London-listed potash development company Emmerson has seemingly hit a dead end in the environmental- and social-impact assessment (ESIA) approval process for its flagship Khemisset potash project, in Morocco.

After the company received an unfavourable recommendation from the Commission Régionale Unifiée de l'Investissement (CRUI) regarding its ESIA application, it pursued possible remedies by engaging in discussions with its Moroccan advisers.

This resulted in Emmerson filing an appeal with the Wali of Rabat-Salé-Kénitra (CRI) region, which encompasses the province of Khemisset.

However, the Centre Régional d'Investissement of the region CRI responded that the CRUI did not have the ability to examine the ESIA submission again. The CRI also did not provide any indication of further avenues of appeal to the company.

This has effectively brought development of the Khemisset potash project to a complete halt.

“Emmerson continues to examine its options with respect to the approvals process and will update the market shortly on its next steps,” the company said in a market update on October 28.

BOARD CHANGES

Simultaneously to the announcement of the ESIA approval roadblock, Emmerson announced that nonexecutive chairperson James Kelly and nonexecutive director Rupert Joy would both be stepping down from the board of directors with immediate effect.

Kelly will be succeeded by Hayden Locke, who will support management going forward.

"[This] has been a very challenging period for the company. Both [Kelly and Joy] are disappointed with the outcome and are reticent to leave at this important juncture, but they also recognise a restructuring is necessary to preserve optionality for the company, and any remaining potential for value for our stakeholders,” Locke said.

Given the permitting delays, Emmerson's balance sheet has been put under pressure, limiting its future financing options. As a result, the company has implemented a comprehensive review to reduce its cash burn rate while it assesses its strategic and appeal options with respect to the ESIA denial.

In addition to the streamlining of the board, from November 1, the two remaining nonexecutive directors, Locke and Dr Robert Wrixon, have agreed to suspend taking their cash fees and will, instead, take fees in the form of shares in an effort to align themselves with the interests of other shareholders.

Meanwhile, Emmerson MD and CEO Graham Clarke has agreed to reduce his base cash compensation by 40%, which will be reviewed on an ongoing quarterly basis with respect to the company's financial position and ongoing prospects. This reduction in salary will also be made up in company shares.

The majority of the remaining ongoing costs within the business, with the exception of core administrative and regulatory functions, are being reviewed and will be reduced. This will mean that virtually no further progress can be made on any of the project development workstreams underway, the company 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. [We] are working hard to assess our next steps,” Locke said.