Potash development company Emmerson Plc Preliminary Economic Assessment completed on the potential sales of de-icing salt by-product from its 100% owned Khemisset potash project.
Morocco - The internal study showed the potential for salt to be marketed in the East Coast US de-icing market competitively, delivering attractive margins, due to the salt being a waste by-product of potash production, the Project's locational advantages and the outstanding infrastructure in Morocco.
Khemisset is estimated to produce more than 4.6 Mtpa of high-grade salt as a by-product of its potash operations, and through the sale of it as a by-product of conservatively 1 Mtpa into the large USA de-icing salt market, it has the potential to deliver additional nominal post tax NPV10 of up to US$133 million based on historical US de-icing salt prices.
Cash margins from the project would be in the range of nearly 40%.
The post tax NPV10 increases to $266 million assuming 2 Mtpa of salt sales
With an upfront capital requirement of just $12 million including a 30% contingency, this is a great opportunity where the East Coast US market is estimated to be over 10 Mtpa.
The project is strongly value accretive to Khemisset's already outstanding post tax NPV10 of $1.14 billion assuming industry expert potash price forecasts
At this stage, partnership discussions are already underway with suitable groups with deep salt market expertise to unlock value from this additional potential revenue stream.
The next steps include further detailed market studies, product specification reviews and integration to the Khemisset project process design.
Hayden Locke, CEO of Emmerson, comments:
"The PEA shows strong potential for a viable by-product business selling salt from Khemisset into the large US de-icing salt market.”
"The East Coast US de-icing salt market is currently supplied predominantly from Chile, Mexico and Morocco and our analysis shows we have a strong transport and logistics advantage which will allow our salt sales to be competitive into this large market.”
In terms of the Khemisset project itself continues to make rapid progress and is on track to deliver the feasibility study in H1, 2020.