Rabat – The study indicated that the Khemisset potash project has potential for a low capital cost and high margin potash mine, Emmerson said in a statement on Tuesday, November 20.
The study estimates an initial extraction rate of 6 million tons of run of mine (ROM) ore annually, over a 20 year mine life, with an average grade over the life of mine of 9 percent of potassium oxide (K2O).
Emmerson CEO Hayden Locke said that the findings represent “a very rare asset in the industry.”
The scoping study gave a post tax net present value of $795 million and assumes a flat real price of $360 per ton.
Using forecast prices from independent market consultant Argus Media, the net present value (NVP) increases to $1.14 billion over a 20-year mine life.
“Potash is controlled by a small handful of companies and is an industry with high barriers to entry, predominantly in the form of extremely high capital cost. This means that few new players, if any, can ever enter the market,” Locke noted.
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Emmerson’s potash mine project is located in Khemisset, 85 kilometers east of Rabat, and benefits from its proximity to a number of port facilities.
All products, according to the study’s assumptions, will be sold in Brazil, Northwestern Europe, NOLA, and South Africa. Using trucks from the mining site, the products will be exported via Mohammedia Port, near Casablanca.
Khemisset “has an estimated capital intensity less than half of the global peer average, and less than a third of the average Canadian development,” Emmerson head said.
The intensity “gives Emmerson a clear opportunity to be one of the few junior companies in the space.”
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Khemisset’s potash assets can benefit the world population
According to British research house Align Research, “Khemisset has a large JORC [mineral resource classification] resource of Muriate of Potash (MOP), which is the most widely used and cheapest source of potassium.”
“Fertilisers led by MOP are seen to be vital in improving the efficiency of farming.”
Morocco is a “country where fertiliser giant OCP requires significant potash feedstock.”
Morocco’s OCP Group is one of the leading exporters and producers of phosphate-based fertilizers in the world. The company develops precision agriculture techniques to help farmers improve the quality and yield of their crops.
Potash is one of the main components used in fertilizers and modern agriculture as it can improve water retention, production output, as well as food crops’ nutrient value and disease resistance. According to the UN Food and Agriculture Organization (FAO), the world will need to produce 70 percent more food for an additional 2.3 billion people by 2050.
The increase, according to an FAO discussion paper, will also help combat “poverty and hunger, using scarce natural resources more efficiently and adapting to climate change are the main challenges world agriculture will face in the coming decades.”
