Emmerson Plc

May 2021 Investor Forum

17 May 2021 / Corporate research

EML is well-placed to benefit from the opportunities that the demand for potash to feed the world's rapidly increasing population is creating. The Khemisset mining project in Morocco has the potential to be among the lowest in terms of capital cost, and, also, as a result of its location, one of the highest-margin potash projects in the world. With the project, EML has the potential to become a major producer of both MOP (Muriate of Potash) and SOP (Sulphate of Potash).

  • Strategy: EML’s focus is on developing the Khemisset Potash Project, located in Northern Morocco. The project offers a large JORC (Joint Ore Reserves Committee)-compliant resource with low capital cost and high-margin product development.
  • Finance: In late February 2021, EML successfully completed a £5.5m fundraising to finance the final critical path components of development work at Khemisset.
  • Valuation: It is widely considered by the stock market that junior resources companies can be expected to trade at around 20%-25% of NAV, if corporate positioning is strong and the project economics are top-quality. EML currently trades at around 5% of NAV, suggesting share price upside potential.
  • Risks: EML faces the normal risks for a junior miner, albeit without the funding risk faced by explorers/developers. These include volatility in potash prices, political risks, environmental risks, and operational risks in successfully executing the mining plan and operating downstream processing facilities.
  • Investment summary: In our opinion, EML offers an attractive investment, with a defined development path and a long-term investment programme for creating a mid-tier, multi-nutrient fertiliser company with sound finances and an appealing valuation.
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