networks near project site Close to export ports meaning no need for expensive rail spurs Close to OCP’s
Slide 17: Project Location Fundamental to Margins
Project Location Fundamental to Margins Located in northern Morocco ~90km from the capital, Rabat Within 90km of planned bulk port of Kenitra Atlantique & 150km from Mohammedia Close to significant regional town of Khemisset Supportive Moroccan government Established infrastructure, including a netw
Slide 18: Premium Netbacks vs. Peers due to Location
Premium Netbacks vs. Peers due to Location Morocco favourably located to service four key markets for MOP in the Atlantic corridor including Africa Location relative to its target markets will deliver a premium netback price versus peers CFR NW Europe FOB US$330/tonne Vancouver US$240/tonne FOB NOLA
Slide 19: Africa: Unrealised Potential
Africa has 60% of the Africa: Unrealised Potential world’s uncultivated arable land and A key driver for food security and fertiliser demand among the world’s lowest fertiliser application rates Moroccan fertiliser producer OCP is pursuing an aggressive African NPK strategy 2014 (group) <25kg/ha 25-
Slide 20: Khemisset Project Near-Term Newsflow
Khemisset Project Near-Term Newsflow Significant progress made on technical studies ahead of Scoping Study in Q1 2019 Workstream Announcement Timing 1. Decline Costs and Design Mid September 2. Road construction to connect plant site to main Early October motorway infrastructure 3. Electrical infras
Slide 21: Morocco: An Attractive Investment Jurisdiction
Morocco: An Attractive Investment Jurisdiction Morocco has been recognised for its supportive fiscal regime, stability and geological potential Morocco voted number one overall Investment Risk Index (higher = better) jurisdiction for mining in Africa in 2018 India China 1st – Lowest Investment Risk
Slide 22: Summary
Summary Exploration risk mitigated Experienced Board and Large JORC compliant Management resource Number 1 African Strong potash demand investment jurisdiction against rebalancing supply in 2015 Potential for low capital Defined development path cost, high margin with longer term investment developm
Slide 23: Contacts
Contacts Emmerson PLC Hayden Locke – Executive Director [email protected] Registered Office London Office Beaumont Cornish Limited IOMA House Third Floor Hope Street 47 Charles Street James Biddle/Roland Cornish Douglas Mayfair Financial Adviser Isle of Man IM1 1AP London W1J 5EL +44 20 7
Slide 24: Appendix I: Key Data
Appendix I: Key Data KEY DATA * Ticker EML.L Shares in Issue 626,132,385 Ordinary Shares Market Cap £18.78 million Share Price 2.95p *As at 04.09.18 KEY SHAREHOLDERS Good Spirit International Ltd1 7.06% Bring on Retirement Ltd 6.59% A.N Technology Beheer BV 5.10% 1. Good Spirit International Ltd hol
Slide 25: Appendix II: Strong Demand
Appendix II: Strong Demand Demand for potassium is expected to be more robust than other key macronutrients especially in developing markets where the usage ratio of nitrogen to potassium is significantly higher Russia 1.5 China 32.9 0.6 0.6 Western Europe 11.4 N P K 2.6 3.0 United States 11.8 India
Slide 26: Appendix III: Tightly Managed Potash Supply
Appendix III: Tightly Managed Potash Supply Approximately 7 Million Tonnes of Capacity Expected to Be Closed by 2020* Announced Potash Mine Closures (2016-2020) 2.5 Million Tonnes KCI – Nameplate Capacity Indefinite Suspension 2 Product Conversion** Ore Depletion 1.5 1 0.5 0 URKA (Bereznikl 2)*** PO