Odyssey Marine Exploration, Inc. (NASDAQ:OMEX), a deep-ocean
exploration pioneer engaged in the discovery, development and
extraction of deep-ocean minerals, reported results for the third
quarter ended September 30, 2020, and provided an update on
current company operations and projects.
The key focus of Odyssey’s project operations
team continues to be the Exploraciones Oceánicas (ExO) Phosphate
Project in Mexico, which can provide access to a critical
resource needed to produce fertilizer, help achieve food security
in Mexico, and supply the phosphate needs of North America for at
least 50 years.
Odyssey is pursuing a North American Free Trade
Agreement (NAFTA) claim against Mexico for their arbitrary and
unlawful denial of the environmental permit, which is the last
major milestone before operations can begin. Odyssey, on behalf of
its subsidiary ExO, is seeking damages of more than $2.3 billion as
detailed in the First Memorial filed in September. This filing is
supported by documentary evidence and 20 expert reports and witness
statements. Once a redacted version of the Memorial is released by
the NAFTA Tribunal, which is expected shortly, Odyssey will provide
a link to the filing at www.odysseymarine.com/nafta.
In addition to the NAFTA claim, ExO continues to
pursue the annulment of the second arbitrary denial in Mexico’s
federal court (the Tribunal Federal de Justicia Administrativa or
TFJA). This court ruled unanimously in 2018 that the first denial
of the environmental permit was illegal under Mexican environmental
law. ExO completed its latest filing in this case in August. A
decision in this case is expected in the first half of next
year.
A significant funding event was completed in
August to ensure that Odyssey and ExO have sufficient cash to last
through the outside dates associated with the
expected NAFTA timeline. “Based on current budgets and
forecasts, we expect this capital to provide Odyssey with the
longest duration of operating capital in its 26-year history,”
commented Mark Gordon, Odyssey Chairman and CEO.
“We remain extremely confident in the merits of
our NAFTA and TFJA cases, and with this funding we are prepared to
take both actions to their full and final conclusions, if
necessary. It is unfortunate that we are being forced to fight
these legal battles to counter the unlawful actions of Mexico’s
previous political administration; actions that have deprived the
citizens of Mexico from realizing the substantial societal and
economic benefits that the ExO Phosphate Project will deliver. We
continue to believe that operationalizing this project is in
everyone’s best interests. Mexico imports almost 60% of
its phosphate rock and produces domestic phosphate at a very high
cost. As a result, a significant portion of Mexico’s arable land
remains unfertilized leading to low crop yields, high food prices
and a significant national hunger issue. Activation of our project
will help President López Obrador realize his stated vision for
fertilizer independence and food security for his nation through
the creation of a huge domestic supply of very high grade and
low-cost phosphate, the key ingredient for fertilizer production.
Mexico has already made a very substantial investment in fertilizer
production plants but unfortunately the country’s quickly dwindling
supply of terrestrial available phosphate has rendered these
investments ineffectual. Commencement of the ExO
Phosphate Project would remedy this issue and would allow President
López Obrador to deliver on his promise of providing low cost
fertilizers to Mexico’s struggling farmers.
“Our successes in the third quarter have set us
up for a strong finish to 2020 and productive 2021,” continued
Gordon. “In addition to an expected positive outcome from our ExO
Project, we expect to increase the value of our diversified mineral
portfolio in 2021, both through the development of completely new
assets and from advancing our existing mineral deposit projects up
the value curve, from initial desk-based research and permit
acquisition to offshore mineral validation, environmental research,
engineering and licensing.”
Third Quarter 2020
Financial ResultsThe net loss for the quarter ending
September 30, 2020 was $5.5 million or $0.51 per share. $4.2 of
expenses were one-time NAFTA legal expenses that were funded
through a specialized litigation funding agreement.
Total revenue in the current quarter was $0.2
million, a $0.6 million decrease compared to the same period a year
ago. The revenue generated in each period was a result of
performing marine research, project administration and search and
recovery operations for our customers and related parties. The
primary reason for this reduction was that the long-term project we
were engaged on the last two years reached its life expectancy
during this quarter.
Marketing, general and administrative expenses
primarily include all costs within the following departments:
Executive, Finance & Accounting, Legal, Information Technology,
Human Resources, Marketing & Communications, Sales and Business
Development. Marketing, general and administrative expenses
decreased $2.1 million to $23,351 for the three-month period ended
September 30, 2020 compared to the same period in the prior year.
The primary contributor to this GAAP expense reduction was a
reversal of an accrued liability into the income statement of $1.3
million related to employee incentives and compensation connected
to our discretionary incentive reserve and a $0.6 million reduction
in non-cash share-based compensation. In addition, during this
period, management took several initiatives to reduce future
potential cash expenses and gain operational efficiencies to
achieve reduced overhead cash expenses resulting in an additional
$0.2 million reduction of cash expenses.
Operations and research expenses are primarily
focused around deep-sea mineral exploration which include minerals
research, scientific services, marine operations and project
management. Operations and research expenses increased by $2.7
million from 2019 to 2020 primarily as a result of the following
items: (i) a $2.7 million increase in financed litigation costs
directly associated with our NAFTA litigation pursuit, (ii) a $0.3
million decrease in our marine services project contract labor and
(iii) a $0.1 million savings in operational overhead
reductions.
Consolidated financial statements as well as
Odyssey's Quarterly Report on Form 10-Q for the period
ended September 30, 2020, are available on the company's
website at www.odysseymarine.com as well as
at www.sec.gov.
About Odyssey Marine
Exploration Odyssey Marine Exploration, Inc. (Nasdaq:OMEX)
is engaged in deep-ocean exploration using innovative methods and
state-of-the-art technology to provide access to critical resources
worldwide. Our core focus is the discovery, development and
extraction of deep-ocean minerals. Odyssey also provides marine
services for private clients and governments. For additional
details, please visit www.odysseymarine.com.
Forward Looking
InformationOdyssey Marine Exploration believes the
information set forth in this Press Release may include "forward
looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of
1933 and Section 21E of the Securities Act of 1934. Certain factors
that could cause results to differ materially from those projected
in the forward-looking statements are set forth in "Risk Factors"
in Part I, Item 1A of the Company's Annual Report on Form 10-K for
the year ended December 31, 2019, which was filed with the
Securities and Exchange Commission on March 30, 2020. The financial
and operating projections as well as estimates of mining assets are
based solely on the assumptions developed by Odyssey that it
believes are reasonable based upon information available to Odyssey
as of the date of this release. All projections and estimates are
subject to material uncertainties and should not be viewed as a
prediction or an assurance of actual future performance. The
validity and accuracy of Odyssey's projections will depend upon
unpredictable future events, many of which are beyond Odyssey's
control and, accordingly, no assurance can be given that Odyssey's
assumptions will prove true or that its projected results will be
achieved.
Cautionary Note to U.S.
InvestorsThe U.S. Securities and Exchange Commission (SEC)
permits mining companies, in their filings with the SEC, to
disclose only those mineral deposits that a company can
economically and legally extract or produce. We use certain terms
in this press release, such as "measured", "indicated," "inferred"
and "resources," which the SEC guidelines strictly prohibit us from
including in our filings with the SEC. "Inferred mineral resources"
have a great amount of uncertainty as to their existence, and great
uncertainty as to their economic and legal feasibility. It cannot
be assumed that all or any part of an inferred mineral resource
will ever be upgraded to a higher category. U.S. investors are
cautioned not to assume that part or all of the inferred mineral
resource exists, or is economically or legally mineable, and are
urged to consider closely the disclosures in our Form 10-K which
may be secured from us or from the SEC's website at
http://www.sec.gov/edgar.shtml.
CONTACT:
Laura Barton
Odyssey Marine Exploration, Inc.
(813) 876-1776 x 2562
laura@odysseymarine.com
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