Member Info for SloppyG

Therein lies the issue we are all second guessing given the scant level of info they consistently provide.

I am starting to think that a recommendation to pipe De-sal water is actually the best case scenario here. Given the headroom in the revised financials (NPV) it would have minimal impact on ROI longer term.

Nefarious activity is however the major risk. If this is the case then I think they need to admit defeat and have an adult conversation with relevant parties to seek some sort of compensation package in return for simply walking away (no legal) and handing over the license and KMP patents (we have no idea anyway if these patents will be robust if and when granted).

What is this number to walk ? £20-50m I would say. That covers the c20m invested in the asset to date, some time & overhead and a bit extra for KMP. 3-5p a share say. I would take that just to recoup some capital, to move on, never invest again in anything Morocco and probably avoid anything pre-EIA as this case could be a game changer from an investment perspective.

One would like to think this value would be peanuts to OCP/MA. However will they try and get it for zero using other mechanisms; wait for administration or cite regulatory breaches etc. If that is the case I think we are stuffed as I am not sure GSM will support us with a fighting fund.

The frustrating thing is, that of all the investment risks present here, I doubt many considered obtaining the permit to be high up on that list. Graham is rapidly becoming the kiss of death in this sector irrespective of whether he considers it misfortune. His judgement has to be in question: "imminent"; the recent Q4 bullish statement that suckered us in once more; the MOU offtakes excluding OCP. The latter of which was the turning point in my opinion and a massive oversight.

Personally I have now written this off in my head and tend to agree with Testpack that this has all the classic signs of a Coup d'etat. I will however stay with it until the end, probably foolishly. I did say previously that every time a CFO walks and I don't follow suit I get my fingers burnt; each time justifying my decision by thinking it is different this time and genuine reasons (was it ?). The irony is not lost as a CFO myself. Wake up man !

Keeping his powder dry for the fire sale MBO no doubt.

I wonder what the shortest time span is ever between consolidations........if any company can pull it off its EQT !

Seems like their Strategic pivot towards taking the business private is going great guns. No doubt a few more ducks to line up in the row before the business is in the optimal position to pull the trigger. Tick tock.

In principle it feels like they need to agree to do whatever it takes, if water is indeed the likely issue, to get this over the line with the MA. There is so much headroom in the financials (NPV) that almost any scenario will be in SH's interests given the SP base we are currently at. Yes it might shift the timelines and erode some of the potential returns but compared to where we are at it it will always be a no brainer.

This of course presumes that the blocker is not nefarious in nature whereby there will seemingly not be anything EML can do to appease; in which case the ML is not fit for purpose and arbitration the only way to go.

Cash runway (4-6 months) is the elephant in the room and the appetite of GSM to continue to support the business in this regard. However one would like to think 20% (likely to grow) of this project is enough of an incentive

Intuitively it feels like there must be way a through this. The whole point of the EIA is to develop mitigating measures to protect against adverse social and environmental impacts not to outright kill a project that is not 100% perfect; in which case a ML in isolation becomes somewhat meaningless and uninvestable.

"The pipeline is part of OCP Group’s Water Programme, delivered by its specialised subsidiary, OCP Green Water, that is dedicated to supplying 100% non-conventional water to the Group by the end of 2024. By 2027, through investments totalling US$611 million, OCP Group aims to have a production capacity of 560 million m3/y of desalinated water and 60 million m3/y of treated wastewater. Combined with new technologies to reduce the Group’s water needs, this will not only guarantee supplies for its industrial operations but also provide spare capacity for local communities, building their resilience to climate change.

This project supports Morocco’s priority for sustainable development and is closely aligned with the World Bank Group’s strategy in Morocco, which includes a strong focus on climate. By 2030, the pipeline is expected to be exclusively powered by renewable sources, improving access to sustainable water resources, and increasing resilience to climate shocks"

Ambiguity of language is certainly not helping matters; referrals, upheld referral, review, recommendations etc.

Odds surely have to point to the unfavourable recommendation being linked to piping de-sal water. If state owned OCP are spending many millions to achieve the same in order to be in a position where they use 100% non-conventional water by 2027 then why would Emmerson not be expected to follow suit; especially when they keep referencing the enhanced NPV of the project. Yes KMP reduces water usage by 50% but I guess their argument would be 50% of a sh.t load of water is still a sh.t load of water.

The question then is would that be game over and hence trying to extract some reasonable value by selling to OCP the only realistic way out of this. The MAs would certainly be setting some precedent for future foreign investment in similar projects; investing in any project before ESIA awarded would become senseless. Emmerson have indirectly been sold the ML by said Authorities and then in good faith invested c$20m in the project excluding overhead. If that can be killed at the last minute due to a less than perfect EIA then ML issuance becomes somewhat of farcical process as it means nothing in reality.

Impossible to predict how this plays out but it feels like a sensible conversation along the lines of lets all forget the lengthy legal route and resulting reputational damage and hence try to agree a moderate compensation package for work completed, the ML and KMP patent etc.....OCP may as well buyout EML and be done with.

They have cash for 4-6 months and a SI who owns 20% of the project with seriously deep pockets. A fighting fund would be minimal given the project is mothballed anyway and pocket money for GSM.

If the authorities see that Emmerson are not going away then they have the issue of the Mining license to resolve and will have to pay fair value for the asset. Personally I think this has a long way to play out yet. We can also throw KMP into the pot in terms of patents and licensing potential etc.

It is strange wording for sure but to be fair Emmerson have a habit of doing this as Ideas stated.

"Emmerson has not received formal notification of a decision and is seeking clarification regarding both a decision and the unfavourable recommendation"

To me this reads as if Decision = rejected and unfavourable rejection = something along the lines of water needs to be piped in etc.

Otherwise the "Decision" is all they need to state imo.

Anyone familiar with the EIA process in practice. Presumably, unless the CRUI are saying this area cannot be mined now, then you get unlimited attempts to keep revising the EIA until it is fit for purpose even if that involves incorporating a costly pipeline ?

I guess its possible that the ML has a condition attached to it saying must get an approved EIA within a certain timeframe. However, if not, then subject to funding you keep on revising the EIA. We know the NPV has improved considerably hence the project could absorb the incremental costs of a pipeline if that is what is required.

The unknown is do GSM have the appetite for the fight as cash runs out in 4-6 months. If they do then this could be an opportunity. Evidence that Emmerson are not going to back away could see a reasonable offer from OCP for the license or some sort of tie up.

Possibly wishful thinking but feels like still more to play out here.

"unfavourable recommendation" is ambiguous. Possibly need a pipeline etc to get it over the line.

Completely reliant on GSM now to sustain a fight. Not sure how easy it is for the MA to simply revoke the ML on the grounds the EIA is not fit for purpose. Suspect this gets even more messy from now on.

Took some more as well sub 5p.

Irrespective of the reasons for the 5p pegging the MC of only £11m, given everything Bres has achieved to this point, is surely becoming farcical. A new entrant to this sector would take years and serious cash to get to this position; a point that is not lost on Mike.

The quality of the partners, the apparent unanimous support for the project across multiple jurisdictions and an experienced CEO with a Chartered Accountancy background make this a compelling investment in my opinion; especially at these levels. The 5p resistance is seemingly so strong that one suspects that when it is finally breached it smashes through; at least hopefully !

For me this is one of those opportunities that people will look back on one day and say well that was a no brainer.......how did I miss that one etc

I guess Hayden Locke can always spring back into action to lend a hand on the funding side given his PE and Investment Banking experience - in his interest to do so as a non-exec that still owns 10m shares (plus possibly some unexpired options).

GSM may also come to the party to fill the void before there is a requirement for a full time CFO.

@Mattador also seemed to be lining up the OCP guy !

A bit harsh I would say.

The goal posts have moved. SPG plant was once an optional add on whereas it is now business critical. Mike has effectively now realised the operating model is not essentially commercially viable in its absence or at least it's marginal.

The net effect of this realisation impacts everything - the DFS, partners, timings, funding, politics etc. Increasingly Bres is taking the role of facilitator managing relations with DFC, Uganda officials, trading partners; at some point they will move to one side at which point I believe SHs will be handsomely rewarded. I think Mike is creating something huge here with retaining 100% ownership of OC. The SI 2m is a nonsense imo and has far too much airtime.

All that being said the 5p pegging is a frustration for sure. At some point we smash through but who knows when !

He could well be. Various possibilities for vested options so I guess will depend on the contract.

keep them on same terms, have to exercise within 90 days of leaving, cancelled when leave etc.

Would be good to know as been burnt in the past with CFOs walking and not following them to the exit. Out of interest can you say how you heard he is keeping the lot ?

Hamz not completely clear. However he was issued 9m options with 9 year expiry when joined in 2022. You can see these still live in the 2023 Annual Report.

More recently (31 May) 1m of these EMI converted and it states has 14m options after this award.

So the 9m will have to be part of that 14m as no other announcement. If the case its a lot of options to walk away from but we obviously don't have all the detail as to reasons.

A bit careless for sure but of course they mean Q4. They have combined the Q3 business update with interims. Usually the business updates is released a few days after the quarter end so its been written as such but anyway.

Somewhat of a curate's egg this one. Specifically referencing a period for expected EIA approval is better than the normal open ended comment and is quite bullish given GC got burnt with his imminent comment in the past. KMP appears to be the answer to just about everything you can think of; perhaps they need to get it in front of the CRUI to head up negotiations !

On the flip side, always get a bit twitchy when the CFO walks especially when on the cusp of apparent greatness. He is not actually a Director but from what I can see from last options RNS he still has 14m options that don't expire for another 8 or so years. Admittedly they are priced 7-15p range in various tranches but if you genuinely believe do you walk away from 14m options with a lengthy expiry. Shareholding wise he only has 500k. Obviously we don't know the full picture so maybe was a bit more of push. @Matador the inference from your post is you think this is linked to an OCP tie up of sorts ?

Not a lot to like here financially imo and results pretty much in line with my worst case. Predicted Operating loss of €1.7m and came in at €1.63m loss.

Revenue and GP a bit better than thought but Opex is still completely out of control and is killing the business. What happened to the so called 20% reduction in overhead ? Opex H1 23 €2.1m H1 24 €2.3m.........so costs have actually increased by 10% !

Debt is now > €6m and Net Assets down to €19m although a significant chunk of this is Intangible goodwill and spurious investments that are very hard to ascertain true underlying value.

I imagine Operating losses in H2 will also be c€1.5m so the recent cash raise is not going to last long. It is difficult to envisage them being able to avoid tapping the market again in due course with this current level of overhead. "Strengthening" the Board will not have come cheap and note the private equity experience.......still feels the the most likely route out of this.

The issue is you have to be prepared to lose the lot whatever the price drops to so we have very little fresh capital and equally no one prepared to average down; one way traffic.

If they are already drafting the Q3 update it shows that even management have given up with the notion that the EIA could land any day out of the blue.

It is starting to feel increasingly unlikely that the EIA will be forthcoming having tried in vain for 4 years. OCP JV best case or worst case ML revoked (EIA failure) and enter mediation/arbitration imo.

Would love to know what GSM make of it all and what they are doing to protect their 20% stake in EML. We still should have reasonable cash to take us to Q2 25 but beyond that it is unclear if GSM continue to support. Maybe this is what the authorities are hoping for and we disappear quietly.

I am personally expecting the interims to be dire and at the worst end of my projections. H1:

Rev €1m

GP €0.3m

Opex €2m

loss $1.7m

Given opex is mainly cash based this 1.7m loss will effectively equate to cash burn and would explain the emergency 1.1m raise. They need logik + raise to remain operational throughout H2 imo.

Anyway we will soon find out.

Funding questions are always valid.

The bigger question however is how do all these developments correlate to a flat MC of c£10m. The SP could be 1p or 10p and the exact same arguments persist and a reluctance to invest etc. The reality of the situation is we have a risk averse junior market. The SI 2.5m could land tomorrow and I am willing to bet this does not fly past 5p as concerns will simply move on to the next operational/financial risk.

Personally I think this is building to literally become something huge. Having an ACA as CEO makes a massive difference at this stage of the business cycle. However I do admit that, at least for the time being, the days of being an "early bird" investor to making greater returns has become pointless. It seems you take all of the risk for the same returns !