Emmerson Secures Funding to Accelerate Pre-Construction Activities in Khemisset

Potash developer Emmerson has secured a strategic investment of up to $ 46.75 million from a group of investors to support the development of the Khemisset potash project in Morocco.

The main investor is Global Sustainable Minerals (GSM), an investment vehicle based in Singapore and backed by a major investor from South East Asia.

The investment is structured in two tranches, comprising an immediate direct equity investment of $ 6.75 million in exchange for 81.82 million Emmerson shares at 6 pence each – an 8% premium over the weighted average price. based on volume (VWAP) over 30 days, depending on the existing authority to issue shares.

It will also include a subscription of up to $ 40 million of convertible loan notes, principal and interest, with a conversion price of 8.2 pence each, a 48% premium over the 30-day VWAP.

The convertible loan notes are designed to contribute directly to the financing of the construction of Khemisset and are accessible by Emmerson once the overall financing package for the project is in place.

The transaction also includes the granting of 82.39 million warrants on a pro rata basis to subscribers of convertible bonds, each warrant having a term of 12 months and an exercise price of 8.2p each.

When converting the convertible bonds, strategic investors, including GSM, will hold up to a maximum of 29.9% of Emmerson.

The $ 6.75 million equity investment allows Emmerson to ramp up pre-construction activities at Khemisset.

In turn, this allows Emmerson to enter the execution phase of discussions on project financing for debt to support the development of the project with the goal of closing in mid-2022, and immediately starting the design. and basic project engineering to prepare to begin full construction during 2022.

Convertible loan notes also allow Emmerson to advance discussions with other finance providers, including project finance banks, sovereign wealth funds, and royalty and streaming providers, as he seeks the best. global financing solution for the project.

CEO of Emmerson Graham Clarke says a major investment, above Emmerson’s current valuation, and long-term strategic commitment by an investment group of the caliber of GSM, is a major endorsement of the Khemisset project.

“We have already formed a strong partnership with investors, who share our vision of creating a new independent, highly profitable and environmentally sustainable potash business.

“The entire Emmerson team and I have worked tirelessly, through an extremely rigorous due diligence process, for several months, to secure this strategic investment. It’s a transformational investment for Emmerson, and it’s a major step in unlocking the full potential value of Khemisset, ”he said.

In addition, Clarke says the Khemisset project will be important to Morocco and bring substantial social and economic benefits to the Khemisset region.

GSM manager Mark Zhou says the Khemisset project is clearly a star in potash development.

“We have been very impressed with the technical work done by Graham and his team to date and the detailed execution plan they have presented to us, which forms the basis of this significant investment. “

Clarke adds that Emmerson expects to invest well over $ 500 million over the initial 19-year life of the project, creating more than 2,000 direct and indirect jobs and establishing a beneficial long-term partnership with Morocco.

Meanwhile, he notes that the potash markets have strengthened considerably since Emmerson released his feasibility study, with prices in Brazil currently above $ 800 / t, which he says is actually the doubles the basic assumptions of previous Emmerson studies.

“The strength of potash is clearly improving its already exceptional economy and, using current spot price assumptions, it would increase our after-tax net present value from a very respectable $ 1.4 billion to $ 3.9 billion.” dollars; [while the] internal rate of return [is] more than 85.4%; while the average after-tax mine life increases to $ 558 million per year for an initial mine life of 19 years, ”says Clarke.

Going forward, he says Emmerson is focusing his attention on getting the project into production as quickly as possible. “Our advisors are well advanced in their engagement with many potential banking partners, and we will move to the bank mandate as soon as possible.

“We have also engaged with our established engineering partners and will begin the basic design of key project components while preparing work packages for eventual tender with our engineering, procurement and procurement management. construction.

the partners. We have already made substantial progress in prequalifying groups that will eventually partner with us to build Khemisset, ”concludes Clarke.

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