LONDON (Alliance News) - Emmerson PLC on Monday said it has received a formal indication of substantial debt financing, USD230 million, for its Khemisset potash project in Morocco.
Shares in Emmerson, which is focused on developing Khemisset, were up 5.3% at 4.42 pence in morning trade in London.
Assuming standard terms and conditions for project finance, Khemisset has a feasible debt capacity of up to USD230 million, as indicated by an undisclosed "major European commercial bank". This potential project finance debt would be used to construct the project.
The funds would likely be provided by a syndicate of major commercial banks and export credit agencies, with debt sizing based on a pricing assumption of a USD235 per tonne of muriate of potash price for the life of the project.
Emmerson sees this as "very conservative", given that USD235 per tonne is a 35% discount to current spot prices and said there is "strong potential" to raise debt capacity if customer floor prices above that base price are negotiated.
Emmerson Chief Executive Hayden Locke said: "To be approached by a major commercial bank with an early indication of debt financing capacity of such significant size, despite using very low potash price assumptions, is a huge endorsement of the economic strength of the project."
Locke added: "We continue to engage in early stage discussions with a number of significant strategic and financing partners with the capacity to provide both debt and equity for Khemisset Project, and the indication of significant debt support will enhance these discussions."
Emmerson (EML)