Construction of London Stock Exchange listed Emmerson’s Khemisset potash project in Morocco is set to commence before the end of this year. Emmerson recently announced a key deliverable in the approval of the Mining Licence (ML) which provides the company with the exclusive right to develop and mine the potash deposit, within the specific perimeter of the licence area, in the Khemisset basin.
According to Graham Clarke, CEO of Emmerson, the grant of the ML followed a successful application process including the submission of a proven, JORC compliant, Mineral Resource Estimate (MRE) and the confirmed technical and economic viability of the project, which was satisfied by the Feasibility Study. “In fact, the Feasibility Study highlighted Khemisset’s outstanding attributes including industry leading capital and operating costs and delivered an initial mine life of 19 years, based on less than 50% of the global resource base for the project. Importantly, the ML encompasses the full resource base allowing simple expansion of the operations in the future without the requirement to re-permit,” says Clarke.
Noting the robust fundamentals which were demonstrated in the June 2020 Feasibility Study, Emmerson announced in February 2021 its intention to examine the opportunity for phased development and expansion projects at Khemisset, aimed at potentially reducing upfront capital costs whilst increasing the ultimate production output and capturing more of the margin, improving on what they say is already a world class project. The key objectives of the phased development approach include:
“We are fortunate that we now have a tailwind in the potash market, with increasing demand tightening up the pricing that producers can set. Clearly this is a helpful situation as we look to negotiate the strategic financing options to construct our mine. Recently, several producers have reported improving prices as strengthening fundamentals from 2020 start showing their effect. They mention a combination of diminished inventories, rising commodity prices, compelling farm economics, and a cyclical recovery being underway.
“The leading fertilizer industry analysts at Argus were forecasting monthly price increases from the lows of mid 2020 for the short and medium term time horizons. This is what has been seen so far and in fact the price in Brazil, which is where Emmerson demonstrates its logistics advantage, was already about 10% higher in January than was being forecast early last year. The more encouraging market outlook for potash will clearly assist in the ongoing strategic and debt financing discussions for Khemisset, says Clarke.
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