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Emmerson provides update on phased development strategy for Khemisset

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World Fertilizer,

Emmerson has provided an update on the assessment of a conceptual, phased development plan for its Khemisset Potash Project in Morocco.

Building on the Feasibility Study, the company has completed a concept study to examine the potential to develop Khemisset using a four-phased approach to reduce upfront capital costs and execution risk, and plan additional expansion stages to ensure that its economic value is fully developed.

The intention of the company remains to build the full-scale project as identified in the FS, however, the report, undertaken to scoping study levels, identifies the opportunity to commence with a smaller scale start-up operation producing muriate of potash (MOP), which would be followed by a series of expansion phases to increase the level of MOP produced, and add in the production of de-icing salt in increasing quantities as well as premium potash product, sulfate of potash (SOP).

The upfront CAPEX for this strategy, including contingency, is estimated at US$287 million. Subsequent phases through to full production would likely be financed from internal cash flows. In full production, the Khemisset Project could produce 800 000 tpy of MOP, 240 000 tpy of SOP and 4 million tpy of de-icing salt, resulting in an annual EBITDA in the first year of full production of US$491 million. This production rate is a significant increase to the existing FS, which the company believes is justified given the scale and quality of the Khemisset orebody.

Graham Clarke, CEO, commented: "This work demonstrates that the Project has the flexibility to be developed in phases, whilst further proving the world class nature of Khemisset. With significant expansion potential that adds huge value to the Project, we are now confident that we could develop Khemisset using a staged approach potentially reducing upfront capital costs and equity requirements from the market and, therefore, dilution to our existing shareholders as we grow to our full potential.

"2021 continues to be a pivotal year for Emmerson as we move forward in the development of what is to become the first large scale potash mine in Africa."

The aim of the study was to first identify and confirm whether there is the potential for a lower CAPEX phase of development and then to demonstrate that additional development phases could follow which would expand the Project both in terms of product offering and overall capacity.

Four phases were identified, the construction requirements assessed, and the associated costs analysed.

The first phase focuses on a reduced MOP output stage where the development of the declines and mine would be similar to the FS base case but with a reduced capacity process plant which would result in lower upfront CAPEX. The savings generated are not proportional to the reduction in output as the benefits of scale are not completely captured and the general infrastructure costs remain the same.

The second phase expands MOP production to the same level as in the FS with the addition of 1 million tpy of de-icing salt produced, as in the FS. The additional CAPEX required facilitates the expansion of the process plant capacity along with the salt production plant and additional costs in mine development.

Phase three brings in an SOP production facility, expected to be located at the port of Jorf Lasfar, in addition to an increase of de-icing salt production to the level of 2 million tpy. The additional CAPEX required is for the construction of the SOP facility and the expansion of the salt production plant.

The final phase includes the development of the south-west (SW) area of the resource via two new declines with the ore being transported to the existing process plant which is expanded to increase the capacity to a total of over 1 million tpy of MOP a portion of which provides feed into the SOP facility. In addition, this phase sees the further expansion of de-icing salt production to a total of 4 million tpy. The additional CAPEX required for this phase covers the establishment of the access and infrastructure for the SW mine and also the expansion of the salt plant to double the capacity to 4 million tpy.

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