Credit: Emmerson Plc
Pending government approval of its potash production activities in Khemisset, Emmerson Plc, a British mining company whose activity is focused on Morocco, continues to suffer losses. According to the financial results for the 2023 financial year published on May 24, operational losses suffered by Emmerson reached $2.98 million, down slightly compared to the $3.19 million incurred one year. previously. The loss for the year attributable to owners of equity reached $2.9 million compared to $3.1 million in 2022, with an overall loss attributable to owners of equity of a total of 2. $87M (this amount was $3.24M in 2022).
In addition to operating and financial losses, total current assets also showed a deterioration for the last financial year. The value of these fell by more than half, going from $7.85 million in 2022 to $3.01 million in 2023. The total assets (current, in addition to non-current assets including value increased to $20.4M) in turn shrank from $26.5M to $23.5M. Although total liabilities (mainly debt) fell from nearly $1 million in 2022 to $346,000 in 2023, total equity deteriorated to around $23 million for the previous year, instead of from $25.46 million a year ago. Net earnings per share in turn fell from 0.34 to 0.29 cents.
As Emmerson continues to feel the impact of the delayed start of production at the Khemisset mine, the estimated costs of operations have been revised upwards in light of new data. Inflation has indeed led to a 31% increase in the estimate of investment expenses (CAPEX), which should stand at nearly $540 million, well beyond the $411 million estimated by the study. of feasibility of 2022. In addition, the update of the financial estimates published on May 24, also forecasts a decline in earnings before interest, taxes, depreciation and amortization (EBITDA), which would be drawn from $286 million initially forecast to $258 million. $. The financial forecasts for the Khemissate potash project are also reviewed by the company based on another parameter: the introduction of new environmental processes. Indeed, after the rejection, last March, by the Ministerial Steering Commission of the appeal made by the company following the unfavorable decision of the Unified Regional Investment Commission (CRUI) rendered in July 2023, the company was invited to include environmental optimization measures before submitting its file for re-examination.
This led to the introduction of a new process, the Khemisset Multi-mineral Process (KMP), whereby the magnesium and iron chlorides present in the brines would be precipitated in the form of struvite and vivianite, after reaction with minerals. phosphates and ammonia. These innovative solutions for residue management would “make it possible to recycle the brines in the plant, instead of eliminating them via deep injection into a well,” explains the company, emphasizing that “ brine recycling has several benefits, including a 50% reduction in overall raw water consumption compared to the 2020 FS, and an improvement in potash recoveries from 85% to approximately 91%. “.
The integration of these new solutions would be accompanied by a reduction in costs and a significant increase in profits, as indicated by the financial forecasts developed taking into account the adoption of the new process. According to the same Source, the project’s investment expenses should only increase by 28% with this innovative solution. Taking into account the effect of operating cost inflation, including revised price assumptions for costs such as electricity, staff salaries, fuel and transportation… CAPEX would thus be around of $525 million, while annual EBITDA would reach $440 million, well beyond the profit of $286 million estimated during the feasibility study.
Today, obtaining Environmental and Social Impact Assessment (ESIA) approval remains the priority for Emmerson. Having already invested significant efforts in this direction », the company, she announces, has just submitted to the CRUI a new study integrating the latest optimizations. Indeed, the issue of approval, which has been the focal point of Emmerson’s work during 2022 and 2023, remains the main concern for 2024 as well. “ The priority for 2024 is to obtain approval of our updated ESIA, incorporating the KMP optimizations, which we submitted to the Moroccan authorities in April 2024. Depending on the results of the next assessments, we expect to receive new from the CRUI shortly after. Given the level of optimizations now incorporated into the ESIA, we very much hope that approval will be granted soon “, she emphasizes.
The outlook for 2024, like operations, remains dependent on the commission’s verdict. Outlining the balance sheet to date and the outlook for the current year, the company reassures that the fundraising in April 2024 made it possible to raise $2.5 million, providing it with “ additional funds to continue work at Khemisset pending ESIA approval “. However, only after receiving this approval, will Emmerson be able to move forward with finalizing the remaining studies on the KMP, so that it can then be incorporated into an updated feasibility study, “ based on the initial 2020 feasibility study, but including all optimizations and improvements, as well as revised estimates, made in intervening years, including work completed as part of baseline engineering “.
