Emmerson Plc · LSE:EML
Emmerson — Investor Presentation (October 2020)
21 slides from Emmerson's investor presentation, October 2020
Slide 1: Developing a low capex, high margin potash project in Morocco
Developing a low capex, high margin potash project in Morocco Corporate Presentation October 2020
Slide 2: Disclaimer
DISCLAIMER This presentation (“Presentation”) is being provided to you (the “Recipient”) by Emmerson PLC (the “Company”) for information purposes only and does not The Company is not responsible to the Recipient for providing regulatory and legal protections afforded to customers (as defined in the
Slide 3: Introduction
INTRODUCTION • Demand for potash will continue to rise • Inevitable need for new well-located sources of supply • Outstanding project economics • Key development expertise in place • Massive equity upside compared to sector producers Corporate Presentation 2
Slide 4: Population growth requires ever higher yields
POPULATION GROWTH REQUIRES EVER HIGHER YIELDS 145 Farmland per capita is shrinking 140 Global fertilizer consumption (kilograms per hectare of arable land) as population rises – arable land (hectares 135 per person) reduced by 33% in the 40 years to 2016 130 Total productive arable land 125 now redu
Slide 5: Our Vision
Doing the right things and doing OUR VISION them in the right way LEADER To be the first and leading potash producer in Africa SUSTAINABLE Partnering with a global renewable energy company STAKEHOLDER Creating lasting employment, paying meaningful returns to Morocco SAFE No compromise on the safety
Slide 6: Bulk commodities depend on logistics...
BULK COMMODITIES DEPEND ON LOGISTICS... Canadian giants are the swing producers (supply restraints ongoing) Nearly 70% of global potash supply is very Saskatchewan remote from end markets Royalties ~US$25/tonne 1,700km by Rail Saskatoon ~US$45/tonne 135km Truck to Port Nominal Royalties US$14/tonne
Slide 7: ...to keep all in sustaining costs competitive
...TO KEEP ALL IN SUSTAINING COSTS COMPETITIVE AISC to CFR Brazil, by operation 300 Khemisset (EML) Khemisset (EML) 250 Inc. By Product Credits 200 $US/Tonne 150 100 50 0 Mining Processing Royalties, Sustaining Capital, and S,G&A Freight Net of Salt By Product Credit Corporate Presentation Source: A
Slide 8: The geology and location are unique advantages
THE GEOLOGY AND LOCATION ARE UNIQUE ADVANTAGES Corporate Presentation 7
Slide 9: Low upfront capex - mine gets built
LOW UPFRONT CAPEX - MINE GETS BUILT Conservative Case Consensus Case Mine life 19 years 19 years Extraction rate (Mt/annum) 5.7 5.7 MOP price per tonne (USD) 280 360 Average Annual MOP production (tonnes/annum) 700,000 700,000 Average Salt Production (tonnes/annum) 1,000,000 1,000,000 AISC FOB Casab
Slide 10: Potash is a steady market
POTASH IS A STEADY MARKET • Current supply restraint signals the potash price has bottomed, will rise from here • The major potash producers trade at decent multiples – around 10x EV/EBITDA • Oligopoly market dampens the boom and bust of other commodities 16.00 14.00 12.00 10.00 EV/EBITDA 8.00 6.00
Slide 11: 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 are top quality • The capex is much lower than the NAV • The management team is credible • Strong shareholders join the register Market Cap USD Projec
Slide 12: ...in comparison to peers
…IN COMPARISON TO PEERS Market Cap as Percentage of NPV8 for other Potash Developers 45% 42% 40% 35% 30% 25% 24% 19% 20% 15% 13% 10% 9% 5% 5% 3% 0% Salt Lake Potash Danakali Kalium Lakes Agrimin Ltd American Pacific Highfield Emmerson Borates Resources 11
Slide 13: The value of independence
THE VALUE OF INDEPENDENCE Inverse Payback 0% 10% 20% 30% 40% 80% • High margin standalone KP2 Kola business 60% KP2 DX EML Adj. Op. Profit Margin +SOP • Ability to finance as a new AMN EML KLL APC independent 40% SO4 HFR SOP EPO RWD DNK CPM WRX • Maximise profit selling into best GSP markets 20% KRN
Slide 14: A strategic asset
A STRATEGIC ASSET 748Kt Green Morocco successfully developing better farmland Africa is expected to experience faster population growth African farmland could see the strongest demand growth for fertilizer Average Global Potash Demand Growth – 2-3% per annum Corporate Presentation Source: www.oc.gov
Slide 15: Morocco is open for business
MOROCCO IS OPEN FOR BUSINESS • Morocco ranks highly on the global investment index • Welcomes FDI in the industrial sector • Competitive royalties and fiscal regime to develop mining sector • Khemisset will be a meaningful contributor to employment and GDP Corporate Presentation 14
Slide 16: Socio economic study
SOCIO ECONOMIC STUDY • 2,385 direct and indirect jobs to be created during construction • Once operational a total of 1,500 jobs will be created with 760 being direct employees • Targeting to fill 90% of roles at the mine with employees living within Khemisset region • Total investment over the life
Slide 17: On the fast track to production
ON THE FAST TRACK TO PRODUCTION Progress to date has been cost effective and quick Nov 2018 July 2019 Feb 2020 June 2020 Aug 2020 Low Capex Potential PEA for Sale of Salt By- Completion of Power and BFS– 5.20p Shore Capital Appointed Joint Broker Confirmed by Scoping Study Product – 4.00p Gas Supply
Slide 18: Financing options
FINANCING OPTIONS • In talks with strategic equity investors • Preliminary discussions with lending banks and specialist funds • Unencumbered off-take is a trump card • Financial investors can take construction risk for producer multiple revaluation • Phased developments Corporate Presentation 17
Slide 19: Upside potential
UPSIDE POTENTIAL • SOP production facility • Low capex, high NPV addition – PFS ongoing • Increase salt sales to the USA • Capacity to grow from 1Mtpa to 4.5Mtpa • Potash Price Recovery • Argus consensus Long Term MOP price $412/t in the FS • Increase Mine Life • Central & SW deposits accessible – p
Slide 20: Investment case
INVESTMENT CASE Well funded with a cash balance of £1.7m to execute strategy quickly Low capital cost, high margin Experienced Board and development confirmed by Management Feasibility Study Number 1 African investment Strong long-term jurisdiction in 2018 fundamentals for potash Defined development
Slide 21: Contacts
CONTACTS: Emmerson Plc Graham Clarke – CEO We will strive to “Always do the right Graham.Clarke@emmersonplc.com thing and always do it in the right way” Hayden Locke – Executive Director Hayden.locke@emmersonplc.com R respect. We respect our environment, our stakeholders and each other. Shard Capita