Odyssey Marine Exploration, Inc. (NASDAQ:OMEX), a pioneer in the
field of deep-ocean exploration, reports financial results for full
year ended December 31, 2018, and provides an update on current
projects and future plans.
“In 2018 we continued to leverage our core
capabilities building the framework and assets on the mineral side
of our business and have now completed our transition. Heading into
2019, we are mission-focused on developing subsea mineral assets to
create and realize near-term and short-term value. This means we
will continue to enlarge our subsea mineral portfolio through
development of new deposits, acquisition of mineral rights/deposits
and through our leveraged contracting model, which allows us to
earn equity in deep-sea mineral projects. We will also move our
existing and new mineral projects up the value curve from research
and permitting into exploration, testing, resource evaluation and
mine planning,” said Mark Gordon, Odyssey CEO and President.
Odyssey’s most advanced mineral project is the
Exploraciones Oceanicas (ExO) phosphate deposit in Mexico. After
conducting extensive resource evaluation and environmental testing
and modeling, ExO submitted a 4,600-page environmental impact
assessment, which demonstrated that the project is environmentally
responsible with minimal direct impact and no long-term effects on
the marine environment, to SEMARNAT, Mexico’s environmental
agency.
Without regard for the scientific facts, the
former Secretary of SEMARNAT ordered the permit denied. Mexico’s
highest administrative court, the Tribunal Federal de Justicia
Administrativa (“TFJA”) confirmed in a unanimous 11-0 decision the
illegal and arbitrary nature of the former Secretary’s actions,
annulling the denial. Although this Tribunal ordered the former
Secretary to provide scientific and factual support justifying the
decision or to issue the permit, the Secretary ordered
reinstatement of its original decision without relevant factual or
scientific justification.
The ExO project relies on proven dredging
technology with a long history of utilization in Mexican waters.
Mexico has approved over 200 dredging projects using this
technology in the past 20 years, some in areas more environmentally
sensitive than the ExO project. A prime example of the prejudicial
treatment applied to ExO is SEMARNAT’s 2018 approval of a seabed
dredging project that will impact 1,400,000 cubic meters of seabed
in areas that SEMARNAT itself designated as of high environmental
relevance. The project area and neighboring areas include the
habitat and presence of several varieties of sea turtles,
bottlenose dolphins and sea lions.
In January, Odyssey took the additional legal
step of presenting Mexico with a notice of its intention (NOI) to
file a claim against Mexico under Chapter Eleven of the North
American Free Trade Agreement (NAFTA). Filing a NOI initiates a
consultation period during which Odyssey and the Mexican Government
will seek amicably to resolve this dispute. On March 22, 2019,
Mexico published Odyssey’s NOI, which is also available
here: https://www.odysseymarine.com/notice.
“Although we continue to have the utmost
confidence in the environmental and economic merits of the project,
we’ve been disappointed with the actions of the former Secretary of
SEMARNAT, who ignored objective evidence, invented grounds for
opposition that had no scientific basis and failed to carry out a
review consistent with the department’s legislative mandate and
procedural rules,” added Gordon. “We intend to work diligently and
in good faith with Mexico’s President Andres Manuel Lopez Obrador’s
administration during the NAFTA NOI consultation period to achieve
an equitable resolution to move the project forward. However,
should such an outcome not prove possible, Odyssey intends to
proceed to arbitration under Chapter Eleven of NAFTA.”
Gordon continued, “Odyssey is focused on more
than just the ExO phosphate deposit. In line with our goals to
increase and enhance our mineral project portfolio, we expect to
soon execute an agreement to acquire a controlling stake in a
company that has rights to a mineral-rich seafloor deposit in the
South Pacific. Significant exploratory work on this deposit that
has already been conducted leads us to have high confidence in the
potential strategic and economic value this opportunity
presents. Closing of this transaction and continued
development of new mineral assets will offer powerful
diversification to Odyssey’s expanding portfolio of seafloor
mineral properties.”
Odyssey’s Current
ProjectsOdyssey provides services for multiple mineral and
shipwreck projects under leveraged contract models whereby Odyssey
is paid to perform services while retaining a significant back-end
share of the future net proceeds from these projects or an equity
ownership share of the project. The combined potential cash flows
from these projects are expected to fund operations for multiple
years while simultaneously increasing the value of projects in
which the company has an equity ownership position.
Offshore operations continue on a 2018
contracted project that is expected to generate revenue during
2019. We are providing a range of marine related services to
this and other clients.
Odyssey is also planning offshore operations in
2019 on mineral deposits controlled by Odyssey and under contract
on deposits controlled by others. Concurrently, Odyssey continues
to research and develop new mineral project opportunities exploring
different asset types in various regions around the world. Two
additional strategic mineral deposits are currently under
development. One is an Odyssey mineral project and the other is
being conducted under contract with Odyssey receiving cash and
equity in the new venture.
Odyssey holds a controlling interest in Oceanica
Resources, S. de R.L., and Exploraciones Oceanicas, S. De R.L. De
C.V. (ExO), a subsidiary of Oceanica. ExO controls exclusive
50-year mining permits in an area in Mexican waters that contains a
large amount of phosphate mineralized material. To move to the next
phase of this project in Mexico, Odyssey and its subsidiaries are
awaiting the issuance of an environmental permit that is being
actively pursued as described above.
2018 Financial Results
Total revenues increased by $2.0 million in 2018
as compared to 2017. The $2.0 million increase is comprised of a
$1.0 million increase in continuation marine recovery work for
Magellan and $1.0 million of new revenue with CIC LLC related to
mineral services.
Marketing, general and administrative expenses
decreased from $6.2 million in 2017 to $5.7
million in 2018. The decrease of $0.5
million was primarily due to (a) a net decrease of $0.4
million in personnel expenses resulting from regular, incentive and
share-based compensation, (b) a decrease of $0.4 million in
admiralty legal support and (c) a $0.1 million increase in our
management related insurance policy.
For 2018, Operations and research expenses were
$3.7 million compared to $3.4 million for the same period in
2017. The variance of $0.3 million was primarily due to (a) a
$1.0 million increase, which is offset by the additional
revenue, in marine services costs which include technical crew
costs as well as other marine operational costs such as equipment
rental, fuel, port fees and consumables, (b) a decrease of $0.2
million in general operations support services overhead which
includes insurances, depreciation, travel and professional
services, (c) a net gain of $0.7 million on the sale of certain
marine assets and (iv) a $0.2 million increase attributable to
mineral support services for a client which is offset by the
additional revenue.
The net loss for 2018 was $5.2 million or
$(0.60) per share, as compared to a net loss of $7.8 million or
$(0.95) per share in 2017.
Consolidated financial statements as well as
Odyssey's Annual Report on Form 10-K for the year ended December
31, 2018, 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, 2018, which was filed with the
Securities and Exchange Commission on April 1, 2019. 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 BartonOdyssey Marine Exploration,
Inc.(813) 876-1776 x 2562laura@odysseymarine.com
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