RE: ESIA delay27 Sep 2022 11:09
We fall into the realms of wordsmithery here.
Though we write about the ESIA, it’s not really our concern as shareholders, because we have a Board and employees to manage implementation.
Our role as shareholders is to hear and hold the Board to account on its time, cost and performance guidance.
In May 2021, the Board said it anticipated starting construction in 6-7months by Q4 2021.
Fast forward to Sept 2022, we have guidance that it hopes to begin in H2 2023, which could be up to two years later than guidance issued a year and a half earlier.
We can talk a lot about the vagaries of a detail level process over which we have no control but ultimately our interface ids the Board guidance.
I think the Board is trying hard. And I think it’s okay to question a two year delay because the effect of that is to:
a) ask for our capital to be locked up for two years longer than was originally asked of us;
b) take a lower return on product price (though no one could have foreseen the Ukraine situation).
If we had progressed to time with no headwinds we would be selling product into the hottest part of the market cycle, which will by all accounts will ease as we reach production.
c) pay an unexpected premium of around £5m to extend the strategic investment by a year to mitigate the situation.
So whether there is ‘no delay’ in the ESIA, or how long Graham takes to sharpen his pencil, is looking at the wrong level in my opinion.
There’s around a two year delay in the project as quoted by the Board AND it’s okay to say that AND doesn’t make Graham a bad person, it happens all the time in nearly every project.
We still have to be able to say what we see because its essential to holding the Board to account and investment decisions.
I think that the ESIA is just capturing people’s imagination because it’s outside our control. I’m not aware of any major timeline that the Board has missed that was within its control and so I think it’s normal for people to be uncomfortable about something they cannot control.
It just doesn’t make sense to say there’s no delay, even on the ESIA as you’d then have to say Graham negligently negotiated the term of the strategic investment to be too short and cost us the extension premium.
We can just accept the reality as it stands and still focus on things still turning out okay.
***
FINAL RESULTS 2021
“Grant of Mining Licence (post period end) providing the exclusive right to develop and mine Khemisset ahead of the anticipated initiation of construction by the end of 2021”
Source: RNS 17 May 2021
https://www.lse.co.uk/rns/EML/final-results-ymqxujzm6w2ddyb.html
HALF YEAR RESULTS 2022
“Emmerson now funded for remaining technical and other workstreams to deliver Khemisset through to construction decision and financial close, currently expected to be during H2 2023”
Source: RNS 26 Sep 2022
https://www.lse.co.uk/rns/EML/interim-results-for-the-six-months-to-3
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