WELLINGTON, New Zealand, June
29, 2018 /CNW/ - Chatham Rock Phosphate (NZ: CRP, TSX.V: NZP)
("CRP" or "the Company") provides a further shareholder briefing.
It has been particularly eventful recently and it's timely to
provide a quick summary to shareholders. In this issue
we will cover:
- Commencing the marine consent reapplication process
- Share purchase plan – importance of this succeeding in order to
maintain momentum
- Marine phosphate permitting progress overseas
- Key messages from Chatham
presentation at the Minerals Forum
- Report on attendance at National Fieldays
- NIWA disturber experiment
- Boskalis to dredge Lyttleton
Harbour
- Rare earths financing
- Namibia
Permit Reapplication Process Back on Track
Following
the success of two recent private placements we now have the
resources to commence the first step in the re-application process.
This will involve the preparation of an environmental scoping
document, to be undertaken by independent advisers and our project
director, Renee Grogan and which is
expected to be completed by November
2018. This will be reviewed by independent experts retained
by the EPA and the feedback from that review (a significant
milestone) will guide Chatham
towards the delivery of a marine consent application that is
consistent with the expectations of regulators, other government
agencies and Maori and community stakeholders.
Preparing that application is expected to take at least a year,
involving updates to a large number of supporting scientific
reports and the need to gather more environmental data from the
permit area.
Announcement of Share Purchase Plan (SPP)
This
financing approach is in contrast to the recent financing
initiatives targeting habitual investors. It is an offer to all
shareholders, regardless of their existing holdings, of up to
20,000 units. Each unit comprises a share and half a 2-year
45 cent warrant (called an option in
New Zealand). The offer will open
on 2 July and close three weeks later.
We hope this offer will be supported by a healthy proportion of
our ~1950 shareholders. We certainly will need that support
to maintain the permit reapplication momentum we have regained.
Ongoing shareholder support will provide the lifeblood to get to
the finish line (being fully permitted). We will also continue to
raise funds from a variety of other sources, including targeting
the farming sector.
Marine Phosphate Permitting Overseas
In April we
quoted from a public release relating to the offshore Mexico Don
Diego marine phosphate deposit. The release stated "on March 21, 2018, the Superior Court of the Federal
Court of Administrative Justice in Mexico had ruled unanimously nullifying the
earlier denial of the environmental permit application for the
extraction of phosphate sand from the Don Diego project". We await
further developments with optimism.
In a parallel situation in Namibia, a very recent court decision
overruled the 2016 withdrawal of a granted consent for a dredging
licence to Namibian Phosphate Limited, the operator of the
Sandpiper project. While this consent has not been formally
reinstated, we are similarly optimistic. Given our five prospecting
permit applications in the same area offshore Namibia this development is far more directly
relevant to Chatham.
Messages from the Minerals Forum
Our key messages:
A key purpose of this conference held in Queenstown in May was to attract international
investors, so local investment opportunities were a focal point of
the gathering. Chatham's key
messages were strongly focused and included the following familiar
points:
- Based on current fertiliser prices and project costs the
project will be highly profitable ($NZ75m pretax per annum)
- No capital investment is required as the rock will be contract
mined and sold unprocessed
- It is a strategic commodity (phosphate is scarce, low cadmium
phosphate even more so)
- The project has many associated environmental benefits (food
safety, carbon emissions, soil profile, water quality)
- It is an ethical source of phosphate
- As the directors and management own 35% we are walking the
walk. We have more skin in the game than any other
shareholder.
The presentation was well received and is on our website.
Messages from The Honourable Megan Woods, Minister of Energy
& Resources:
Minister Woods' keynote address included some helpful
reassurances relating to offshore minerals permitting. Because
these are so relevant to our project I repeat the relevant sections
below verbatim.
- "Other than for oil and gas, we have not changed the rules or
regulations around offshore mineral exploration at all.
- Our system assesses each application for offshore minerals
exploration against a variety of factors – including environmental
impact under the Resource Management Act, or under the Exclusive
Economic Zone legislation where the application is for an area more
than 12 nautical miles offshore.
- We see this system continuing - each permit application will
continue to be assessed on its merits.
- For example, just a couple of weeks ago NZ Petroleum &
Minerals, a foundation partner of this event, granted two such
permits for ironsands.
- We know there are other minerals other than ironsands offshore
and we want to see exploration for these minerals continue.
- There are known deposits of phosphate, polymetallic
nodules, cobalt rich ferromanganese crusts and seafloor
massive sulphides that all hold the potential for economic
benefit".
Given Chatham already has a
granted mining permit which included negotiating a significant
royalty payable to the Government, the economic benefits have
already been well established.
National Field Days
Chatham attended the National Field Days at
Mystery Creek in Hamilton, held
annually in June. The Fieldays event, the largest
agribusiness show in the southern hemisphere, attracts more than
130,000 people over four days and attendance in previous years has
proven successful for Chatham.
This was the case again as we had a steady stream of people coming
to our stall, wanting to know about the project, our phosphate
product and the investment opportunity. We were again visited by
farmers who have followed our project over the past several years
in the media, by companies involved in the industry, by people who
are simply curious to learn more about the project's technical
innovations and by loyal shareholders.
Interestingly many of our visitors knew what reactive phosphate
rock was, understand its properties and benefits and many welcomed
the demise of manufactured phosphate
fertilisers.
Niwa Disturber Experiment
Also a few weeks ago we
advised shareholders an ocean study by NIWA (National Institute of
Water and Atmospheric Research) to be undertaken in May would be
particularly relevant to our proposed marine phosphate recovery
operation on the Chatham Rise.
NIWA had advised that one of the most challenging scientific
underwater experiments it has ever attempted is taking place on the
Chatham Rise.
The aim of the voyage was to disturb a small area of the seabed
and create a sediment plume using a benthic disturber. The
dispersal of the plume would then be monitored, and surveys before
and after the disturbance would measure the effects on the seabed
animals. The data collected will be used to build up a picture of
how the biological communities on the seabed may be affected by the
sediment stirred up by mining or bottom trawl fishing.
Uncertainty about the effects of sediment plumes has contributed
to applications for seabed mining being declined and the plumes are
also an environmental concern for sustainable fisheries
certification.
"These activities create plumes of sediment but we don't know
how the sediment affects seabed life as it settles again on the
seafloor, and how much deep-sea animals can withstand. We are doing
this experiment on a small scale on the Chatham Rise but it will
give us a much better idea of how environmental managers and
industry can work to mitigate larger-scale disturbance effects,"
NIWA scientist Dr Malcolm Clark
noted at the time.
At the time we said: "Clearly the outcomes of the disturbance
research are incredibly relevant to our project in that they will
provide real data on the behaviour and effect of plumes generated
when the seafloor is disturbed (by any activity including dredging,
mining and bottom trawling).
"We have already spent very considerable sums modelling how the
plumes will behave so we expect that this real data will further
strengthen our ability to quantify these effects."
The experiment was completed in early June and we look forward
to the results.
Boskalis Dredge "Fairway" to be in NZ waters
Shareholders will be aware we have worked closely with Royal
Boskalis Westminster (Boskalis) since 2011. Our proposed phosphate
recovery operation has been conceived and designed by Boskalis and
the company is also a shareholder in Chatham.
Boskalis recently won the contract to dredge the Lyttleton
harbour and as a result Fairway, a 230m trailing-suction hopper dredger, will be
undertaking that contract in the next few months. As is routine in
dredging contracts world-wide, the dredging operation will operate
within extremely fine environmental tolerances and will be very
closely monitored. It's a fortuitous opportunity for Boskalis to
demonstrate to New Zealand
stakeholders that they really are world class at what they
do.
Rare Earths Research
Chatham previously confirmed it was about to
commission a research project aimed at separating valuable
by-products (including rare earths) within the sandy seafloor
matrix that contains the rock phosphate deposit. As our phosphate
recovery process is already bringing these sands up to the vessel
there is no mining cost involved, merely the costs of separating
these by-products from the sand before it is returned to the
sea-floor. Successful recovery of even a small proportion of these
by-products could add significantly to our revenue and
profitability and also establish a strategic ocean-floor asset for
New Zealand. Delays in securing
expected research grants resulted in this project being put on hold
but there are changes on the landscape here (partially due to the
change of government) and we are, again, optimistic we can get this
project up and running.
Namibia – Chatham moving away from being a "one trick"
pony
Shareholders will be aware Chatham applied for marine phosphate
prospecting permits offshore Namibia some years ago. More recently we have
focused on securing strategic alliances in Namibia which will help facilitate our plans
to become more active in Namibia.
We consider this initiative, which leverages our in-house
expertise, to be very much in the interests of our shareholders. As
and when they arise, future commitments will be structured in a
manner where they will not divert funding from our principal
objective; gaining the Chatham Rise Marine Consent on our second
try.
A reminder about our environmental and other benefits
You can be our advocates whenever our project is raised in
conversation. To remind you why the Chatham Rise project
remains hugely important for New
Zealand, here are the key reasons:
- Our rock is a proven reactive phosphate rock. Using it results
in much less run-off into waterways and an improved soil profile
compared with the effects of manufactured fertilisers.
- As such it is an organic fertiliser
- It also contains ultra-low levels of cadmium, a cancer-causing
heavy metal with much greater concentrations in other rock
phosphate deposits
- Being locally sourced and needing to be applied less frequently
results in much lower carbon emissions (in effect increasing the NZ
electric vehicle fleet from 5,000 to 24,000 vehicles)
- The environmental footprint of seabed extraction is much
smaller than the impact of onshore phosphate on local communities
overseas
- The rock is within one day's sailing distance and supply is far
more secure than phosphate rock coming from unstable regions on the
other side of the world
- The project economics are attractive and Chatham will pay significant royalties and
income taxes
- The project will generate new jobs in environmental monitoring,
on the mining ship, in the home port and in the science and
agricultural sectors
The following graphic outlines these and other key benefits. See
also our online interactive infographic at
http://www.rockphosphate.co.nz/projectinfographic
Regards
Chris Castle, Managing
Director
chris@crpl.co.nz or +64 21 55 81
85
skype: phosphateking
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SOURCE Chatham Rock Phosphate