Emmerson Plc · LSE:EML
Emmerson — Non-Deal Roadshow (September 2021)
30 slides from Emmerson's roadshow presentation, September 2021
Slide 1: Developing a low capex, high margin potash project in Morocco
Developing a low capex, high margin potash project in Morocco Corporate Presentation – September 2021
Slide 2: Disclaimer
Disclaimer This presentation (“Presentation”) is being provided to you (the “Recipient”) by Emmerson PLC (the “Company”) for information The Company is not responsible to the Recipient for providing regulatory and legal protections afforded to customers (as defined purposes only and does not constit
Slide 3: Investment Highlights
INVESTMENT HIGHLIGHTS 1. 2. 3. 4. $1.4bn Potash: Lowest Quartile Key Development Multi-decade After Tax NAV1 Cost Base Expertise in Place Demand Growth 5. 6. 7. 8. Highest Supportive 19 Year + Expansion Standards Mining Jurisdiction – Mine Life To >30 Years Low Tax & Royalties ESG Compliance 01. Cor
Slide 4: Population + Intensity of Use = Demand Increases up to 2Mtpa
POPULATION + Intensity of Use = DEMAND INCREASES up to 2Mtpa After Tax NAV1 To Reduce Rates of soil K depletion, IoU will Trend annual have to accelerate; growth of 1.5% p.a. growth of corresponds to incremental demand of 42Mt by 2035 ~2 Mt If IoU continues to rise at roughly the Trend annual * hist
Slide 5: Prices Moving Much Higher
PRICES MOVING MUCH HIGHER * 01. Corporate Presentation
Slide 6: Morocco – Great Location for a Potash Deposit
MORROCO – GREAT LOCATION FOR A POTASH DEPOSIT Morocco is a major fertilizer player through OCP phosphate exports An important domestic market for fertilizer Gateway to Africa: the fastest growing fertilizer market Actively encouraging both industrial FDI and new mining projects 01. Corporate Present
Slide 7: Harnessing Abundant Renewable Energy
HARNESSING ABUNDANT RENEWABLE ENERGY Emmerson is negotiating energy tariffs with Voltalia Morocco has 3,000 hours of sunshine per year There has been over $3bn of new solar projects started in country 42% of electricity is now generated from renewable energy COP21 pledge: 52% of electricity from ren
Slide 8: Positive Impact
POSITIVE IMPACT 1. 2. 3. 4. 2,385 US $146m US $63m Direct & indirect jobs created US $2.5bn during construction. Per annum - Indirect fiscal Per annum – Direct fiscal contribution of the project contribution of the project 1,218 in indirect employment Total investment over the 760 in direct employme
Slide 9: Major Cost Advantage from Location
MAJOR COST ADVANTAGE FROM LOCATION Canadian giants are swing producers (supply restraints ongoing) Nearly 70% of global potash supply is very remote from end markets Saskatchewan Royalties ~US$25/tonne After Tax NAV1 1,700km by Rail Saskatoon ~US$45/tonne 135km Truck to Nominal Royalties Port US$0.1
Slide 10: The Geology and Location Are Unique Advantages
THE GEOLOGY AND LOCATION ARE UNIQUE ADVANTAGES 01. Corporate Presentation
Slide 11: The Big Picture – A Global Fertilizer Hub
THE BIG PICTURE – A GLOBAL FERTILIZER HUB Total MOP Imported to Morocco 2012 - 2019 (in Tonnes) 1,200,000 Jorf Lasfar – one of the largest fertilizer complexes in the world. 1,000,000 Water, Power, Atlantic port. 800,000 SOP Input: Sulfuric acid. OCP 600,000 industrial production on site. 400,000 SO
Slide 12: Africa Population Boom
AFRICA POPULATION BOOM African population set to grow rapidly in coming decades: • Currently growing at 2.7% a year • Population to have doubled by 2050 to 2.5 billion (25% of global population) • Growth in population and GDP per capita forces increases in yield – creating even greater growth in dem
Slide 13: Agriculture Growth in Africa
AGRICULTURE GROWTH IN AFRICA Africa’s vast size only contains 288 MHA of harvested area Responsible expansion of agricultural area alongside growth in use of potash has large potential in increased food production for Africa and the rest of the world. The soil of Sub-Saharan Africa is among the most
Slide 14: The Future Growth Continent
THE FUTURE GROWTH CONTINENT Forecasted demand growth for MOP in Africa exceeds all other regions over the next decade Potash contribution to K uptake in Africa is the lowest globally at ~5% Africa’s soil nutrient balance is “poor, deteriorating” – further highlighting the need for potash in African
Slide 15: Potash Is a Steady Market
POTASH IS A STEADY MARKET Current supply restraint signals the The major potash producers trade Oligopoly market dampens the potash price has bottomed, will rise at decent multiples, around 10x boom and bust of other from here EV/EBITDA commodities 16.00 14.00 12.00 EV/EBITDA 10.00 8.00 6.00 4.00 2.
Slide 16: The Khemisset Project Has World Class Economics
THE KHEMISSET PROJECT HAS WORLD CLASS ECONOMICS Post Tax NPV8 = $1.4b Average Annual ROM Production (tonnes) 5.7m Post Tax IRR = 40.6% CAPEX = $411m Life of mine 19 Years Average Annual MOP Production After (tonnes) Tax NAV1 735,000 LOM Cash Cost ($/tonne) 151.8 AISC FOB Casablanca ($/tonne) 158.0 P
Slide 17: Significant Equity Upside from Net Asset Value
SIGNIFICANT EQUITY UPSIDE FROM NET ASSET VALUE Junior resources companies can be expected to trade around 20-25% of NAV if: The project economics The capex is much The management team Strong shareholders are top quality lower than the NAV is credible join the register Market Cap USD Flagship Project
Slide 18: Low Upfront Capex
LOW UPFRONT CAPEX Consensus Case Spot Price (All other inputs equal) Mine life 19 years 19 years Extraction rate (Mt/annum) 6.0 6.0 MOP price per tonne (USD) 412 680 Average Annual MOP production (tonnes/annum) 735,000 735,000 Average Salt Production (tonnes/annum) 1,000,000 1,000,000 AISC FOB Casab
Slide 19: On the Fast Track to Production
ON THE FAST TRACK TO PRODUCTION Progress to date has been cost effective and quick June RTO £6m raised at 3p Jun Mine Builder CEO Appointed– 5.40p 2018 2020 FS – 5.20p Nov Low Capex Potential Confirmed by Scoping Study – 3.35p Jul Equity Financing £1.72m @ 4.25p– 4.87p 2018 2020 Apr Heads of Agreeme
Slide 20: Major Milestones to Advance into Construction
Major Milestones to Advance into Construction 1. Mining Permit 2. ESIA Approval 3. Strategic Partner 4. Debt Finance 5. Commence Construction 01. Corporate Presentation
Slide 21: Always do the right thing and always do it in the right way
We will strive to “Always do the right thing and always do it in the right way” Emmerson Plc Graham Clarke - CEO R Respect We respect our environment, our stakeholders and each other. graham.clarke@emmersonplc.com Hayden Locke – Executive Director hayden.locke@emmersonplc.com I Integrity We act with
Slide 22: Thank You
THANK YOU 4% EMMERSON PLC
Slide 23: The Value of Independence
THE VALUE OF INDEPENDENCE High margin standalone business Unallied to any integrated Fertilizer company Maximise profit flexibly selling into best markets 01. Corporate Presentation
Slide 24: Current MOP Prices in Different Markets
CURRENT MOP PRICES IN DIFFERENT MARKETS 01. Corporate Presentation
Slide 25: Phased Development Summary
PHASED DEVELOPMENT SUMMARY Conceptual, phased development plan completed resulting in major value enhancing opportunities Estimated NPV8 US$2.37 Significantly reduced up- Potential for subsequent billion (post tax) front capex of US$254.6m phases to be funded from (assuming phase 4 (pre-contingency)
Slide 26: Stepping Up to a Larger Output Plateau
STEPPING UP TO A LARGER OUTPUT PLATEAU Phase 1 Phase 2 Phase 3 Phase 4 Total MOP Production (t) 350,000 385,000 - 270,000 1,005,00 MOP consumed by SOP production (t) - - (205,000) - (205,000) MOP Sold (t) 350,000 385,000 530,000 270,000 800,000 SOP Production (t) - - 240,000 - 240,000 De-icing salt
Slide 27: Phased Development Expansion from Cashflow
PHASED DEVELOPMENT EXPANSION FROM CASHFLOW 800,000,000 700,000,000 600,000,000 500,000,000 US$ 400,000,000 300,000,000 200,000,000 100,000,000 - Phase 1 Phase 2 Phase 3 Phase 4 Sales Capex * 2019 F =EBITDA forecasted figure as real data has not been fully collected yet Source: www.oc.gov.ma/DataBase
Slide 28: Sales and EBITDA Growth as Production Ramps Up
SALES AND EBITDA GROWTH AS PRODUCTION RAMPS UP 800,000,000 6.0 700,000,000 5.0 600,000,000 4.0 500,000,000 EBITDA Multiples US$ 400,000,000 3.0 300,000,000 2.0 200,000,000 1.0 100,000,000 - 0.0 Phase 1 Phase 2 Phase 3 Phase 4 Sales Capex EV/EBITDA 01. Corporate Presentation
Slide 29: Feasibility Study: Positive Economics
FEASIBILITY STUDY: POSITIVE ECONOMICS Key assumptions and results NPV (US$m) Sensitivity to Potash Price and Discount Rate Cashflow & EBITDA Sensitivity to Potash Price Cashflow & EBITDA Sensitivity to Potash Price 01. Corporate Presentation
Slide 30: Is There Room for Jansen
IS THERE ROOM FOR JANSEN BHP “Jansen” – after eventually coming online The world needs 2Mt more potash every year By 2030 demand will have grown approx. 18Mtpa Even a new world class mine needs a $327/t at Vancouver Khemisset’s location is key to its value (CFR Brazil is at least $40/t higher than F