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I believe that the company is now targeting the completion of finance and permitting by the end of this year. I don’t think anything is imminent. Construction to start perhaps beginning of next year, and first production in 2025. I think this is the most optimistic timeframe now. Certainly a slow burner - fundamentals are still good despite the project timelines being pushed back. These things always take a lot longer than expected and there could be further delays - I think Highfield Resources in Spain is still waiting for certain approvals? They must have been waiting for 4- 5 years at least - I have lost interest in that one. Obviously Emmerson is burning cash with every passing month - yes, it had a good balance sheet at last update, but that won’t be the case if this drags on for a considerable period, and further dilution is always a risk.
As expected, the q1 update does not really contain much of an update. ESIA - same status as before with the additional note that a wider number of people are being considered (suggesting this will not come anytime soon). Company had suggested debt finance news by end of q1 - this has been missed. No clear timelines at the moment - the old phrase “in due course” applies here. With a 2 year + construction period, it is still not clear when construction will start. Obviously raises the risk of further shareholder dilution at some point.
The end or year newsletter (December 2021) refers to a land acquisition programme - I am not sure where the company is with this, or even what is involved, as it is not something that is talked about at interviews. The permit has also reached a stage now where it is significantly delayed - something that was nailed on last summer is still unclear at the end of March 2022. Definitely quite a few uncertainties at the moment. A bit more communication from the BOD would be appreciated. Is there normally an update at the end of the first quarter?
we are close now - debt finance news should land this month. I also believe we will hear on the ESIA very soon - the directors were not in Morocco recently for a holiday.
Gonzalez - maybe because from the viewpoint of the Moroccan authorities there is no delay? You only think there is a delay because Graham announced that he hoped the permit would arrive at the begnning of H2 2021. This proved to not be the case; he has apologised for this at a number of investor presentations last year. That is fine - there was clearly a misunderstanding around timing / process. The company likes to be ambitious with its milestones - that is generally a good thing. I think they learnt a lesson here to not over-promise and you would have seen that more recently in recent announcements. In the end, if you have lost confidence in the board, you can always sell your holding but I expect you will regret very soon as things will move quickly this year. We should be due an RNS this week or next week on the awarding of the remaining engineering contracts - lots of work being done in the background to start contruction by the end of the year.
With regards to the ESIA delay, I expect there was some misunderstanding about how long the process would take. Morocco released a new mining code relatively recently and Emmerson will be one of the first miners in the country to get approval under this code. Things are done properly in Morocco - this isn't a third world country. You can see that from the number of different submissions they have had to submit; you need to allow time for this process to complete. I also think the pandemic hasn't helped speed up matters- governments have had other priorities during the last 2 years but things are looking more positive now.
The drop yesterday was seen across the whole market - long term holders shouldn't be worried about day to day price movements anyway (if indeed they are long term holders).
Graham admitted that his timescale for the ESIA was overly ambitious and he has apologised for that. I think that is fine - these things are out of the company's control. I believe the BoD when the company says:
"the Environmental and Social Impact Assessment ('ESIA') submission is awaiting the final approval and the Company has completed various submissions to government agencies including the water authority, l'Agence du Bassin Hydraulique de Sebou, Regional Department of Environment, Regional Department of Forestry, and Regional Centre of Investment, as well as the public enquiry process with no objections and full support from local stakeholders".
It will come I expect within the next couple of months and those who are criticising the directors now will quickly come on here and say this is the best junior miner out there etc. EML are not the only company which has experienced delays in permitting - you look at their competitor in Spain, Highfield Resources, I think they have been waiting for various bits of paperwork for at least 3 years now. When the Emmerson board say they have a good relationship with the Moroccan authorities, I believe them. It is in everyone's interest to get the mine built, and foreign investment is crucial to that. A bit of patience required from some on here.
In my opinion, the engineering contracts are not dependant on the ESIA arriving before. EML awarded the first engineering contract to Barr Engineering for the Mineral Processing Facility in early December - others should follow very shortly according to the company. In any event, the ESIA will hopefully arrive in Q1.
I agree - I expect the ESIA permit will be awarded by the end of March. Emmerson’s broker, Shore Capital, have said they will provide an update on the ESIA permit in Q1 - make of that what you will. I believe the board are confident it will come in 1-2 months.
Upcoming newsflow:
- contracts awarded for the engineering of all other work packages (end of January / beginning of February)
- Debt finace - confirming the Managing Lead Arrangers (by the end of March)
- Update on ESIA permit (by the end of March)
My understanding from Graham is that all paperwork has been submitted to the authorities and the additional queries have been answered by the company. It is a case now of waiting for the final meeting to take place - it has admittedly been like this for a few months now. The company hasn't provided a revised date. If I had to speculate, I don't think it is imminent as I think the company would have waited for the permit before finalising the recent equity deal, knowing that the granting of the permit would have raised the share price and allowed the equity deal to be done at a higher price. The board clearly thought they needed to progress the other workstreams including the debt finance discussions and couldn't afford to waste any more time if construction is to start in the middle of next year. I think the permit will come in the first half of next year - the good news is that I don't think the equity deal woud have been concluded if there were genuine concerns on this. It is just a matter of time now.
It was interesting that in the most recent interview, Graham hinted that there would be some very good offtake agreements coming, helped by the resurgent potash price which is now around $800 to the Emmerson target markets. Debt finance news will land shortly which will be significant, and hopefully the Environmental permit before the end of the year. We should learn more this week from the investor presentation - what is clear is that this company is significantly undervalued at the moment.
I think overall this is a good result today. Most importantly it opens up the door for debt finance discussions. Hayden has also hinted that a project with such strong fundamentals should attract a 30%-70% equity to debt split. The news today suggests this is where we are heading, which would be an excellent result for shareholders. 8.2 p for the convertible loan notes is a nice premium to recent share prices and I think on balance this was a good result. Lots of news to come in the next few months which should really boost the share price.
Environmental permit still pending - hopefully this will be granted before the end of the year. Finance - strategic partner news also before the end of the year? Recent interview from Graham and Hayden suggests finance package should be in place by March - they did refer to a very significant 6 months in early October. After what has been a quiet 2021 for news, I am hoping things pick up now.
Putting the ESIA permit to one side, the SOP update was due to be released to the market in August. EML has been very good at hitting its milestones on time in the past - I hope things don't start to slide now. Hopefully we will receive an update before we go into the fourth quarter. Still confident there will be news on permitting and finance before the end of the year.
For a number of years, the board has been very good at keeping shareholders updated, so the radio silence over the last few months is certainly out of character. There is hopefully a lot brewing in the pipeline, despite the fact that the enviromental permit is later than expected. It would be good to know if early construction is still on course to start at the end of the year - with only three months to go, this has presumably slipped a little so I hope we receive an update on that. Even if there is no material news, there will hopefully be an update before we go into the fourth quarter. If the news lands which we are all hoping for between now and the end of the year, there is no reason why the share price shouldn't reach double figures. The reasons for investing here in my opinion have not changed.
I agree that Rupert was not brought on board for the Environmental permit - this wouldn't be his area of expertise in my opinion anyway. Going back to the Hardman presentation on 12 May, Graham was very confident the permit would come later this month or early June. This is on the basis that no red flags were raised during the initial phases. We can add a bit of time to this due to Covid in my opinion and the difficulties of meeting face-to-face. However, I think the board have been asked to make certain changes to their ESIA paperwork. Hence the reason for a more significant delay. I look at the day in the life of Lahcen Alloubane on twitter and it says as follows: "preparation of amended reports to the water agency as part of the ESIA approval. Progress with intergration of the water pipeline in the ESIA package". Whilst we don't know when this was, I expect this may have something to do with it. I think the board have been advised to make a few changes, but in my opinion, the permit will come, just a bit later than expected. Hopefully by the end of this month.
I think the market needs something to get excited about here - there hasn't really been anything since 9 February when the mining licence was granted. EML knew it would be a quiet few months, hence the reason for all of the investor presentations in May and June to try and keep interest going during a quiet 2nd quarter. We are however now firmly in the third quarter - this is the quarter when finance is due to be tied up (reading the shareholder update which was released at the beginning of January). I expect there is room for some slippage here into the 4th quarter. Nevertheless there is quite a lot of news to be released between now and Christmas if early construction is due to start by then. I am hoping that everything is being lined up behing the scenes, ready to go once the environmental permit lands. We can therefore expect quite an interesting end to the year. If the environmental permit doesn't come in the next few weeks, I would expect an update from the company. The delay is probably purely Covid related, perhaps also the holiday season - there certainly wasn't any red flags raised in the initial stages. Hopefully any day now.
If the environmental permit is announced this month ( bearing in mind the covid restrictions have recently been lifted in Morocco), then in my opinion, the use of the word "imminent" for a tweet on 29 June is fine. When investing in a mining company, a month is not exactly a long time. EML are still confident they can start construction by the end of the year based on last update a couple of weeks ago so I think a few investors here need to calm down. I am sure EML is doing a lot of work in the meantime so everything can be tied up quite quickly once the final approval comes. I look at the track record of the company over the last few years and believe they will deliver here - a bit more patience is required.
I see that the Moroccan government lifted further covid restrictions yesterday including the "the authorization of gatherings and activities in closed spaces for less than 50 people". I expect this is the news that EML has been waiting for with respect to the permit meeting.
In other news, I see that OCP has entered into a new agreement with the World Bank. Interesting read: https://www.moroccoworldnews.com/2021/06/343129/moroccos-ocp-plans-to-expand-agricultural-value-chain-in-africa