Emmerson - Update post-Feasibility Study

Development of a world class potash mining asset in an outstanding location to provide fertiliser to help feed the planet

Emmerson first listed on the LSE in February 2017 as an investment company. In June 2018, the company was re-admitted following the RTO of Moroccan Salts Ltd which is developing the Khemisset Potash Project near Rabat in northern Morocco, a country where fertiliser giant OCP requires significant potash feedstock. Khemisset has a large JORC resource of Muriate of Potash (MOP), which is the most widely used and cheapest source of potassium.

  • Big agriculture investment drivers pushing up the MOP price

    The United Nations believes that the world will need to produce 70% more food by 2050, not just to meet the needs of its fast-growing population but also for a burgeoning middle class that is seeking a higher protein diet. Fertilisers led by MOP are seen to be vital to improve the efficiency of farming.

  • Feasibility Study highlights the dramatic share price disconnect

    Khemisset came through the Feasibility Study with flying colours demonstrating potential to be a world class, low capex, high margin potash mine. The post-tax NPV(8) came out at US$1.4 billion, with a 38.5% IRR plus robust cash generation. With the FS in place, financing discussions can now be finalised and there is a clear pathway to allow production to start as early as 2022. These might look like ambitious plans but the Emmerson management team has always been ambitious and has not disappointed us yet.

  • Compelling low capex development – which is rare in potash projects

    Management has extensive potash development experience, previously with ASX listed Highfield Resources, and believe Khemisset has the potential to be a low capital cost development which is very rare in potash with scope for impressive economics even at modest potash prices.

  • Risked conservative NPV suggests potential upside of over 300%

    Our conservative valuation illustrates the clear potential. We update our coverage with an increased target price of 24.90p and Conviction Buy stance.


    Emmerson is a research client of Align Research. Full details of our Company & Personal Account Dealing Policy can be found on our website http://www.alignresearch.co.uk/legal/ 

    For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.

Table: financial overview
Year to Dec 2018A 2019A 2020E 2021E
Revenue (£'000) - - - -
Pre-tax (£'000) (1,784) (1,132) (1,250) (1,500)
EPS (p) (0.49) (0.17) (0.18) (0.22)
Source: Company accounts & Align Research