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Emmerson puts port upgrade costs at US$7.5M

Potash developer Emmerson (LSE:EML) has estimated the cost of the port upgrade for its 100%-owned Khemisset potash project in northern Morocco at US$7.5 million as it wrapped up the preliminary design.
Emmerson puts port upgrade costs at US$7.5M Emmerson puts port upgrade costs at US$7.5M Emmerson puts port upgrade costs at US$7.5M Emmerson puts port upgrade costs at US$7.5M Emmerson puts port upgrade costs at US$7.5M

The scoping study at Emmerson's Khemisset licence area in Morocco is expected to be completed before the end of the year

Staff reporter

With the completion of the work, the company expects a scoping study to be published before the end of the year, "well ahead" of schedule.

Included in the port upgrade design are facilities to unload potash from trucks at 500 tonnes per hour, a 25,000t warehouse, 1,000t/h loading facilities, and capacity to receive, unload and reload at least 800,000t per annum, depending on truck and ship frequency.

It should allow the company to export potash from Khemisset through the Port of Mohammedia. Talks with local authorities are ongoing, although Emmerson said the Port of Casablanca and Port of Kenitra were feasible alternatives.

The $7.5 million total budget for the construction of the port upgrades includes a 30% contingency.

Emmerson said the estimated capital cost saving was about 95% for the capital expenditure cost for the port upgrade, or more than $190 million, relative to the cost of the recently constructed K+S Canada Port Moody potash handling and storage system.

The company said the cost estimates further enhanced management's belief that Khemisset could be a low capital cost potash mine development, as it already had low capex mine access, low capex logistics solution, and low capex electrical and gas supply, which combined to save Emmerson over $1.2 billion when compared to Canadian peers.

It previously announced the completion of preliminary design and cost estimates for mine access, which came to $35 million, also including a 30% contingency.

CEO Hayden Locke said access to existing port facilities, with minimal upgrades required, would result in significant capital cost savings for Khemisset.

"Our initial discussions with authorities at the Port of Mohammedia have confirmed that there is expected to be capacity for the export of potash produced from Khemisset. Cost estimates include construction of a storage warehouse and loading facility for the handling of at least 800,000 tonnes of potash product per annum," he said.

Emmerson shares rose 3.68% to 3.52p (US4.52c).