Emmerson Plc · LSE:EML
Emmerson — Investor Presentation (November 2019)
27 slides from Emmerson's investor presentation, November 2019
Slide 1: Developing a low capex, high margin potash project in Morocco
Developing a low capex, high margin potash project in Morocco Corporate Presentation November 2019
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: Introduction to Emmerson
INTRODUCTION TO EMMERSON Corporate Presentation Q4 2019 2
Slide 4: Morocco is an attractive investment jurisdiction
MOROCCO IS AN ATTRACTIVE INVESTMENT JURISDICTION “Our recent site visit confirmed the quality of infrastructure in Morocco and the key advantages afforded by the Project’s location…” Phil Swinfen, Analyst, Shard Capital Voted number one overall jurisdiction for mining in Africa in 2018 Favourable fi
Slide 5: Overview: Scoping Study – Nov 2018
Scoping Study – Nov 2018 OVERVIEW • Post tax NPV of US$1.14bn Emmerson PLC (EML.L) has delivered its Scoping Study and and IRR of over 30%1 is well funded with over £2.5m in the bank • Top quartile post tax cash margins of over 50%1 • Top quartile EBITDA margins of nearly 70%1 72% increase in JORC •
Slide 6: Highly experienced team: board and management
HIGHLY EXPERIENCED TEAM BOARD MANAGEMENT Mark Connelly – Non Executive Chairman An internationally experienced financial and commercial Phil Cleggett – Head of Corporate Development executive with 30 years’ experience in the financing and A qualified accountant with ~10 years’ experience in mining a
Slide 7: Morocco: an attractive investment jurisdiction
MOROCCO: AN ATTRACTIVE INVESTMENT JURISDICTION Morocco has been recognised for its supportive Morocco voted number one overall jurisdiction for fiscal regime, stability and geological potential mining in Africa in 2018 Investment Risk Index (higher = better) 1st – Lowest Investment Risk in Africa In
Slide 8: Two key drivers in potash development
TWO KEY DRIVERS IN POTASH DEVELOPMENT 1 Capital Cost to Production Can you make an economic return in a low or “normal” price environment? 2 Location Relative to Customer and End Prices Do you have a competitive advantage over your producing peers? Corporate Presentation Q4 2019 7
Slide 9: One of the lowest capital cost potash projects
ONE OF THE LOWEST CAPITAL COST POTASH PROJECTS “The Scoping Study confirmed that the Project has the potential to be one of the lowest capital cost (and capital intensity), and highest margin potash projects globally.” Phil Swinfen, Analyst, Shard Capital CAPITAL INTENSITY - US$/TONNE PRODUCTION Bet
Slide 10: Access to mineralisation a key to low capex
ACCESS TO MINERALISATION A KEY TO LOW CAPEX Decline Long Section with Lithology Comparison of Costs of Decline or Shaft Access at Various Projects Corporate Presentation Q4 2019 9
Slide 11: Khemisset project cost savings
KHEMISSET PROJECT COST SAVINGS Identified pre-production capital cost savings of over US$1.4 billion1 Over 90% cost savings against peers on key mine access and infrastructure Estimated decline Estimated road Estimated cost of No additional cost costs of US$35m construction cost of US$5.7m (incl. to
Slide 12: Why is location so important
WHY IS LOCATION SO IMPORTANT Nearly 70% of global potash supply is very Saskatchewan remote from end Royalties markets ~US$25/tonne 1,700km by Rail Saskatoon ~US$45/tonne 135km Truck to Nominal Royalties Port US$0.10/tonne US$10/tonne Shipping Vancouver - Brazil ~US$30/tonne Shipping Morocco – Brazi
Slide 13: The Khemisset Scoping Study
The Khemisset Scoping Study 12
Slide 14: Strong progress to date
STRONG PROGRESS TO DATE Emmerson has delivered multiple de-risking milestones since listing Year 2017 2018 2019 2020 Quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Stakeholder Engagement Drilling Surface Geology Digitise Geological Database Maiden Mineral Resource Estimate Metallurgical tes
Slide 15: Outstanding economics
OUTSTANDING ECONOMICS Demonstrates a financially robust project that delivers strong NPVs & cashflows through a range of potash prices US$1.14bn 20 years Post Tax NPV10 29.8%* Initial (using Argus Media forecast IRR Life of Mine prices) Cash margins Total pre-production capital Ave. steady state ann
Slide 16: Scoping Study: key assumptions and results
SCOPING STUDY: KEY ASSUMPTIONS AND RESULTS Key Assumptions and Results NPV (US$m) Sensitivity to Potash Price and Discount Rate Parameter Value MOP CFR Brazil Initial Operating Life 20 years US$300 US$320 US$340 US$360 US$380 US$400 US$420 Discount Rate Annual ROM Extraction Rate 6Mtpa 5.0% 929 1,12
Slide 17: Resource upgrade to extend mine life
RESOURCE UPGRADE TO EXTEND MINE LIFE 72% increase in resource tonnes with approximately 70% in the Indicated category Maiden Mineral Resource Estimate (May 2018) Million Tonnes (potash seam) K2O (%) Indicated Category 0.0 n/a Inferred Category 311.0 10.20 Total (Indicated & Inferred) 311.0 10.20 70%
Slide 18: Mining
MINING Conventional mining is lowest technical risk and most flexible extraction method ‣ Potash to be mined by Conventional Room and Pillar Mining ‣ Solution Mining and Longwall Mining were also evaluated, Room and Pillar selected because: High production rate Multiple working faces Lower upfront c
Slide 19: Processing
PROCESSING Potash Ore Screening/Milling Milled Ore (optional) Simple processing Milled Ore Magnetic Separation Rinneite Fraction Decomposition ‣ Processing via Hot Leaching and KCI Crystallisation Sylvite/Halite Fraction Mother Liquor Slurry ‣ Flotation also evaluated, Crystallisation selected becau
Slide 20: Metallurgical testing confirms process
METALLURGICAL TESTING CONFIRMS PROCESS ‣ Comprehensive Metallurgical Testing program commenced in April 2019 ‣ First Phase testing completed in June 2019 Brine Equilibria Showing Strong FeCl2 Decomposition Result confirm the scoping study flowsheet can produce saleable K60 MOP from Khemisset ores 30
Slide 21: Utilities and infrastructure
UTILITIES AND INFRASTRUCTURE ‣ Short connections to existing roads (1.2km) and electrical infrastructure (5.5km) ‣ Port with existing capacity 150km from site requires only minor upgrades Proposed new mine access road Approximate location of connection points in relation to mine infrastructure area
Slide 22: Bottom quartile all-in-sustaining cost to Brazil
BOTTOM QUARTILE ALL-IN-SUSTAINING COST TO BRAZIL Transport and logistics typically accounts for more than 50% of delivered cost to customer 300 250 200 $US/Tonne 150 100 50 0 Mining Processing Royalties, Sustaining Capital, and S,G&A Freight Source: Argus, November 2018 Corporate Presentation Q4 201
Slide 23: Africa: unrealised potential
Africa has 60% of the AFRICA: UNREALISED POTENTIAL world’s uncultivated arable land and among the world’s A key driver for food security and fertiliser demand lowest fertiliser application rates Moroccan fertiliser producer OCP is pursuing an aggressive African NPK strategy 2014 (group) <25kg/ha 25-
Slide 24: Africa is the future for fertiliser
AFRICA IS THE FUTURE FOR FERTILISER MOP IMPORTS TO MOROCCO 748Kt 500,000 375,000 250,000 125,000 0 2012 2013 2014 2015 2016 2017 2018 Average Global Potash Demand Growth – 2-3% per annum Source: www.oc.gov.ma/DataBase/CommerceExterieur/requete.htm, Company Estimates Corporate Presentation Q4 2019 23
Slide 25: Summary
SUMMARY Well funded with a cash balance of over £2.5 million to execute strategy quickly Potential for low capital cost, Experienced Board and high margin development Management confirmed by Scoping Study Number 1 African Strong potash demand against investment jurisdiction in tightening supply 2018
Slide 26: Contacts
CONTACTS Emmerson PLC Hayden Locke – Executive Director [email protected] Registered Office London Office Phil Cleggett – Corporate Development IOMA House Third Floor Hope Street 47 Charles Street [email protected] Douglas Mayfair Isle of Man IM1 1AP London W1J 5EL Shard Capit
Slide 27: Corporate structure
CORPORATE STRUCTURE 7 25000000 KEY DATA 6 Ticker EML.L 20000000 5 Shares in Issue 686,132,385 Ordinary Shares 15000000 4 Market Cap (undiluted) £24.0 million* 3 Share Price 3.55p* 10000000 2 Ave Volume (6 mths) 1.80 million shares 5000000 1 Ave Volume (3 mths) 2.11 million shares 0 0 *As at 22.11.19