(Alliance News) - Emmerson PLC said Monday it has signed a memorandum of understanding with French renewable energy developer Voltalia SA for providing electricity to the Khemisset potash project in Morocco.
Shares in the potash development firm were up 2.7% at 3.49 pence on Monday.
The memorandum will include both Emmerson and Voltalia examining the potential for electrical supply from renewable sources.
An agreement could lead to the potential reduction of electrical power costs could enhance project economics relative to its scoping study, improving Khemisset's post tax net present value of USD1.14 billion at a 10% discount rate.
In addition, as electricity would be supplied over Morocco's energy transmission grid, Emmerson will not be exposed to operating risks, or additional capital costs.
"We continue to examine various options to optimise the industry leading capital cost Khemisset potash project's potential as we advance it towards full feasibility. Based on early discussions, a renewable electricity contract has the potential to deliver significant cost savings on electricity consumption compared to the assumptions used in the scoping study," said Chief Executive Officer Hayden Locke.
"Given electricity accounts for around a third of Khemisset's cash operating cost, the potential improvement to the project's already outstanding economics, which includes an average life of mine earnings before interest, taxes, depreciation and amortisation of USD236 million per annum, could be extremely meaningful," Locke added.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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Emmerson (EML)