Emmerson (LSE:EML) — Company Update

0:01 Good morning, ladies and gentlemen, and welcome to the EMMERSON PLC Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time using the Q and A tab that's on the right hand corner of your screen. Please simply type in your questions and press send. The company may not be in a position to answer every question received during today's meeting, but the company will review all questions submitted today and publish responses where it's appropriate to do so. We'll make these available to you via the platform, and we'll email you when they're ready for your review. I'd also like to remind you that this presentation is being recorded.

0:32 Before we begin, we'd like to submit the following poll. And if you'd give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand over to Charles Vaughan, Corporate Development Director and Graham Clark, CEO from EMMERSON. Good morning to you both. Good morning, and thank you. Good morning, everybody that's online listening to us. We're going to go through a presentation, which will probably take us around twenty five minutes. Because we we've you know, there'll be a range of people watching, we're going to cover off sort the basics of the of the project, of the company, but also then update on on the most recent announcement from last week and also the next steps going forward from here.

1:13 So just in terms of an overview of the project, the ChemoSEF project in Morocco, it's a high value project. So our feasibility study that was completed last year identified a net asset value of $1,400,000,000 That was based on a a potash price forecast at the time of just over $400 a ton. Price now spot market is well over $800 a ton in some of the markets, and that would actually put our our NAV up closer to $4,000,000,000. So high value project, a lot of confidence in the potash price, and we'll talk a bit more about that as we go through. Potash itself, much in demand, increasing demand over historically over the last fifteen to twenty years, and that is all forecast to continue going forward. And we'll cover that in more detail as well.

1:59 When we're in production, we're in the bottom quartile, very low cost producer. Various reasons for that, partly the ore body, the closeness of surface, and also the location and access to a port, which gives us access to all of the main fertilizer markets around the world. All of the work we've done on the project to date has been done to the highest standards above and beyond what would necessarily be required in Morocco. So all of our environmental and and social work assessment work has been done to to World Bank standards. We have a very supportive jurisdiction. Morocco, you know, compared to to a lot of Africa, is is a really stable jurisdiction. They understand mining. They understand the benefits, and they're wanting to develop the economy of the country and are very much supporting inward investment of of the type that that we're doing on this project.

2:46 As as we stand, we have a nineteen year mine life. That's from less than half of the resource that we've identified, and we fully expect, as as happens with with most mines, certainly potash mines, which is my experience, that as we as we mine forwards, we'll explore more, and we will probably more than double the the life of the mine, over the period that we're operating. Potential to get well over thirty years, of production. One of the key aspects, and it's shown on the slide in the top right hand corner is if we have the right expertise in place. I joined the company in the middle of last year, taking over from from Hayden who'd driven the the company forward to the point of delivering the feasibility study. But I came in, was brought in because I have the experience to actually build the mine and operate the mine, and that was my sole intent when I joined the company, and that is absolutely the focus of the whole team now is to take this this mine forward into production. I spent twenty odd years operating a mine and another eight or nine on on mine development.

3:44 So we're building the team out now around sort of my expertise to make sure that we have all areas covered, and we'll take this project forward into construction and ultimately into operations. And we're still targeting to do that in 2024. Just to look a little bit more now about the about the products. Fundamentals behind all all fertilizer demand is a growing population, an increased, therefore, need for food and actually the production of food out is outstripping the the increase, in in the population growth proportionally. And then potash demand is actually outstripping that as well. And that is because the more intensive intensively we use, the agricultural land available, the more the nutrients are taken out of the soil and the more we have to put back. And what this results in is an annual growth in terms of the demand of one and a half to 2,000,000 tons of potash per year. And given our our production is around seven fifty thousand tons per year, we're actually less than half of one year's increased demand.

4:48 So absolutely a demand for the prod for the product. And at the moment, with the price as it is of over $800 a ton, obviously, it is the perfect timing for us to be moving forward through the remaining funding activities to get this project, into construction. Great location. We'll talk a bit about the logistical benefits in a moment, but I it's important to understand that Morocco is actually already a fertilizer hub, of of global standards. It has OCP, the world's largest phosphate producer operating in the country, and you can see the four orange circles there on on the plan show the the locations of their mines, and they have fertilizer production at the Port Of Jorf thus far. They use Casablanca to export. So we're very much developing this project in a in an area of the world that understands fertilizers and understands the benefit of that, and that really plays into to our hands as well.

5:43 These are some of the outputs of a socioeconomic study that we we did last year, which, just shows the the benefits to the Moroccan economy of of this project. And this is very well understood at a local, regional, national level, in country. I think the key ones that that, you know, really strike home, certainly in the in the local area where we're building the project is the number of jobs created, which is just under 2,400, and the the increase in local GDP, which is is 40%. So it's transformational. This project is transformational in the in the region of Morocco where we're building it. And this is very much understood, acknowledged, and we we're getting a lot of support for the project. Just a little bit more about the logistics and the fact the location of the project in Morocco, North African coast, access to the Port Of Casablanca.

6:30 And this example, we've shown this in presentations before, but it is really important to understand the differences that this makes to our operating costs and and where we sit on the cost curve. So we can export our prod product from the site in at Chemiset down to one of the main fertilizer markets in in Brazil.

6:50 A $100 over $100 cheaper than the Canadians can from their mines in Saskatchewan. So you see the Canadian, produces Saskatchewan 1,700 kilometers by rail to get to the Port Of Vancouver, high royalties to pay to the Saskatchewan government, and then via the Panama Canal down to Brazil. And we have a $100 a ton advantage over them, and very similar for the for the large producers in Russia as well. We have a real advantage here, which means that we're actually immune from the potash price to a large extent. But obviously, when the price is high as it is now, we make it significantly higher margins than anybody else. This is summarized on this slide along with the sort of advantages that the geology brings to development. So we just here simplistically compare our development to Chemiset to a typical Canadian potash mine. So on the top, we're 500 meters down to access the deposit. So we can do that with two declines. There's no aquifers to contend with. And we've got an estimated cost from the feasibility study of around $35,000,000 for these declines.

7:55 If we're in Canada developing deep shafts through an aquifer, which is very typical, it's also same with the Sirius Minerals, now Anglo American project in The UK, those shafts will cost over $1,000,000,000. So it's low CapEx, but also, and very importantly, it's low risk in terms of the construction methodology. And then with the infrastructure setup as it is in in Morocco, we're only 15 kilometers from connecting to the main power grid. We've got a highway passing the site to take the product down to the Port Of Casablanca, and I've already talked about logistical advantages that we have. So low CapEx, low risk, and it is a standout project in the potash development space. I'll just hand over now to Charles to go through the next two or three slides, and then I'll pick it back up again. Hi. Good morning.

8:42 So you've some of you would have seen this slide before. We think of this project in terms of its net asset value as do most mining investors have to think about development stage and companies that they're gonna invest in. What we show here is a couple of the really, really kind of grade a deposits that were discovered and were subsequently either taken over by larger companies or financed into production, you can see that they can get up to around 50% of their net asset value before they move into production, after which people prefer to value them on EBITDA multiples. Yes. We could value this on an EBITDA multiple in the future now or think about it in those terms, but we prefer to think about it in terms of net asset value because that encompasses what you have to spend to invest in getting the project up and running.

9:40 What we show here is that, sure, we, you know, we announced this very good deal and and the share price moved up to 7p. But but e even at this sort of territory, we are we are at a an extreme discount to on net asset value. We understood that at the time when people were sort of questioning how how we would actually get the whole thing financed and and what how realistic it was. But what we contend is that having done this deal for so much of the equity, we have knocked over a significant part of the risk of getting this whole thing financed. And I think what you'll see next is movement on the debt financing, which which is which is a very big part of the puzzle.

10:30 And and when we've done that, I think that people will start thinking, okay. Well, what what last remains before we can start valuing this at something even at 25, 30% of NAV preproduction. So, yeah, we we think that there is a a huge amount of equity upside if we can knock over the final risks in getting this thing into financed.

11:03 Feasibility study last year, you know, the all of the numbers showed this is a good project. Banks wanna lend on a good project. When we put in the new spot price, if we were selling now, I mean, to to notice that the whole project would be paid back in in a little over a year. I mean, these are you know, it's a fantastically buoyant commodity market that we're coming into. And even though it's true, yeah, we are not yet selling our products, so this is this price is sort of hypothetical, It may certainly had a good effect on chiving along our negotiations with the final person who we actually did our deal with this the strategic. It will have have a very good effect on the final negotiations with the underwriting syndicate we're talking to because it's it's it enables them to use a more realistic long term potash price as their stress test rather than one that's just overly low. We know potash is a pretty well managed market. To use an overly low potash prices, your stress test just causes you to be able not to be able to take on so much of so much loan to value because, because they worry about your debt service ratios.

12:23 In a potash price like this, the banks just get much more relaxed about it. So I think, again, that will play to our advantage in the deal we can strike on the project finance. And just just in case the the details of this strategic investment deal weren't clear to people, It it took a long time negotiating this. The reason we've split it out like this and it's is because the upfront 6,750,000 US dollars was was the money that we required to do all of the work,

13:08 which is part of the CapEx, but work that needs to be done before we will draw down the full project finance. If we didn't have this money, we would have been coming to the market. Price that would have affected the the share price quite badly, I would suggest. However, we've got this, and that means that the timeline is still intact, and we can negotiate at ROEs with the banks. And even the ESIA, which everyone knows has been delayed, it it is no longer causing any holdup at all. So getting some money at a small premium upfront was extremely useful to us, and the and GSM totally understood that. And GSM wants to build this mine and get it into production. So it was doing what it could as well to to make this a deal that worked for everyone, and getting this thing moving forward was key to them. So that's the first part. And then the later part at at a at a much higher premium, which, again, GSM understood, comes from it it converts when sorry. It converts man it's a mandatory convert in due course, but it gets drawn down only when all the project finance is in place. So in a sense, it's sort of low risk for GSM, but when when the banking finance is put in place in the final tranche of equity, all of the money gets drawn down. And at that stage, the

14:38 interest rate kicks in, And then that has a maximum of two years that it could run as an interest paying debt instrument. But if the share price moves over 16p, which to refer back to the net asset value, which only put us at roughly 10%, 12% of the company of the NAV, which is a crazy low thing for for a company that's actually then financed. These these these these converts automatically turn into equity. So and the interest rate stops at that stage straight away. So it's done in a really nice way that it gives the banks the comfort that a large slice of the equity is in place as soon as the project finance wants to go.

15:31 And it's it's high interest, but not high not very high considering the type of debt instrument that it is. And in all likelihood, you're not gonna see that interest rate being paid for very long anyway. And in a very good scenario, everything moves forward and they the the investing party also cashes in its warrants, brings in extra cash at the premium. So we consider that as part of the overall project finance package, this was a very neat solution for a company that had a low market cap at the time of negotiating this deal.

16:14 Okay. Thanks, Charles. So I think what's important now is to understand what we're actually gonna do with the the equity, the money that's come in now that we we're gonna have in our bank account shortly. So this is actually crucial. The deal is, you know, is an absolute trigger for us to push forwards with the the rest of the financing, and talks with the banks have accelerated over the last week considerably already. We we can see that they now understand that this this project can be financed, and they're very keen now to progress their their discussions with us. But, also, what this

16:45 the money that we we've now got allows us to do is to push ahead with some preconstruction work and actually get the the engineering the basic engineering done, contracts awarded for that, and that that work done starting, you know, towards the end of this month for for one of those packages. So what I'd like to do now is just show you how we've actually divided up, the construction into various work packages. This slide shows four of those. Number one being the connection to the highway, which passes the site. Number two is the process facility. Number three, the portal and declines down to access the resource. And then number four is the the remaining surface infrastructure on the site.

17:23 And then the other three packages, number five is the tailing storage facility. And then six and seven, we have to bring power onto the site. That's a connection to the to the main power grid, so that's 15 kilometer

17:36 connection. And then also bringing water onto onto sites, and this is a 20 kilometer pipeline, from a dam fairly close to the site. So seven key packages of work to be better defined, through the basic engineering.

17:52 So what we decided to do in in terms of our strategy is that we, EMMERSON, will actually award these these contracts to do the basic design to 30% with a view then that once that is complete, we will be in a much better position with a greater sort of level of granularity and detail to actually put out the detailed design, the procurement construction to an EPCM contractor.

18:18 People we've been talking to over the last probably five or six months who are interested in doing the basic design, it probably will be one of those that goes forward and unpicks up the EPCM contract. And we've had some really good conversations, not least in Morocco itself, where there are certainly two really good engineering companies, both with global exposure and global support from from larger engineering companies who would be more than capable of actually delivering the basic engineering and the EPCM contracts using their expertise that they already have in country, which is really important for

18:50 us because that gives us efficiency and, you know, we'll control the cost as far as we possibly can. What we're actually doing now with the basic design, we've actually taken one of those out, which is the process facility, and that will go to a specialist engineering company because of the need to make sure we get the process design absolutely right for it to deliver the recoveries and the product that we've identified in the feasibility study. And then the remaining six will probably go to a second different engineering company to complete all

19:21 of the the remaining basic engineering work. And just to give an idea of, you know, the the sort of process we've been through with this, it was going back to April of this year that we actually went out and started to identify potential candidates to do the process engineering work. And we had proposals tender received, and we actually were in a position of having negotiated the price down as it as it happened at the time.

19:48 By the middle of June, we were actually ready in a position where we could have awarded that move forward and awarded that that work to the to the engineering company. We went in a position with the funding in the in the bank at that time to really commit because it is quite a large piece of work. But we are now with the with the the announcement last week, able to actually commit to that, and the plan is that that will be awarded before the end of this month, and that work will commence before the end of the year. With regard to the other six packages, we've gone through a process of of communication, discussion, sort of lengthy workshops over a period of of several weeks with with potential candidates to understand their views on it and and, you know, get their sort of feedback on on our on our strategy and our approach. So we're in a position at the beginning of October to go out for expressions of interest and through a prequalification.

20:40 We went out to seven companies, as I say, two based in in Morocco, but a a number of global organizations as

20:47 well. And we've had, we we received back their initial responses. We actually narrowed the field down to four at that stage, and we've gone out for a request for proposal to them to those four companies, and that was towards the end of October. And we're expecting to to get all of their proposals back probably about the end of this month. And it might be a push, but we're, you know, aiming by the end of the year to be somewhere near in a position to actually award that work for the remainder of the basic engineering. And the, you know, the investment, know, our strategic partner coming in last week, it puts us in a position where we can actually really push forward with this. And this is actually work that was costed as as part of the total total CapEx bill, so it's something that we're actually sort of bringing forwards and and giving ourselves a really good start with.

21:35 We've been doing some work on-site for the last two or three months. So, you know, picking up from some of the areas of the feasibility study where we knew we needed more work just to to give us, you know, much more confidence in in all of the assumptions that have been made and allow us to feed into this design work that we're we're commencing now. We had to do a bit more drilling on-site, and that's a combination of some deep drilling, which is holes down the line of the decline so that we can, you know, fully derisk the decline development and also a couple of extra holes into the into the ore body itself that would actually give us more detail for the early years of mining and a, know, a great level of confidence to put a detailed mine plan together over the next few months. That works well underway. There's a couple of the holes on the decline being completed, and we're actually in process of drilling one of the deeper holes into the ore body at the moment.

22:27 We've also done a series of of over 20 shallow geological drill holes. That's really to give us the detail of the near surface geology so that we can feed that into the planning for the portal for the declines, but also for all of the foundations for the process plant and the the surface infrastructure. So we've done a combination of drill holes and also some geophysical work, and that that is nearing completion, that work now. That should be completed in the next few weeks, And that's given us the valuable data now that the engineering companies can use with the work that they're going to do. And just on the right, that's a photograph there just outside the the core shed near the site. And just just a comment really that, you know, the drilling that's been done, there's been two previous campaigns. All of the core samples taken are in this core store.

23:14 It's fantastically controlled. And I and I have to say my previous experience of of exploration work in The UK, I think the the way the core and the all of this has been handled in in Morocco, you know, is is actually superior to to to my experience previously. So we've got a, you know, great great setup there. All of the core is packaged, packaged, protected, and and therefore for anybody to see we've in the future. And then just, you know, this is just where we where we've been over the last two or three years. You know, we have knocked off a significant number of of milestones, and this, you know, brings us to quarter four this year with the the strategic equity coming in. And I can't, you know, overstate how how important that is to us. It is transformational.

24:00 It has taken us some time, yes, and it's maybe taken us longer than we would have liked, but, you know, these things, you know, have to be done in in a certain way and and and follow the process. So where it puts us now, though, is, you know, in a position where we have the banks now engaging with us, you know, really, really actively engaged with a view to getting the the debt packages in place and us to be able to announce who the lead banks are. And that process then really, you know, is is what takes us forward to financial close and the ability to to start the the physical construction on-site. But it's also allowing us to do all of this this preconstruction work, get the basic engineering done. That enables us, when we're funded, to be able to actually engage with the EPCM to actually start start the project and and and get us into to proper construction.

24:50 And we're still aiming at the moment. The timelines haven't changed with regards to getting into production. You know, we we believe that we can be in first production in the early part of twenty twenty four. So this this really is a, you know, a key event, this the strategic coming on board. They're supportive. And as Charles said, you know, they want to get this project built. So that's why they've invested. They're not just investing to sit back. They've invested so that this project gets built. And I'll just leave the this slide up as the as the last slide and and just comment on it. And we do use the line, do the right things and do them in the right way. That is important. That, you know, that is is the way that we're working in the country. We have to respect our stakeholders there. We have to respect, you know, that that we are delivering this project in another country.

25:36 And that means that, you know, everything we do, we have to do it properly with regard to the environment, everything else, the interaction with the the authorities. And that that is, you know, a really important thing to us, and we do follow follow that with everything that we do, you know, the team in Morocco and and also the team working in The UK. So with that, we'll, you know, sort of conclude the presentation and happy to take some questions. That's great, Graham. Charles, thank you very much indeed for updating investors this morning. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of the screen. I just want let Charles and Graham take a few moments to review those questions submitted already. I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A, can be accessed via your Investor Meet company dashboard.

26:22 I'd also like to remind you that your feedback is important to the company. And immediately after this presentation's ended, we'll redirect you so that you can provide the company with your thoughts and expectations. Charles, Graham, I haven't given you a lot of time to look at the questions. But as you know, we receive both questions ahead of today's events and throughout today's presentation. So perhaps if I may, I'll start off the Q and A by selecting a few of those that we received today and ahead of the event. The first one, if I may, is the company anticipating any cash grants or subsidies from the Moroccan government? Yes. Absolutely. There's there's sort of a range of things that we can get. So there is some obviously, there's there's tax benefits. So a five year tax holiday once we get into operations. And also because of exporting the product, we do actually get a reduction in corporation tax as a result of that. So we get favorable corporation tax rates.

27:16 And also in terms of actual sort of my more direct subsidies, it is actually up to a maximum of 10% of the total capital cost, but that's made up of, contributions to the development of infrastructure, so the power lines and the water pipeline, for example, and some of the roads we we will get a contribution for and also for training and land acquisition. So that can go up to 10% of total capital cost. That's great. Thank you very much indeed. Turning on to the next question. Has Graham or any other team had a meeting with Leila Bernali, the new Moroccan minister for mines? No. Not as yet. I had planned along with with one of our nonexec directors to actually be in Morocco earlier this month.

28:03 And that, you know, the the purpose of that visit was to to get meetings arranged if we could with the with the new ministers that have, you know, announced fairly recently after the election. So we very do very much do want to meet with her, and it's likely now to be in in the new year before we can get out of there because as we were actually arranging various meetings, Morocco sort of closed any direct flights from The UK. So it's once again made travel a little bit more complicated. So we didn't we couldn't commit at that time to to arrange meetings and and be sure we could get there. So that is planned, and we we will very much like to meet Elena Bernal in in particular. Thank you very much indeed. Next question around, I guess, investor communication. Can investors be better informed moving forward regarding important events?

28:50 Yes. I mean, we there's a few questions, and I've seen a couple of the ones, the live ones that have come in. And we do understand that, you know, shareholders want to be, you know, informed and kept up to date. But it it is the case sometimes that, you know, when we're in the midst of of going through a process and and the ESIA is is is such a process as an example, You know, we need to use, you know, a level of diplomacy and, you know, we are working in in Morocco. We have to be careful. And and it isn't really appropriate to to come up with, you know, short, periodic sort of minor updates because, you know, our key target always is to to get to the end of the process and and get the result that we need. So, yeah, we one thing we do for sure and and the Nomad or everyone plays a part in this is if if there is something that is, you know, material or price sensitive, we we obviously put it out by RNS straight away. So we will always do that. But it isn't always appropriate to just to give sort of minor updates as we go through things.

29:52 Thank you very much indeed, Graham. Just turning on to the the next question. Are there any updates on the SOP study? So the SOP study was still that's still ongoing. You know, probably surprisingly to us, we've had difficulty in actually getting meaningful quotes for the equipment, particularly the furnaces. You know, the Manheim process, it isn't that common around the world, and, you know, there aren't many new one new plants being built. So we have struggled to get, you know, quotes that we can actually use in a in in the feasibility study. So that has, you know, caused some delay. But we're still working on that. And, you know, as as soon as we can get something that actually allows us to have proper sort of price prices and costings, then we'll, you know, we will we will let everybody know about that.

30:39 Thank you once again, Graham. Any updates on the icing salt offtake agreement? Yes. We have. We've actually got now a a sales and marketing executive working, you know, for us on this along with the with the potash offtakes. So the salt, we're we are engaged with potential customers, and the target, you know, we've got, is that a minimum of 2,000,000 tons per annum offtake for de icing salt. That is is what we're targeting. We assumed 1,000,000 tons per annum in the feasibility study, but we believe we can actually be more aggressive than that. So there is work going on with that. And as soon as we have any updates, we will let everybody know about it. Thank you very much indeed. Just moving on to the next question. Any conversations with OCP Group about taking on their mine?

31:29 We have had conversations previous, and we've had conversations this year with OCP. And obviously, there's logic in that happening. They'll you know, they have an area of the of the same deposit. But, you know, what we aren't doing is is sitting around waiting, you know, for those conversations to develop into anything. We're focusing on actually getting this funded and built. So, you know, there is the opportunity for OCP to talk to us at any time, you know, through that process, and and it still remains, you know, logical that the product that they're currently importing into the country, you know, if it's there available in country, would be supplied from from ourselves. So but our focus, as I've said, is and the team's focus is we're putting in place what we need to put in place to build the project and and get it into production.

32:18 Thank you very much indeed. If I may turn to the next one, can any equipment be bought cheaply from the administrations administrators of Salt Lake? Well, I it's it's quite possible that, you know, there there would be equipment that's there if they're prepared to release it that might might fit in our process plan. But, really, you know, we have I've just been saying that we are we're going to award the contract for basic engineering for the process facility. It's absolutely key that this is done by you know, with the right expertise so that we get this right because it has to deliver, you know, our product to the right spec and and in the right quantities. So that is a key piece of work. We need to do that. That will identify exactly what, equipment is required in our process. But we will stick to what we're doing, which is making sure our process plant works.

33:08 So it isn't really the time to be considering looking at secondhand equipment or nearly new equipment from somewhere else. Thank you very much indeed. Moving on, I believe the London office doesn't exist anymore. Perhaps to save money, good prudence, perhaps you can give some clarity on that. Yeah. Yeah. Yeah. And the we we finished the lease on our last London office just before the pandemic struck, actually. And so, yeah, it made made no sense to take a new one. Graham's based up in Yorkshire. So it's Josh, project controller. I'm down in London. Felix, various of us are down in London. At the moment, we don't require an office. Yeah. It's you know, we don't we don't wanna spend extra money on stuff we don't need. We're quite cost conscious, but it's not really a a sort of something we would bother making a release about either.

34:01 As we tool up and get into production, we may well require an office. But for now, we're we're coping very well without it. Thank you, Charles. Thank you very much indeed. Is there a new targeted time line for everything now? Just dates that you would like to see things happen. I think the the key thing I've I've sort of maybe already commented on it is that, you know, the time line in so much as, you know, first production is is still achievable in the early part of twenty twenty four. You know, that is ultimately that's the end of the timeline. So, you know, that hasn't changed. Obviously, other things in between do take longer or some things take you know, come quicker than you expect. So you know? But but the key thing is we know we can still get into production in the the early part of twenty twenty four. I think the key the key now is that the the strategic, cornerstone investor really is the trigger for the for the debt process to to kick off, in anger, and that's that is what's happening.

35:04 You know, we the amount of discussion calls, meetings that we've had in the last week since then has, you know, has escalated considerably in relation to that. So, you know, that process is moving along now swiftly. That ultimately, you know, going through the bank's process, their their sort of detailed due diligence and and getting to financial close will sort of dictate the you know, a lot of the other events and and when they actually start. So physical construction starting on-site, obviously, only follows that. So, you know, there is some some movement. We know we have some flexibility in in timings, but we still remain confident that first production in the first part of twenty twenty four is where we're heading. Thank you very much indeed. Could you elaborate on how you see the eventual debt to equity makeup? Will there be more equity finance and hence further dilution?

35:54 Yeah. I think you want to use a rule of thumb of kind of around twothree debt, onethree equity. And so, yeah, we're likely to see another tranche of equity, final tranche come in. I think what's what's sort of to note really on this front is that the deal we did on with GSM actually didn't tie up the offtake. So we we would have thought a year ago that the strategic investor that we got in would want the offtake actually so we still have that trump card in hand. So it wouldn't surprise me if we did a large part of the final tranche of equity with another strategic.

36:41 But yeah. I mean, when when we get to announce the the final sort of debt package, people will be able to roughly estimate what the final equity tranche will be. What what they won't know is how much of that, if not all of it, is done by a final strategic co partner who who probably wants the offtake. So we will see all of that in the coming weeks and months. Thank you very much indeed. And I think the final question that we received, which was quite long winded, but really just talks about options and warrants and in terms of that dilution. Just wondered if you could just give a a bit of clarity around that. Well, know, ultimately, the award of options is a is a board decision, and and they'll make that based on, you know, a balance of sort of incentivization and, you know, and and any further dilution.

37:36 You know, it's not something that we've been focused on, I have to say. It's it's, you know, not in my mind at all. You know, we're we're focused on doing. We've been completely focused on getting the deal done, with ESM to get to get that over the line, and and now we're focused on on the the bank process. So, you it will be something that the the board will bear in mind, and we are bringing in new team members to pick up, you know, specialist areas that we need to to cover off now. And if it's considered that, you know, it it sort of provides an added incentive to people, then it it may well be considered. But it wouldn't be any significant level of dilution, you know, if if we did issue some more options to to employees. That's great. Well, thank you very much indeed. So I don't know whether it's worth one final scan of the q and a tab on that's on the right hand corner of of the the screen in case there's anything there perhaps potentially that I've missed that you didn't touch on within the presentation or indeed you felt that you wanted to add any further comment. We do have a little bit more time. And as I said, you know, thank you to all those investors that have submitted questions. And as I say, you know, whatever we don't get through to today, we'll we'll make sure they're available. And if responses are appropriate, we'll make those available to you.

38:45 So, Charles Graham, I don't know if there is anything further that you see there that you wish to Well, question from d w who has been trying to get in touch via our online contact form. I'm sorry if that has not it's obviously not worked. We will look into what's happened with that. That's we do try and you know, it's it's our policy to try and be pretty good at replying to investors. So sorry about that. We will check that. It might be a glitch on the website. No problem. Of course, if if he can put his details in the feedback, he'll we'll make those available to you as well. Okay. I've there's a a question here from Michael T. Can you provide some insight into how you plan to fill the 2,000 jobs that the project will create? Does Morocco have the expertise on the ground to construct the mine?

39:33 So I think the answer to that is in in terms of is the expertise there? That's absolutely yes. And that's something that we've been very impressed with recent visits. You know, we've engaged with a couple of companies, engineering companies in Morocco, and they're they are experienced in actually constructing and operating mines. There are companies out in Morocco that do that and be on mine visits. And I've been you know, my whole life's been working in mines and abiding by UK mining regs, you know, in in difficult underground conditions. And I have to say the standards in Morocco, I was very impressed by the level of skill, very impressed by. So there's most definitely, you know, the expertise in country. And and, you know, we we are going through a tender process to award the basic engineering, and we will do the same for the EPCM contractor. But there are most definitely options in Morocco to use engineering companies based there who most definitely have access to all of the expertise we would require, both for the construction and then actually, you know, for starting operations.

40:40 Already commented on, you know, OCP and the scale of their mining operation that, yes, it's surface based, but in terms of process expertise, you know, that is there in country. So the country is very well set set up to be able to supply the the labor. Though my experience historically at at Cleveland potash, You know, a lot of the labor for for Cleveland potash, probably 80%, was sourced locally, you know, from people with no mining experience. And, you know, you people with sort of, you know, basic transferable skills can become very good mining people, and and particularly farmers, in my experience make excellent underground miners. They can operate equipment and probably have been doing, you know, from an early age, and, you know, they, you know, they have the right sort of mindset. So there's no doubt that, you know, the the sort of pool of labor is available, and there's a high level of expertise already there for us to take advantage of.

41:44 There's a couple of questions around the equity, both the deal we've done recently and future equity tranche, which I just tried to address. But on on this one of how come we didn't put this to shareholders, this and was it dilutive? Well, I think that, you know, it's pretty obvious that it wasn't dilutive because it was done above the price that people could have could have been buying shares if they didn't want to be diluted. And with the nature of these sort of big bilateral core cornerstone shareholder type arrangements is that you just do the deal in a bilateral way, and you don't also then try and make it a marketed offering.

42:32 So shareholders were not gonna get included in this sort of deal ever, but that's not because we weren't trying to look after them. We tried to look after them by structuring it so that it came in above the share price that that they could have been buying and selling shares for anyway. So that's how I'm afraid those those those sort of deals are always handled like that. So is it just question here. Can you tell us more about the strategic shareholder? Did you have more than one potential strategic shareholder to choose from? So we have talked to a number of strategic shareholders, potential partners, and we are still talking to some.

43:23 We still, importantly, have the the offtake available, the potash offtake, so it is quite possible that we can engage with somebody who wants the offtake and is prepared to invest, you know, on that basis to to secure some of the offtake. So there are still opportunities there for people to come in. We have talked to a number, as we've said over, you know, the last twelve months, we we've been talking to a number of people who've been in the data room and have, you know, have have assessed the project. In terms of, you know, the the parties that have come in, GSM, you know, we put some detail on them in the in the announcement, but they are looking to they've invested in in several projects. They're looking to sort of expand outside of Asia, so they've invested in projects in in Australia, also in North America.

44:10 And in every case, it's there to either take a project through into operations or or to support a, you know, development to achieve that. So they're very much focused on, you know, looking at the the sort of projects, you know, such as ours. So that was a, you know, sort of a mutual sort of contact, if you like. They were somebody that we we were looking at and but they were also looking at us, and it's you know, they are a really good partner to have, and we we're very much looking forward to working with them. Well, when is it envisaged full bank funding will be required and agreed?

45:01 So as Graham said, certainly, we are aware that having landed this strategic has accelerated the debt process. The debt process had had been going on for about six months before this, And we already had a fairly good idea of the banks who were interested. They liked the look of all of the numbers in the feasibility study, which have obviously only improved with the potash price. And but, you know, they also were thinking, but are you guys ever gonna get the equity? So now that we've shown we were never gonna get the full equity before doing the debt, but now we've shown a significant part of it put in place. They've all jumped into action. So hopefully, we'll see movement on the on the underwriting syndicate pretty soon.

46:02 Charles, I'm mindful. I do do know that we had the meeting scheduled for now, but I do know that you had a meeting that came in also that kind of overlaps with the closing of the meeting. Yeah. I don't know if there's any final potential question I could ask you to look at. And as I said, we will make all the questions available post the meeting so you can reflect on them and publish responses where it's appropriate to do so. I don't know if there's anything final that you want to look at. I think it's fine for Perfect. Well, look, thank you very much indeed to you both for updating investors this afternoon. I know investor feedback will be particularly useful to you and important to you, and I'll shortly redirect investors to give you their thoughts and expectations. But perhaps, Graham, before doing so, could just ask you just for a few closing comments to wrap up with. Okay. Thanks, Mark.

46:47 Yeah. So I think, you know, last week was a culmination of a huge amount of effort, from from the whole team to deliver the strategic investor, and and that really is hugely significant. It's a trigger for the for the rest of the funding. It enables us to progress all of the engineering work so that we can actually be ready to start construction once we have the funding in place. And it's you know, they what they've basically done is they've they've assessed the project in detail. They've you know, they are sort of completely supportive of what we're doing, and, you know, they believe this project is gonna go through into operations, and they'll support us to do that. The team is focusing on on delivering exactly that. We would very much hope to be able to to update on the the progress with the debt funding in the not too distant future and, obviously, the the environmental approval.

47:40 So, you know, we're really moving forward now, you know, this gives us the opportunity next year to to actually get funding in in place and and get into construction. And the target, as I said, still remains for first production in the first part of twenty twenty four. So thank you, everybody, for for listening. We've tried to answer as as many of the questions as we can, and we look forward to your feedback. That's great. Graham, Charles, thank you once again for updating investors this afternoon. Ladies and gentlemen, please do not close the session as we'll now automatically redirect you for the opportunity to provide feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be highly valued and greatly appreciated by the company. On behalf of the management team of EMMERSON PLC, we'd like to thank you for attending today's presentation.

48:27 That now concludes today's session, and good morning. Not like I said earlier, good afternoon to you all.