Member Info for Ideas

Yes, no news during any negotiation

Begs the follow on question, how is this ESIA and deal already not been rushed through in the last six months as OCP has greater demand than it can supply?

Someone on here suggested that it may have been Emmerson believing that it could go it alone that caused the disconnect (e.g. from government expected ways of working). I found that interesting as Graham did once use that kind of language on YouTube but surely would be madness given access to diplomatic skills from an ambassador sitting on the Board - can’t be right, surely.

Also interesting that the business said, “thanks for the mention” to the UK bods at the recent trade talks. Only dawned a few days later, does that mean by implication that Emmerson wasn’t on the agenda, as this was a side mention? Again this would seem odd in the current phosphate market. Puzzling, as always.

The gold rush for Morocco's phosphate in the Ukraine war aftermath
https://acquiaprod.middleeasteye.net/news/morocco-gold-rush-fertilisers-war-ukraine

- Turnover up 70%+ years on year

- Protection capacity to increase 50% in next four years.

I’m never clear if ‘production’ is processing rather than obtaining potash (e.g. mining), but stands to reason more processing will need more input materials.

I think it's reasonably clear that there are RNS exemptions during an ongoing process.

Here is one summary but people should do their own research if in any doubt.

"AIM Rule 11 requires notification without delay of any new developments which are not public knowledge which, if made public, would cause a significant movement in its share price. 

The Guidance Notes in part 2 of the AIM Rules make clear that this means information a reasonable investor would be likely to use as part of an investment decision. 

There is an exemption set out in the guidance relating to transactions which are in the course of negotiation where disclosure might prejudice those negotiations, provided that those who are aware of the information (e.g. the other party to a negotiation and professional advisers) keep that information confidential and do not trade in the company’s shares. 

The Guidance Notes for Rule 11 also allow companies not to notify information about impending developments in certain circumstances, provided that this information is kept confidential."

As DShox said, I think this historic discussion is becoming fairly academic as we are approaching a hard deadline that cannot be waived away and status will need to be disclosed one way or another in 8 weeks time.

Hopefully that comes as an all-in-one deal.

First public and explicit mention I’ve seen of any diplomatic discussions - here in the UK trade talks Ana referred to in a linked in post:

https://twitter.com/prettydamocles/status/1554535496189153288

A mention is no more than that for all we know but still good to get name checked on the record.

Lets keep it factual and non-misleading:

Sound Energy Plc got its EIA approval for gas wells around six months after meeting with the ministry and presenting its EIA for scrutiny. It did an offtake agreement with Afriquia Gas, a national leader that also took a 9.8% equity stake in SOU and sits in a group of companies run by the ex-Minister of Agriculture, and current President of Morocco.

Sound Energy's experience doesn't make it 'typically' six months, and the recent two year example that you gave doesn't make it 'typically' two years. Each application will have its own considerations and countless people on here have highlighted that there is no published timescale.

Secondly, Graham would only have to RNS if he were categorically told that there would never be an ESIA approval or if there was an official refusal. He isn't going to have to RNS because its looking ropey, or AIM would be a safe place to invest.

No opinion on the wider post but the 'typical' timelines and triggers for RNS are incorrect, in my opinion at least, so wanted to add balance.

You tempted me to look it up.

Looks like an EU Ambassador does around £170k and he earned £19k from us last year.

Interesting party for me is any inference that both a) the ESIA date is unclear AND b) an OCP deal isn’t about to drop, because without those, and other milestones, our special investment will be affected.

Less concerned in the amount he bought. Shares aren’t for everyone and, if you look at it differently, he doubled his holding, which would be a great sign of confidence!

Agree, it’s inconsequential and will be quickly forgotten but, if anything, he’s communicated that the business knows not substantially more than we do, because if he did have special knowledge then it would be an insider dealing.

How we can have a full time employee to phone everyday, a retired ambassador, ministers ‘on board’ and still have no guide date or even quarter is at the least a curiosity!

Sharing a few things seen in the news
************

Morocco Trade Envoy Andrew Murrison MP was among last‘s Boris resignations.

Roughly 18 months in post but had some good association with Morocco.

- Former Minister for North Africa and the Middle East;

- Ex Chair of the Morocco All Party Parliamentary Group.

- Signed the post Brexit trade Association Agreement with Moroccan Foreign Minister His Excellency Nasser Bourita in October 2019 as Minister of State at the Foreign Office and then came into role.

Won’t determine anything but had experience and palm pressing, so hope we get someone similar. The Morocco All Party Parliamentary Group seems have closed.

https://www.channel4.com/news/conservative-mp-andrew-murrison-resigns-as-trade-envoy-after-mulling-over-it-for-some-time

Morocco’s Agriculture Minister Mohammed Sadiki said on Monday that scarcity of water for irrigation purposes is the primary challenge facing the current agriculture campaign, which may or may not have influenced the water authority’s further ESIA enquiries

https://www.moroccoworldnews.com/2022/07/350100/lack-of-irrigation-water-threatens-moroccos-2022-agriculture-campaign

India is undercutting potash providers like OCP buying Russian potash for $920-925 per tonne, which is lower and expected to exert some downward pricing pressure - presumably in the Indian market or any non sanctions observing market.

https://menafn.com/1104458452/Russia-Becomes-Indias-Top-DAP-Fertiliser-Supplier

It’s chance that I saw these together. If helpful, could do likewise in future but don’t want to news bomb the board if people are following their own sources!

Please like this post of if its helpful to see this sort of thing and / or you would like anything similar in future (from me or others on the board).

Great share Westie

I was starting to think, “these guys can’t know any more than us these days”, with such a lag in milestone news, but she’s done the unthinkable and had a direct conversation with Graham and he’s reasserted his confidence.

I don’t suppose he could say otherwise, and it’s no more than he has said before but a recent checkpoint is very good with the YouTube interviews now ageing.

Also a good explanation for this weeks’ rise!

Thanks again for the share.

Testpack

Agree your incremental approach, there is still risk to unlock.

In terms of any about face, I would say it's a little more nuanced:

- Matador has posted fairly recently and I think has been positive throughout and, if the twitter handle is the same, is consistent on Twitter;

- Dshox has posted here fairly recently and, if anything, I would say has cooled somewhat in outlook since the early posts (each can speak for their own opinion of course as this is just my observation);

- I, I agree, have been more challenging of the Board silence and I think with fair cause to ask. All out patience has been tested, surely.

If my post earlier appears doe eyed, a more complete statement would be to say that, “I hope we are now in the queue of these deals because there is an appearance of a strategic plan being deployed by the state and, if it turns out that we are not in the plan, then we have scant future”. I didn't feel the need to say that in full because it's somewhat implicit but also because it's all speculation.

If there was any relief in my post it is beginning to find a possible thesis for myself as to why we have been waiting for so long and the Board itself has said it's taking unexpectedly long to get going (in context of the highest demand for potash in recent memory). I don’t think that hope is entirely crazy either as OCP is ramping its output everywhere but we haven’t yet (I don’t think) seen it ramp it’s potash input.

I hope that there is a continuing deal flow, and that we're in it, but I don't think that to express the possibility amounts to saying that ‘silence is golden’ or descends (fully) to herd mentality. Still lots to tick off and for us to hear. I have yet to say that I’m enjoying the silence!

Agree. A there’s clear drawing together of strategic initiatives all around us and that kind of weight of planning and strategy would well justify the reporting silence.

Doesn’t guarantee anything, but looks a very good chance we’re in the line of upcoming deals, like a jigsaw coming together.

Matador, agree on AGMs

So on that announcement, Koch will bring American ammonia to OCP, which it is short of. Where does that leave us?

It looks like potash is a further ingredient in the end fertiliser product and so that is still needed and this deal is parallel to us and therefore has no direct effect but shows OCP locking down its supply of key ingredients after doing a similar deal to secure energy supply.

In principle, this could suggest a tie up with OCP is coning soon in the works, though I think I noticed that the deal completed last week with Koch was announced on 2 March, so doesn't automatically mean an imminent similar announcement for us.

FYI - Possible easing of tariffs going into the US later in the summer.

US farmers argued that Moroccan fertilisers should face tariffs because they were considered state subsidised and unfairly cheap, under cutting US products.

US farming consumer groups have lobbied that this is harming them as end users because the price is too high. The decision will be reviewed and could reportedly be reversed as early as later this summer.

I think the current small share price rise is coming from believing there will be an announcement at the AGM. I don’t share that belief because we’ve seen the requested resolutions and RNS must be issued when ready and cannot be saved back. However, I think the prospect of lower tariffs, if realised, would be a far better reason to grow the share price, as the effect would greatly benefit EML.

********
Sources below:

US farming consumer groups
https://www.ncga.com/stay-informed/media/in-the-news/article/2022/06/as-ncga-raises-alarms-about-tariffs-court-of-international-trade-begins-asking-tough-questions-of-fertilizer-companies

Moroccan reporting
https://www.moroccoworldnews.com/2022/07/350045/us-court-of-trade-considers-appealing-tariffs-on-moroccan-fertilizers

This is the fund that was amended to remove ‘actively supporting fertiliser plants’ (paraphrased), because the EU felt funding fertiliser would go against its climate plans.

However, there’s funding activity going on. The link below is a further deal combining a number of gulf sovereign wealth funds (incl. Kuwait, Abu Dhabi) and African funds to invest in Africa, announced last Monday:

https://www.swfinstitute.org/news/93102/food-security-three-swfs-sign-a-deal-in-rabat-for-african-investment

And at the same meeting of the Africa Sovereign Investors Forum (ASIF), King Mohammed talked about investing more to utilise Africa’s own resources, including mentioning fertiliser.

Unless there’s a massive eff up, this project should take off in a big way because it’s in scope for all these initiatives push) and to feed OCP’s expansion (pull).

The silence is leaving us in the shareholder doldrums but there is good activity in the industry background.

They need to invest geopolitically to retain influence in the African continent and in other developing nations - agree seems remote but it was scheduled on the EU Council agenda and G7 has announced a broader $600bn investment fund overnight.

See: G7 summit: Leaders detail $600bn plan to rival China's Belt and Road initiative https://www.bbc.co.uk/news/world-asia-61947325

A possible insight into the possible headwind on ESIA and wider progression:

The draft minutes of the European Council meeting (23 and 24 June 2022) included a plan "to support the development of fertiliser manufacturing capacity and alternatives in developing countries" (credit:
@Tat_TvamAsi), which presumably could include co-funding which would be worth holding off for if this was known to to be upcoming. Nothing worse than taking out a loan only to find it could have come cheaper from the EU.

The final text[1] dilutes this to, “calls on the Commission and the Member States…to work on initiatives together with international partners to support the development of manufacturing capacity of inputs in developing countries, in particular sustainable fertilisers.”; much less clear.

The EU Commission had explicitly opposed the draft text, warning that actively supporting fertiliser production in developing nations would be inconsistent with the EU energy and environment policies, so no formal EU funding then. [2]

If we assume that the ESIA will not be released until the project obtains state controlled a) funding, b) 10-15% investment, c) offtake at favourable prices and d) delivery contractors, then getting certainty on that wider geo-political issue may now be helpful in giving enough clarity for the state to now push on and commit to funding and backfilling what it needs for all these new processing plants.

[1] https://www.consilium.europa.eu/media/57442/2022-06-2324-euco-conclusions-en.pdf at para 9

[2] https://www.reuters.com/world/europe/eu-split-over-fertiliser-plants-poorer-nations-food-crisis-bites-2022-06-20/

Testpack, I don’t disagree with what you took from it but as it can across that way, for anyone else, I’m not criticising the board, as such, more trying to challenge my own thinking.

I’m not saying they’ve made any good or bad decisions - I just don’t know - but I’m interested to bounce ideas of others while we have the current information gap.

So: neutral towards the board, intending to be constructively challenging and supportive of the stock.

I’m not concerning myself with only saying positives because, as someone else has said below, I think the main factor for next movements will be substance and milestones rather than sentiment. The spring of future promise can only coil so much!

@dshox UK facility would be a big win and tie up

Defo would like to see OCP involved.

To back up and explain the point, this is where Graham last talked about it in November, 7 months ago. Asks with whether EML might build out OCP’s mine but Graham goes on to talk about offtake and it doesn’t seem like anything was doing (at that time) - he says it would still be “logical” for OCP to buy from EML, OCP can come and talk to us, etc. just didn’t sound at all like they were on the phone, etc. and had a working relationship.

I remember sitting up when I first heard the overall tone.

https://youtu.be/z4TG_YhEoXU?t=1890

I wondered at the time if Rupert might be leading them on a diplomatic track and if Graham was ‘wide’ enough to just get in and do the deal with a bit of tussle and back scratching.

I do feel, as you say, that they’ll need to get OCP in because I can’t see out of territory funding and exporting all the potash to Brazil, etc. (aka being seen to exploit the territory) yielding an ESIA or mining licence renewal, and the comms now are all about working with local suppliers.

With todays market and OCPs high aspiration the business must now be on this and looking how it can team up with OCP - managing it’s mine too would add value too.