Adam Davidson, CEO of Trident Royalties, discusses offtake milestones and catalysts to boost FY24. Watch the video here.
Meeting yesterday, ref Aghmir post.
"In its third session, the National Investment Committee approved 42 projects (34 draft agreements and 8 annexes agreements), which will be completed by the private sector with a total value of 7.4 billion dirhams, which will create 16,200 jobs, including 5,900 direct jobs and 10,300 indirect jobs.
The private sector's investment of 60% of the value of approved investment projects concretely reflects that the new investment charter mainly stimulates national enterprises.
In terms of job opportunities created, the industrial sector is the main sector in terms of the number of jobs that will be created thanks to the projects approved by the National Investment Commission, as this sector will create more than 9,000 direct and indirect jobs, representing more than 56% of the total job opportunities, followed by the tourism sector with about 13%, and the pharmaceutical industry with 8%.
During this meeting, Prime Minister Aziz Akhannouch stressed that supporting private national investment and job creation are among the government's priorities, in implementation of the High Royal Directives, explaining that all concerned parties are mobilized to ensure the sustainability of the registered dynamic necessary to contribute to the economic recovery of our country."
Sorry TP that was to, Ideas.
TP, OCP mine phosphate which is found on the surface or at shallow depths. These surface mines are quite different to mining potash 400m below the surface. It could be described as a mine or quarry.
You are correct about the size of OCP they are a massive player in the fertilizer industry & plan to operate in several African countries.
Could they get a ML & ESIA? Of course but it could take a number of years (although not as long as it is taking for EML).
They could easily mine the area they hold but the mine would be limited given EML own the licence around them, hence why a JV would work well for them IMO.
WYT, that's interesting regarding the slope, why on earth would they build a slope without mining/environmental licences? Its cart before horse.
As I understand it this is a joint venture between OCP & ONHYM, historically looking at the old RNS details the OCP area are the brown blocks on the maps surrounded by the larger EML blue blocks.
ONHYM have been busy looking for natural (white), Hydrogen in the basin but that is much deeper than the potash seem.
Sloppy, agreed like BYT mentioned OCP have the blocks but no mining licence or experience, not to mention their resource hasn't even been JORC'd. The articles on line mention tunnels, I think they are just poorly worded & they have been drilling samples.
It is as we say all speculation, but given both company's are mining the same material & possibly selling it to the same customer (OCP), it would make commercial sense for the two to work together.
So & please do not take this seriously I am playing around with the possibilities,
A joint venture would make the most sense to me (provided OCP & the gov play fair), a scenario as below would work for both parties.
a 50/50 joint venture in MSL (currently 100% owned by Emmerson),
in return for half the company OCP transfer all their current licencing blocks to MSL.
Both company's fund the building of the mine & processing plant (what % negotiable but heavier on the OCP side),
The benefit to OCP is they now have a mine capable of producing the potash they need for 50+ years, possibly further & production could with their financial clout be ramped up. OCP could pay the gate price reducing their current costs by as much as half, not forgetting the revenue from MSL.
The benefit for EML is the debt raise would be far smaller & in having OCP as their main/only customer transportation costs would be negligible (at gate cost).
If OCP have as much potash as they think & the future expansion the mine would produce billions in revenue. Split 50/50 yes but the revenue minus the transport would be over $150m per year over 50yrs.
Put that on a FWD earning ratio of say 8 & you are looking a Mcap of around £600m for EML.
Like I said playing around with the figures & making huge assumptions but given this board is far better off late why not.
I wonder how soon that ESIA would drop if the above was to be agreed ;)
GW, agreed. This is what the Feb 21 RNS stated about the licence.
"The ML is valid for an initial 10-year period, which is renewable in 10-yr increments until the resource is exhausted and provides exclusive rights to extraction. Article 47 of the Mining Code 33-13 stipulates that: "The mining licence confers upon its holder the exclusive right to extract and/or develop mining products from an ore deposit in order to produce marketable mining products, namely through the use of studies, preparatory work, mining activities and/or enrichment and/or valorization operations, in addition to the installation of any infrastructure necessary to carry out these works".
"The Company retains the right to explore in the investigation permits covering the highly prospective ground around the ML, in particular the extensions to the north east of the Project."
I also found this info from a broker note,
"“With the aim of producing at least some of its own potash in-house, OCP acquired certain
tenements in the Khemisset Basin amidst those of Emmerson’s. However, we understand
that Emmerson’s database of historical drilling results indicates that the bulk of potash
mineralisation on OCP’s tenements is comprised of carnallite (which is less desirable from
mining and processing viewpoints), generally with lower K2O grades.
We are therefore doubtful that a standalone MOP mine on OCP’s tenements will be
economically viable. Instead, it would seem to us to make eminent sense that OCP should
look to strike a deal with Emmerson. We see two cooperative ‘win win’ possibilities:
• A single operation designed to optimally exploit OCP’s and Emmerson’s tenements
would likely enjoy an economic value that is greater than the sum of two standalone
operations, we believe.
• Alternatively, OCP could simply strike an offtake agreement with Emmerson, with the
two parties splitting the savings in shipping costs. Such a deal would secure a significant
proportion of OCP’s potash requirements while reducing its procurement costs. In
addition, there would be no need for OCP to fund the construction of a potash operation.
Meanwhile, Emmerson would enjoy an enhanced netback – and we understand that,
under Moroccan law, importantly, Emmerson will still benefit from the 20% CIT rate
incentive on any sales to OCP (as the transformed products would ultimately be
exported).
A third option is rather less palatable, from our point of view: that of OCP acquiring Emmerson
and/or Khemisset. Emmerson’s market cap is currently quite low relative to Khemisset’s
potential value, so barring a significant rally in Emmerson’s shares (and/or a very hefty
premium), we perceive an acquisitive transaction as being of rather more benefit to OCP than
to Emmerson’s shareholders.”
It's a strange one yesterdays news, I don't know if its good or bad really.
As we are kept well in the dark regarding progress, I doubt we will hear much from EML as regards the OCP move but a couple of things to note.
1, the licence area OCP hold is an old claim from well before EML got their area. If you remember the older RNS's the licence area EML had on the slides had blocks missing in the middle/bottom, these were the OCP areas.
2, The scoping study of EML's claim runs S/W to N/E, with the better grades the further N/E you go. OCP's claim is in the S/W area where grades are poorer. They do not appear to have any further exploration potential.
3, Hayden mentioned post DFS that the area not in the DFS would give another 250mt & an extra 10yrs to the mine life. Then there is the potential area further N/E which he thought back in 2109 could hold another 4-500mt, which would push the mine life to over 50yrs.
OCP do not look to have this extra potential. The licence blocks for EML's area & the potential are already held by EML when they consolidated the mining licence in 2020.
4, If both mines went ahead separately then sharing a processing plant would seem a way to save millions for both company's. OCP may also want to build a SOP plant which again would benefit EML if they could have an agreement with OCP to buy the potash.
GLA
I have been thinking about this since seeing the article earlier today & I can only think this could be very, very positive for EML.
There are so many unknowns, its difficult to speculate but, this might be what GC was talking about in the last RNS (ref better financials & environmental improvements) .
Sharing a processing plant with OCP would be amazing, especially if they pay for it!
https://medias24.com/2024/01/22/ocp-lance-un-projet-dexploitation-de-potasse-a-khemisset/
Oh no sorry guys false alarm.
It pinged on my alerts & I read January not noticing 2023.
Sorry for getting anyone’s hopes up. Still unsure why Google alerted me.
My bad
GLA
Well looks as though the meeting has taken place today.
https://www.cg.gov.ma/fr/node/10991
Let’s hope for that long awaited RNS.
GLA
Yesterday’s RNS, still leaves us guessing as to when the meeting will come this is the only issue keeping the SP down, but there was more to take out of the RNS.
Firstly any talk (as in the last month), of the company needing to raise funds has been answered. There is cash in the bank for a further 12mths.
GC mentioned there are not any issues not addressed in the redrafted ESIA. Importantly the use of wastewater, tailings storage & brine disposal have now been addressed.
GC mentioned further optimisation which would offset set environmental issues & add economic upside to an already very economical mine. Iron from the tailings maybe?
Lastly the banks continued backing is welcoming especially as £230 of the debt raise is backed by the UK export finance which is important as with this backing EML get better terms.
GLA
Nice to hear the cash position is ok for 12mths, “ Emmerson currently has US$3.5m of cash, sufficient for 'at least’ the next 12 months", added the broker”
Page 11, of the corporate presentation (2yrs build time),
next step after receiving ESIA is BFS (6mths according to GC).
https://www.emmersonplc.com/investors/corporate-documents/
The decision is with the national investment committee. This is a new committee which has so far met twice, once in May & again in July.
No one knows when the next meeting is due (it may have already been pushed back due to the earthquake in September), as far as we have been told the decision on granting an ESIA for the mine will be made by this committee.
https://www.cg.gov.ma/fr/conseils-administratifs?field_type_conseils_target_id=5
Sloppy, the July RNS stating that the regional gov could not authorise the ESIA was a strange on as all the reasons set out (tailings storage, brines, water) were old issues raised back in 2021, and according to Emmerson all had been addressed. It's either the local committee dismissed the improvements/solutions or the last RNS was a C&P of the issues raised in 2021.
If it is the former, then hopefully the national committee already have the revised application.
Fortunately, when it comes to addressing the drought the Moroccan gov are not messing around. There is a new dam planned for the Khemisset area (see link below). They have also just finished a waterway over near Rabat which is adding billions of gallons of water which used to just enter the ocean.
I don't think EML need to be that creative on water, they have already planned to use wastewater. A compromise might be that EML have to stop/limit production in extreme drought circumstances.
The other alternatives could be that we are charged more for the water we do use in drought conditions.
The Brines are to be deep well injected which according to a previous RNS has already been trialed or is to be, before this system is used.
https://www.lavieeco.com/au-royaume/voici-les-chantiers-phares-du-departement-de-nizar-baraka-en-2024/
https://northafricapost.com/70802-morocco-completes-first-phase-of-major-waterway.html
DunnaRunna, nice to see a well thought out post. I agree with you GC is the man for building & running the potash mine.
Nobody expected such a hold up on the ESIA, it was as you say thought of as in the bag.
When the application dragged on GC rightly brought in an experienced staff member (Hajar Alaoui Permitting and Approvals Manager), who had delt with ESIA applications in the past.
As I have mentioned before if the permit isn't granted right now then, I cannot see why EML could not negotiate a satisfactory compromise given the huge financial benefits for the company, country & local employment opportunities the project brings.
Goldbar, there isn't much for them to say, the only issue that matters is the ESIA. If they mention off takes, debt financing, or progress on the plant design, they would be shot down as none of it matters without the permit.
With regards to the ESIA, as you know EML are awaiting news from the next national investment committee.
https://www.cg.gov.ma/fr/conseils-administratifs?field_type_conseils_target_id=5
GC has been in Morocco a few times over the last month, so one would hope (aka complete guess), that he has had meetings with official's who will need the revised details of the plant & importantly water use in order to make the decision at national committee level.
Obviously the best case scenario is it's granted at the next meeting & EML can crack on with the BFS (6mths).
The alternative is if they ask EML to resubmit or adjust the plant further for water conservation purposes.
There may be other positive/negative outcomes, given it is such a world class asset which makes millions even when potash prices are low, one would hope that a deal could be struck.
I found this interesting, Highfield have their Spanish potash mine & have updated the FS from last year prices of course have risen but it does not look too bad.
https://wcsecure.weblink.com.au/pdf/HFR/02737027.pdf
Interview also,
https://www.proactiveinvestors.co.uk/companies/news/1032450/highfield-resources-updates-feasibility-study-in-strong-potash-market-1032450.html
We all know that the only way the SP will turnaround is on news of the ESIA being approved. Until then we will either drift as we have been since July or worse see a drop like this week when someone/folk have had enough. Without the permit the project is dead, which is incredible given the financial rewards this project could bring to the locals, the gov in tax's & the shareholders & financial investors. Even at today's low potash prices the mine would make $100m+.
Graham I understand has been over in Morocco this week, so I would imagine involved in meetings & trying to press for the ministerial committee to approve.
We are in the Moroccan authorities hands.