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Feasibility study confirms low CAPEX potential of Khemisset project

Published by
World Fertilizer,


Emmerson has released a summary of the results of its recently completed feasibility study for the Khemisset potash project in northern Morocco.

The study gives a project value of US$1.4 billion (post-tax net present value) and internal rate of return of 38.5% over an initial 19-year mine life. The total pre-production capital cost (potash only) has been estimated at US$387 million, including contingency. This consequently places the project in the bottom decile in terms of capital intensity per tonne of product produced, less than half of global peer average capital intensity.

Peak production of 810 000 tpy of muriate of potash is anticipated in the study, with an average steady state production of 735 000 tpy.

The average, steady state, EBITDA margin is estimated at 61.5%, or US$307 million per annum, meaning a capital payback of less than 2.6 years.

The initial mine life of 19 years has significant potential to increase from existing JORC compliant mineral resources. The current mine plan includes only 43% of the total mineral resource estimate of 537 million t with an average grade of 9.24% potassium oxide (K2O).

Emmerson will now aim to progress the project through permitting requirements for the rest of 2020, as well as move forward financing discussions for the next phase of development.

Hayden Locke, CEO of Emmerson, commented: "The feasibility study has confirmed the findings from the scoping study, which showed that Khemisset has the potential to be a world class, low capital cost, high margin potash mine, which is a very rare asset in the global fertiliser industry.

"We are particularly pleased that the total pre-production capital cost has come down by approximately US$19 million from the scoping study, which is unusual when moving to higher levels of engineering, and is a testament to the focus of our engineering team on delivering fit for purpose, disciplined designs for the project.

"As expected, the forecast all-in-sustaining cash costs, delivered to customer, place this project in the bottom quartile of all potash projects to Emmerson's target markets. When we include the offsetting salt by-product credits, as is the typical convention in the mining industry, Khemisset becomes one of the lowest cost producers to these markets. This is a powerful competitive position and that will continue to attract interest from numerous potential strategic partners.

"It is outstanding that, in a downside market price scenario, assuming a potash price of around US$225/t, this project will still generate a very robust average life of mine post-tax free cash flow of nearly US$90 million per annum and an IRR of nearly 15%.

Read the article online at: https://www.worldfertilizer.com/project-news/01062020/feasibility-study-confirms-low-capex-potential-of-khemisset-project/

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