Emmerson said the bank had completed initial due diligence and financial modelling, with the funding expected to come from a syndicate comprising three or four commercial banks and export credit agencies (ECAs).

The company said the debt sizing was based on conservative, bank-case pricing of $235 per tonne CFR Brazil muriate of potash price flat over the project's life - about a 35% discount to current spot prices. The company said there was strong potential to increase debt capacity if it could negotiate customer floor prices above the base case.

It added the indicative terms were in line with market norms for mine construction project finance, including standard covenants, cash sweeps and security packages.

The financing will include a 10-year term, including a three-year grace period prior to first repayments, assuming the ECAs are involved, with interest rates to be calculated at a margin of up to 5% above an agreed base rate, such as Euribor or Libor.

CEO Hayden Locke said it was an endorsement of Khemisset's economic strength to be approached by a major commercial bank with an early indication of debt financing capacity of such significant size, despite using low potash price assumptions.

"The scoping study, which was delivered in November 2018, highlighted Khemisset's industry leading capital intensity, but also showed that, even in the downside price scenarios, the project exhibited very robust cashflow generation.

"The board and management believed this would underpin a significant debt financing package from credible institutions, a view that has been strongly endorsed by this indicative proposal," he said.

The final debt sizing and terms of the financing are subject to using conditions, including the completion of satisfactory technical, legal and environmental due diligence and finalisation of offtake agreements.

Locke said the debt support would help in the company's continuing talks with a number of significant strategic and financing partners with the capacity to provide debt and equity for Khemisset.

Emmerson's shares were up 6.43% Monday to 4.47p (US5.67c).