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Morocco-focused potash developer, Emmerson, is advancing multiple workstreams at its 100%-owned Khemisset potash project in Northern Morocco, to further de-risk the project as it works towards its delivery.

Read more: Emmerson raises £1.72 million for Khemisset potash project

The ongoing workstreams are aimed at provide confidence in the ongoing project finance and due diligence processes. Theseinclude the permitting process, which is on track with the main permits targeted to be in place in H1 2021; investigation of options for staged development to reduce upfront capital costs and provide financing flexibility; and the engagement with potential strategic partners, debt providers and anchor investors, which is proceeding well.

The Moroccan mining ministry and other relevant authorities are proving to be helpful in dealing with the permitting process, providing confidence that Emmerson will successfully achieve the target of having both the environmental and mining permits in place during H1 2021.

“This is now a pivotal time for Emmerson as we continue to make excellent progress with the delivery of the Khemisset project and move closer to construction.  The team continue to add value and the ongoing workstreams shall enhance what is already a world class project,” says Emmerson CEO Graham Clarke.
 

Workstreams that have commenced using the existing funds include geological work that will prepare for and finalise the scope of general site investigation and de-risking of the declines, a further seismic survey and additional drilling to further prove out the early mining blocks. Ventilation modelling, cuttability testing and a technical review of the mine plan are being undertaken and further process work is also underway. Where necessary, independent experts have been engaged.

Moreover, a detailed risk analysis has been completed to identify the areas that need further work to mitigate the risks and prepare the project for funding due diligence. This work is now being completed and guides the priorities for expenditure – using existing funds to maximise impact and to be fully prepared for a high level of due diligence from funding partners.


Development options

Work is currently being done to confirm the opportunities for phased development of the project which will present an advantage in financing talks. The options being assessed have the potential to materially reduce the upfront capital cost with the flexibility around potentially phased development meaning financing can be considered at different levels.  Furthermore, because the valuable product off-take has not yet been allocated, in a potash market dominated by a handful of majors, this independence of supply is a major attraction to various potential partners.

 
Growth options

Emmerson is engaging with external consultants to further investigate the potential for producing SOP (potassium sulphate). Work is ongoing towards delivering a preliminary feasibility study (PFS) to outline the economics of this alternative and confirm the potential for significant value to be added to the project. The scoping study on the SOP project indicated a post-tax NPV of US$411 million with average post tax-free cash flow of $70 million per year.

Moreover, the strategy is still in place for marketing the de-icing salt, which is a by-product of mining the potash.  The target market for this salt is the USA, which is a large consumer. This additional income stream will effectively reduce the cash cost of producing the potash, so it is an important aspect of the project when in production. The company is continuing to investigate and develop this significant opportunity for adding value to the project.

The feasibility study assumed that 1 Mt of de-icing salt would be sold with this element of the project having a post-tax NPV of up to $133 million. The project can potentially produce up to 4.5 Mt of salt per annum leaving considerable scope for an increase in the value generated by the sales of salt.

In terms of expanding the resource, a mining consultant has been engaged to investigate an expansion of the mineable potash resource.  The aim of this is to secure a much longer mine plan, rather than an increase in the production rate, which would be helpful for all stakeholders in the medium and long term.