The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Rupert Joy is a Non-Executive Director and I, for one, found the link below useful given he is not an employee and will probably work limited hours on a consultancy basis:
https://www.investopedia.com/terms/n/non-executive-director.asp
Thanks TP3 for the contents of the email. The online meeting would be very welcome although not everyone's questions will be answered of course. Any light EML can shed on the water issue is overdue and hopefully will shortcut the continuing debate/speculation on this board.
Hi All,
I am relatively new to this group with my main focus on a potash play (Emmerson, EML), another speculative long-term mining stock. The main risk with EML is the wait on the Environmental permit which without EML cannot finance the mine construction, etc. What are the main risks with Amaroq or the things that will stop them at least producing gold from their Nanulaq mine? Do we have confidence production and positive cash flow will start in 2024?
Thanks in advance.
Thanks testpack but if that was the solution, I am sure it would have been thought of. Surely we are talking a LOT of water which is going to be very expensive to bring in. And where do they source the water from in the first place? I doubt whether the authorities will grant any permits unless the solution is a permanent one.
I certainly read that a 4th draft is required but given that they are "minor finalisations" required, who knows whether a 4th draft has not already been submitted. The fact that this was "confirmed" by the authorities suggests Emmerson are close IMHO. I would still bet on a Q1 approval rather than Q4.
Believe the quote re 28th Oct comes from slide 13 in latest version of company presentation:
https://www.emmersonplc.com/wp-content/uploads/2022/12/EML-Dec-22-final.pdf
The activities listed in the Q2 update are numerous and presumably quite expensive given a lot is contracted out to specialists. Is there anything missing from this list in terms of preparation for construction pending the EISA? The staff have as much if not more to gain from this going well than us so I am sure they are motivated enough.
On the matter of keeping us to-date on the EISA in particular, however, I share many of the sentiments and frustrations expressed already. However, if they had any news to share, I am sure they would. When they submitted their first initial EISA application, it took months before the govt came back and asked for more refinement on the water usage. Who knows this won't happen with another aspect of the submission?
"Permitting Update
As shareholders will be aware, the Company's Environmental and Social Impact Assessment ("ESIA") is awaiting final approval. Emmerson is committed to meeting the highest environmental standards in Morocco and this will remain a core principle at the heart of its work throughout the construction phase and during the subsequent life of the mine. The Company has addressed all the ESIA issues raised by the relevant Moroccan authorities"
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I don't read into the above that EML have any more "criteria" to fulfill currently. However, it seems they had to revise their submission before (e.g. use of waste water) and it could be the govt may come back and ask for more improvements in the coming days and weeks.
Horses for courses as they say. Hayden comes across as a confident and natural speaker whereas Graham does not in the same way but it was stated that the company needed someone with the in-depth technical expertise in the Potash industry necessary to oversee the development of the mine. Who knows whether Hayden wanted to stay in this capacity?
Surely a major factor in SP projections is the uptake of institutional investors (II's). When/If major risks like the environmental permit and funding are removed (hopefully without too much dilution), you would expect more investment from II's? However, the company will still be loss making until it reaches production so I would imagine this will still put off many.
What would be useful to know is who out here has genuinely invested in an EML like company in the past and been on the full investment journey. Every company is different I know and some have been burnt by Sirius but perhaps some have other stories to tell?
My biggest concern is that the 30th Sept could be used as leverage by the other side in any "negotiations"/politics that involve granting of the Environmental permit. I understand that there is scope for an extension but that would be less than ideal.
Of the 17.5m options granted to GC on 5th Aug 2020 (share price 4.15 that day). it looks like:
1.5m @ option of 0.1p (I agree with testpack3 on this - zero risk and incentive here)
2m @ option of 5p
4m @ option of 7p
10m @ option of 10p
So vast majority had a decent incentive at the prevailing share price on the day. Some were give-aways. Current value of these give-aways is just over £100k pre tax. To get all the options, GC has to stick around until Aug 23.
Of course, you can buy and sell same day and pocket the difference between option and sell price. This is subject to highest rate tax for these guys. CGT tax applies if you buy/exercise and sell later. Therein lies some risk.
NOTE: see correction RNS from Aug 6th 2020 for true exercise prices.
GC has been awarded options to buy these shares at 7p each from July 2024. This is very different to being given shares for nothing now. If the company does not progress and the share price does not increase, the options are worthless. The current value of these options is around £127k by my calculations and that's what they will cost him to buy. Not sure where the £m comes from?
I have worked for various US and Israeli start-ups in IT and have been granted options myself. Start-ups tend to get their pound of flesh in terms of the hours you work and don't always pay the best. Share options are an incentive for many to join but no guarantee of riches.
"...and the Gov, want all the works complete before moving to grant any final permit. Patience and we will be rewarded."
Hi Audible,
Thanks for the post. I re-read the RNS and missed the link between completion of works and final permit. Where was this?
I am not an expert on Market Makers but do people really think they have as much influence on the share price as other factors affecting this share (finance, environmental permit) and the markets globally? EML often seems to drift downwards after a period of no news and this seems no different.
Good questions testpack but I think the NPV was predicated on around $400 per tonne with spot prices at around double that late 2021 and pre Ukraine? While crop prices remain high, I have read it is likely that Potash prices will follow suit.
It seems to be the perfect storm for prices right now so it is likely there will be downwards pressure on prices as this passes over but that's years and not months. I can't see prices back below $400 anytime soon if ever though but who really knows? No-one could have predicted Covid and a war in Europe 3-4 years ago.
Hindsight is a wonderful thing.
I am sure GC relayed what was the correct perception at the time and was trying to communicate on timescales when EML have been criticized for not keeping people up-to-date. He cannot seem to win on this.
Didn't the authorities ask for more information on the water consumption side of the ESIA and more work was required since?
"Now the 'all or nothing'' investor, like OOS, stands to lose everything, and only gain if the EISA is approved. He's a gambler, not an investor. I belong to the latter."
I think we are all in the same boat. If OOS loses everything if the EISA is not approved, we all lose in the same way. It's the same gamble for everyone. Our levels of risk will be different from investor to investor. We don't all follow each other in our share quantities and when we choose to dip out. I am sure we all share the same concern about the EISA and financing round but have our own strategies for dealing with this. If I thought the EISA was a "nailed on cert", I would have invested even more.