Odyssey Marine Exploration, Inc. (NASDAQ:OMEX), a pioneer in
the field of deep-ocean exploration, reported results for the third
quarter ended September 30, 2019, and provided an update on
current projects.
“This current quarter’s financial results were
impacted by several non-recurring or extraordinary charges that did
not adversely affect cash flow. As has often been the case over our
25-year history, Odyssey’s financial statements do not adequately
convey the significant progress our team has made advancing several
of our key projects that have the very real potential to build
substantial asset values in the coming quarters,” said Mark Gordon,
Odyssey Chief Executive Officer and Chairman of the Board.
“Odyssey has a long-proven history of
successfully funding our business through various funding
structures and we have various opportunities to fund additional
development of our projects,” continued Gordon. “Our strategy
includes monetizing small percentages of our project ownership at
various stages of development and we are presently in late stage
discussions to further monetize the value that we have already
created in one or more of these assets. In addition, there is the
potential in the first half of 2020 for a multi-million dollar
payment to Odyssey relating to a previously completed shipwreck
recovery.”
“I recently returned from the 48th Underwater
Mining Conference presented by the International Marine Minerals
Society in China, and I am even more confident in the ultimate
success of our business plan,” added Gordon. “Our team met with
government officials and top marine and terrestrial mining experts
who now believe production from seafloor mining is more imminent
than their initial projections and that Odyssey has the tools, team
and technology to bring these projects to production.”
“Our team continues to execute on our business
plan which focuses on acquiring or developing subsea mineral assets
and advancing these projects along the development path to increase
their near- and long-term value. Our current portfolio now includes
the Exploraciones Oceanicas (ExO) Phosphate Deposit in Mexico,
Lihir Subsea Gold (Bismarck) in Papua New Guinea, and a services
contract that provides us with a meaningful equity component in the
development of a polymetallic nodule project. Two additional
projects are in the final stages of evaluation as potential
additions to our portfolio.”
“The ExO resource, a strategically significant
phosphate deposit off the Mexican coast, is furthest along the
development path. Our team continues to work closely with our NAFTA
counsel in vigorously pursuing our case against Mexico which will
prove the project’s environmental permit application was denied in
breach of the treaty by the former Mexican Administration. We
expect the NAFTA tribunal will be constituted before the end of the
year, allowing for the calendar for the proceedings to be defined
shortly thereafter. In the meanwhile, discussions in pursuit of a
mutually beneficial settlement continue. The specialized litigation
funding agreement we executed several months ago provides
sufficient capital to support robust and sustained pursuit of this
action and allows us to continue to focus corporate funds on the
development of additional subsea mineral projects.”
Odyssey President and COO, John Longley added,
“We’re currently finalizing plans to advance the Lihir Subsea Gold
project exploration program. We expect to begin operations on site
in the first half of 2020. Geological and environmental surveys
will be conducted to aid in the production of a 43-101/JORC
compliant resource estimate and environmental impact assessment. We
are looking forward to advancing the knowledge and confirming the
extent of this highly prospective resource area within the remit of
exploration license that was recently renewed with the Mineral
Resource Authority.”
Odyssey is also continuing to provide a range of
offshore services on several strategically significant deep-ocean
projects.
“As we begin to finalize our 2020 business plan,
we are extremely excited about the major events we expect in the
year ahead, including further progress toward a final resolution of
our ExO Phosphate project, new exploration results that will help
to further quantify the value of our subsea gold project that is
located in area of proven high grade gold resources, and the
addition of at least one entirely new project to our growing
portfolio of subsea mineral projects,” said Gordon.
Third Quarter 2019 Financial
ResultsNet loss for the current quarter was $4.2
million, or ($0.45) per share, compared to a loss
of $1.3 million or ($0.15) per share in the
same period a year ago. Our net loss for this current quarter
contains approximately 78% of non-recurring or out of the ordinary
charges. These items amount to $3.3 million and include equity
compensation provided to the directors of a controlled subsidiary
of ours, charges related to a debt modification that include an
inducement, accelerated accretion and a loss on extinguishment and
direct NAFTA financed litigation costs. After adjusting for these
uncommon charges, our earnings per share would have been
approximately ($0.10), a net loss of $0.9 million.
Total revenue in the current quarter was $0.8
million, a $0.1 million decrease compared to 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. We
provided these services to our related party customer Magellan
during both of these periods as well as providing mineral related
services in 2019 to the deep-sea mineral exploration company, CIC,
owned and controlled by our past Chairman of the Board.
Marketing, general and administrative increased
$0.8 million to $2.1 million for the three-month period ended
September 30, 2019 compared to $1.4 million from the same period in
the prior year. There were several variances that resulted in this
increase period over period. Personnel costs increased by a net of
$0.6 million due to an increase of $0.7 million in subsidiary
director fees which was the result of awarding the directors
equity-based compensation in the subsidiary, in lieu of cash. These
subsidiary directors did not receive any compensation in 2018. This
amount was offset by a $0.1 million reduction in share-based
compensation. Administrative professional fees increased $0.1
million which includes costs related to being a public company.
Maritime legal increased $0.1 million related to support of an
ongoing shipwreck project.
Operations and research expenses increased by
$1.1 million from 2018 to 2019 primarily as a result of the
following items: (i) the prior period contained a refund of $0.1
million related to our marine insurance, (ii) a $0.1 million
increase in non-legal professional support of our NAFTA litigation
related to our Mexican subsidiary as pursue securing the
applied-for environmental permit and (iii) a $0.9 million increase
of direct legal support related to our NAFTA litigation.
Total other income and expense was $2.4 and $0.8
million in net expenses for 2019 and 2018, respectively, resulting
in a net expense increase of $1.6 million. This variance was
primarily attributable to an increase in interest expense of $0.3
million from the beneficial conversion feature tied to a promissory
note, a warrant inducement of $0.9 million and a debt
extinguishment loss of $0.3 million from a debt modification and
$0.1 of general other non-operating items.
Total other income and expense was $1.3 and $0.7
million in net expenses for 2019 and 2018, respectively, resulting
in a net expense increase of $0.6 million. This variance was
primarily attributable to an increase in interest expense of $0.5
million from recording the beneficial conversion feature tied to a
promissory note.
Consolidated financial statements as well as
Odyssey's Quarterly Report on Form 10-Q for the period
ended September 30,2019, are available on the company's
website at www.odysseymarine.com as well as
at www.sec.gov.
About Odyssey Marine
ExplorationOdyssey 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.laura@odysseymarine.com
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