LONDON (ShareCast) - (Sharecast News) - Morocco-focussed potash development company Emmerson has signed a heads of agreement with respect to offtake, sales and marketing for 100% of production from the Khemisset Potash Project, it announced on Monday.
The London-listed firm said the heads of agreement set out a commitment for both Emmerson and the unnamed counterparty to work towards a long-term sales agreement for 100% of Khemisset's production, focusing on the Brazilian, African and north west European markets.

It said that once in production, Khemisset would be the closest producing potash mine to each of those key markets and - as a result of the advantageous location - it was expected that Emmerson would be one of the highest margin potash producers in the world.

The recently-released scoping study confirmed Khemisset's potential for "sector leading" capital intensity and margins, the board said, which provided a post-tax net present value at a 10% discount (NPV10) of $1.14bn, using independent industry expert price forecasts.

Emmerson said the offtake counterparty was one of the world's leading fertiliser trading, distribution and marketing companies.

Importantly for the firm, it had a "significant" footprint in the lucrative Brazilian market, including fertiliser blending facilities, which made the counterparty an "ideal" long-term partner for the Khemisset Project in the board's view.

"Signing a heads of agreement is an important step for the company as we commence early engagement with sales and marketing partners for product from the world class Khemisset Potash Project," said Emmerson chief executive officer Hayden Locke.

"We believe potash produced in Morocco will be in significant demand for a number of important consuming markets, and this heads of agreement reinforces that belief.

"Our partner's footprint in the fast growing Brazilian and more mature north west European markets makes them an ideal partner for Emmerson , as we focus on those markets where we would have a strong transport and logistics advantage."

Locke said the benefit of location had been "clearly demonstrated" in the company's scoping study, with the board continuing to expect Khemisset to be among the highest-margin potash projects in the world, generating "outstanding" returns for shareholders.

"Strong sales and marketing partners will be fundamental to supporting our eventual discussions with financing partners and we believe our sales partner will provide significant confidence to all potential lending syndicates for the project."

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