Emmerson signs MoU with leading gas distributor for Khemisset project
Anita Riotta
Company News- 3 min read
09:31, 29th April 2019

Emmerson (EML) FOLLOW has signed a Memorandum of Understanding (MoU) with Afriquia Gaz, Morocco’s leading distributor of gas, for the supply of gas to its Khemisset potash project. 

The move further improves on one of the Khemisset project’s central features-- being low cost with high margins-- and comes as a result of a concerted effort from Emmerson. Earlier this year, the company announced the appointment of Don Larmour, a metallurgy and process consultant, who, among other issues, was to focus on "further reduc[ing] our capital and operating costs, especially on the energy consumption side"

In an interview with Vox Markets, Hayden Locke, CEO of Emmerson, stressed how "energy, in the form of gas, accounts for about 30-40% of our total processing cost." Reaching an understanding for a cheaper gas source, then, is clearly pivotal for reducing the project's overall capex.

Mr. Locke reiterated this point in today's news: 

“Energy is a major operating cost for the Project and, as a result, even slight improvements in this key area can result in significant improvements for the Project overall. 

We believe that our energy needs will be supplied via low capital cost solutions at competitive long-term operational prices, further supporting Emmerson's potential to become one of the World's lowest cost and highest margin potash producer."

Under the current MoU, the two parties will work together to determine the best long-term gas delivery system, including pipeline or regular truck delivery, along with the most appropriate source of gas. 

Afriquia will oversee a storage facility, including supply, installation and maintenance, at its own cost; Emmerson will manage the civil works, such as electricity and support services, for the facility’s operations.

The MoU, Emmerson argues, has the potential to improve upon the economics projected by Emmerson for the Khemisset project, which boasts an initial 20-year life of mine, average EBITDA of approximately US$240 million per annum, and a post-tax NPV10 of US$1.14 billion using industry expert potash price forecasts.

For more news and updates on Emmerson: FOLLOW

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