Emmerson PLC on Monday said no further progress can be made on its Khemisset project, as a negative regulatory recommendation puts the company’s balance sheet under pressure.
Shares in the developer of the Khemisset potash mine in Morocco dropped 38% to 0.35 pence each in London on Monday afternoon.
In early October, a government commission in Morocco made an unfavourable recommendation regarding the approval of Emmerson’s updated environmental & social impact assessment for its Khemisset project.
Emmerson consequently filed an appeal with the Wali of the Rabat-Sale-Kenitra region, which encompasses the province of Khemisset, against the unfavourable recommendation from the Commission Regionale Unifiee de l’Investissement, or Unified Regional Investment Commission.
However, the Rabat-Sale-Kenitra region has responded that the regulatory finding cannot be re-examined, and has provided no indication of any further potential opportunities for appeal.
Emmerson said the ruling has put its balance sheet under pressure, and limited its future financing options. The company now looks to ‘significantly reduce’ its cash burn rate, while it assesses other strategic and appeal options available.
Non-Executive Chair James Kelly and Non-Executive Director Rupert Joy have both stepped down with immediate effect, with Hayden Locke now assuming the role of chair. The two remaining non-executive directors will suspend taking their cash fees and instead take fees in the form of shares.
Chief Executive Officer Graham Clarke will reduce his base cash compensation by 40%, to be reviewed on an ongoing quarterly basis in relation to the company’s financial position. Graham Clarke will also take a portion of the reduction in shares.
No further progress can be made on current project developments for the time being, the company said.
Incoming Chair Hayden Locke said: ‘Many investors mistake silence for lack of activity but, in our current situation, it is difficult to make appropriate and conclusive statements when we have no clarity on our position, without prejudicing our potential future options. Graham, Rob and I are working hard to assess our next steps, and I look forward to updating the market when our path becomes clear.’
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