Emmerson's CEO Hayden Locke spoke to Mining Journal about the feasibility study

The study shows a post-tax NPV of US$1.4 billion and IRR of 38.5% over an initial 19-year mine life, with a pre-production capex figure of US$387 million, US$19 million below the scoping study estimate.

Emmerson CEO Hayden Locke said he was "particularly pleased" by the reduced capex figure and that the forecast all-in sustaining cash costs put the project in the bottom quartile of all projects delivering potash into Emmerson's target markets, including Brazil, northwest Europe and South Africa.

Shard Capital, Emmerson's broker, called the study an "exceptional result" and praised the company for delivering the study on time during a pandemic.

"Containing the capital and operating cost base under the higher level of scrutiny demanded by a feasibility study is no mean feat," said Shard.

"The move from scoping study to feasibility study has seen some major revisions to certain elements of the plan and is typically the phase when cost blow-outs can occur. We take considerable comfort in the fact that the overall cost base is of a similar order of magnitude after completing detailed engineering, geotechnical, mining and processing workstreams."

Shard said the project had been "considerably de-risked but without a concomitant increase in costs".

One aspect of the latest study that may raise eyebrows is the long-term MOP price used.

MOP prices are languishing around US$225/tonne, way below the price assumed in the study of US$412/t. However, Locke said even with a price of US$225/t Khemisset would still generate average life of mine post-tax free cash flow of nearly US$90 million per year and an IRR of nearly 15%.

"This is more than enough to pay the interest and principal on a significant amount of debt and ensure that we, as equity investors in Emmerson, make a solid downside case return on our capital," he said.