Ed The NED and his twitter Thread15 Jan 2021 14:22
1/2
I've tried to unroll the twitter thread from Ed The Ned. For you all, I suspect it's eerily similar to the contents in Mining Journal.
Plenty of discussion points
....
Emmerson springs out of the blocks
Rising demand for agricultural commodities has provided a strong backdrop for AIM-listed potash developer Emmerson PLC as it progresses towards construction of its Khemisset muriate of potash (MOP) project in northern Morocco.
Shares in Emmerson have risen 33% since the start of the year, but Hayden Locke, former CEO and now executive director, believes there is more to come, with the company set to secure its mining licence in the coming weeks before closing a deal with an as yet unnamedstrategic partner.
Locke, who described 2021 as a big year for Emmerson, told Mining Journal he put the recent share price move down to a bull run in corn and soybean.
“The agricultural sector is going through a boom. Grain prices are going through the roof. Soybeans are almost at all-time highs, which is a huge potash consumer,” Locke told Mining Journal.
“The last time soybeans went through this level, it signalled the run of a potash price up to $900/t…I hope it doesn’t go that high but it’s certainly looking pretty bullish,” he said.
MOP prices have also been on the move over the last few months; prices in Brazil are up about 25% from the end of the September quarter to nearly US$300/t today.
Emmerson released a feasibility study in June 2020 showing a post-tax NPV for Khemisset of US$1.4 billion and IRR of 38.5% over an initial 19-year mine life, with a pre-production capex figure of US$387 million, US$19 million below the scoping study estimate.
Emmerson assumed a price of US$412/t in the study, considerably above current levels. However, if Locke is correct and MOP prices rise in the wake of strong corn and soybean prices, the study figures could prove conservative.
Khemisset’s NPV rises to over US$2 billion at $500/t MOP, with EBITDA to US$425 million.
In terms of moving the project forward, Locke said Emmerson hoped to receive its permits from the Moroccan authorities “early on this year”, with the strategic partner, which would finance the mine from an equity perspective, to be confirmed by the end of June.
While Emmerson has yet to comment on the identity of its potential partner, Morocco is home to one of the world’s largest potash consumers in OCP.
Locke conceded OCP had a “vested interest” in a potash mine being built in the country, and noted the recent uptick in MOP prices would only sharpen the company’s focus in securing future supply sources.
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