TIDMEML
RNS Number : 1165K
Emmerson PLC
20 April 2020
Emmerson Plc / Ticker: EML / Index: LSE / Sector: Mining
20 April 2020
Emmerson Plc ("Emmerson" or the "Company")
Finalised Decline Design Confirms Low Capex Mine Access at
Khemisset
Emmerson Plc, the Moroccan focused potash development company,
is pleased to announce that it has finalised the Feasibility Study
components for the mine access design and costing for its world
class Khemisset Potash Project in Northern Morocco ("Khemisset" or
"the Project"). The Project is advantaged by industry leading
capital costs and bottom quartile all-in delivered cost to
customer, yielding outstanding economic metrics including average
annual life of mine EBITDA of US$236 million and a post-tax NPV
(10) of US$1.14 billion.
To view the RNS will illustrative diagrams and images please use
the following link:
http://www.rns-pdf.londonstockexchange.com/rns/1165K_1-2020-4-19.pdf
Highlights
-- Scoping Study development approach confirmed with the mining
horizon proposed to be accessed by twin declines constructed using
underground mining machinery which will later be used in mining
production
-- Direct capital cost estimate of mine access component of
approximately US$34.1m including a 21.7% contingency, a slight
reduction on the Scoping Study estimate of US$34.7m
-- This cost forecast places Khemisset in the lowest 10% for
mine access cost for potash developments globally
-- Design and estimate completed by independent engineering
group, Golder Associates ("Golder"), according to AusIMM guidelines
for capital cost estimates
-- Mine access design and cost estimates are the final
deliverable prior to the completion of the full Feasibility Study,
which remains on track for first half 2020 completion despite
challenges presented by the ongoing COVID-19 outbreak
Hayden Locke, CEO of Emmerson, commented:
"One of the most prominent barriers to entry in the potash
market is the overall capital cost to develop the mine. Mine
access, typically via a shaft, is one of the single largest
determinants of overall capital cost of these projects, and can be
hundreds of millions, and in many cases billions, of dollars. We
are fortunate to have a Project where this major capital component
can be achieved for only $34.1m, a cost saving of over 90% when
compared to most projects globally. This reduction in capital cost
has numerous knock-on benefits including allowing a smaller project
to be developed and providing a more readily financeable project
regardless of potash prices.
"A detailed trade-off study was completed to select the
preferred site location and considered multiple variables including
several relating to optimising the decline construction. One of the
key aspects was the overall development timeline of the decline,
which is now 14 months, to ensure it was not a critical path item
and had sufficient buffer within the overall development
schedule.
"To have improved both cost and timeline forecasts for mine
access development from our Scoping Study phase gives us further
confidence that the forthcoming Khemisset Feasibility Study will
demonstrate a world class, low capex, high margin potash
project.
"This is the fourth completed workstream item from the ongoing
Feasibility Study, which continues to progress well and is on
schedule for final release during the first half of 2020."
Summary Overview
Golder, which was appointed by the Company to manage the
delivery of its Feasibility Study, has completed design and cost
estimates for decline access at Khemisset. Designs and estimates
have been prepared in line with guidelines provided by the
Australasian Institute of Mining and Metallurgy ("AusIMM"). The
total costs of $34.1m including contingency is a slight reduction
on the Scoping Study estimate and represents a 95% reduction in
capital cost when compared against typical Canadian peers.
Figure 1: Comparison of Mine Access Capital Costs - See PDF
The proposed access to the potash horizon is comprised of twin
declines driven at a slope of 1 in 7, which is similar to the
Scoping Study design, however, it provides significant improvements
to the original concept primarily due to the new preferred plant
site location. The construction of twin declines allows one to be
utilised for personnel access and air intake for mine ventilation,
and the other for the mineral transport conveyor and ventilation
exhaust.
The declines will be constructed using continuous miners
("CMs"), machines which will eventually be responsible for mine
production and gallery development. The declines have been designed
to access the primary horizon in the eastern edge of the deposit,
at a depth of approximately 450m below surface. The decline
position and orientation has been selected to balance accessing the
optimum part of the deposit at the shallowest depth while also
allowing the plant site to be located as close as possible to the
existing local infrastructure (roads, power, water). The initial
portal location can be seen in Figure 1 below.
Figure 2: Plan of Decline Route - See PDF
Geology and Stratigraphy
The decline will be driven through three key lithologies: minor
clay formation (10m thick); primary massive salt horizon (320m
thick); and an overlying basalt unit (60m thick). Figure 2 below
shows a long section of the proposed mine access decline as it
passes through the different strata and a plan view showing the
co-ordinates of the twin decline and connecting cross cuts.
Figure 3: Decline Long Section and Plan - See PDF
Decline Design
At surface, a portal will be established to provide a stable
entry way to the mine through the near surface lithologies and
minimise the volume of surface water and runoff entering the
decline. The proposed portal structure is comprised of a series of
precast concrete box sections placed in an open cut, excavated to
the level where the upper salt strata is assumed to be
self-standing (10m below surface), and then backfilled to restore
the original ground surface level. Drainage channels and pumping
will be used to catch and remove any water running down the floor
of the decline. Mechanical excavation can begin as soon as the
upper salt horizon is reached. The portal box section structure
will terminate when there is sufficient excavation roof cover in
the upper salt to create the tunnel opening; with the information
available, this is expected at a depth of approximately 16m below
surface.
The total length of each decline is planned to be approximately
3,200m. A barrier pillar separates the two parallel declines by a
distance of 24m. This is separation distance is equivalent to three
tunnel spans, chosen to minimise the length of connecting cross
cuts whilst maintaining sufficient separation to isolate one tunnel
from the other in the case of an emergency.
Cross cuts are spaced every 200m along the decline, a distance
selected to provide an efficient tramming distance for shuttle cars
between continuous miners and the load-out conveyor during
construction. This also allows the machines to operate with a 200m
power cable attached as a typical machine tether length.
A different support class has been designated for use when
tunnelling through each major stratum, the details of which are
shown in Table 1 below. They have been selected to maintain
stability in those strata for the life of mine, based on empirical
methods, apparent rock quality and experience.
Upper Salt 8m x 3.5m for 2.4m fully encapsulated 22mm AT/KT
both main roadway bolts at 1.5m spacing with 100% mesh
and cross cuts roof
Basalt 8m x 3.5m for 2.4m fully encapsulated 22mm AT/KT
both main roadway bolts at 1.2m spacing with 100% mesh
and cross cuts roof
------------------- -------------------------------------------
Ain Horma 8m x 3.5m for Basalt zone support plus the addition
Fault both main roadway of w steel straps installed perpendicular
and cross cuts to tunnel direction at 2.4m intervals.
W steel straps secured by 4m long
fully encapsulated 23mm FRS bolts.
------------------- -------------------------------------------
Table 1: Decline Support Classes
Schedule and Cost Estimation
The total programme duration of the decline construction
activities is anticipated to be approximately 14 months with an
estimated capital cost of approximately US$34.1 million including a
21.7% contingency.
A summary of the cost breakdown is presented in Table 2
below:
Item US$ millions
------------------------------------------ --------------------------
Direct Costs $28.0
------------------------------------------ --------------------------
Portal Construction $4.3
------------------------------------------ --------------------------
Upper Salt & Ain El Orma Development
(Zone 2) $8.5
------------------------------------------ --------------------------
Basalt & Cross Cut Development
(Zones 3 & 4) $6.4
------------------------------------------ --------------------------
Power $3.4
------------------------------------------ --------------------------
Equipment purchase (vent fans,
etc) $0.3
------------------------------------------ --------------------------
Mobilisation/Demobilisation $3.2
------------------------------------------ --------------------------
Supervision $1.9
------------------------------------------ --------------------------
Contingency (21.68%) $6.1
------------------------------------------ --------------------------
Total Costs including Contingency $34.1
------------------------------------------ --------------------------
Table 2: Summary of Costs for Decline Development
For further information,
please visit
www.emmersonplc.com
, follow us on
Twitter (@emmerson_plc),
or contact: Emmerson Plc Tel: +44 (0) 20 7236
Hayden Locke 1177
Edward McDermott
Damon Heath Shard Capital Partners Tel: +44 ( 0) 20 7186
Isabella Pierre 9950
Isabel de Salis St Brides Partners Ltd Tel: +44 (0) 20 7236
Megan Dennison Financial PR/IR 1177
Notes to Editors
Emmerson's primary focus is on developing the Khemisset Potash
Project located in Northern Morocco. The project has a large JORC
Resource Estimate (2012) of 537Mt @ 9.24% K(2) O and significant
exploration potential with an accelerated development pathway
targeting a low capex, high margin mine. Khemisset is perfectly
located to capitalise on the expected growth of African fertiliser
consumption whilst also being located on the doorstep of European
markets. This unique positioning means the project will receive a
premium netback price compared to existing potash producers. The
need to feed the world's rapidly increasing population is driving
demand for potash and Emmerson is well placed to benefit from the
opportunities this presents.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014.
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END
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