Announcement concerning EPA summary judgement application

2 September 2016 

Market Announcement

As previously announced to the market, Chatham Rock Phosphate Limited (NZX: CRP) opposed an application for summary judgment lodged by the EPA for costs for the sum of approximately $795,000 relating to the consent hearing process. 

The High Court has not granted the summary judgment as sought by the EPA and it has been adjourned for mention until 11am on 8 November 2016 to allow CRP to:

  • commence any proceeding for judicial review challenging the validity of the EPA’s charges; and
  • obtain any interim order it may be able to obtain under s 8 of the Judicature Amendment Act 1972 having the effect of prohibiting or staying the present proceeding pending the determination of the judicial review proceeding. 

If no such interim order has been obtained by 8 November 2016, judgment is likely to be entered for the EPA for the full amount of its claims. 

CRP will now consider the judgment in detail and take legal advice on it and will advise the market in due course on its next intended steps. 

For and on behalf of the Board,

 

Chris Castle

Managing Director

 

Chatham welcomes Trans Tasman Resources’ new marine consent application

23 August 2016

Chatham Rock Phosphate has welcomed news of Trans Tasman Resources’ new application for a marine consent from the Environmental Protection Authority.

“Shareholders at our annual meeting last month expressed considerable interest in the progress of TTR’s project, which is why we are commenting today.

“Along with other international marine resources companies, Chatham will be watching progress with a very keen interest and wish TTR every success.”

Chris Castle 6421 55 81 85 or chris@crpl.co.nz

NZX Announcement: New Capital Allotted

21 July 2016

 New Capital Allotted

Chatham Rock Phosphate Limited (NZX: CRP) has today issued 25 million unpaid ordinary shares in CRP (Unpaid Shares) to a private investor at an issue price of $0.006 per share, raising in aggregate $150,000.  The Unpaid Shares will be paid up in instalments over a 12 month period. 

CRP has also today issued 800,000 fully paid ordinary shares in CRP (Fully Paid Shares) to a qualified investor at an issue price of $0.006 per share, raising in aggregate $4,800. 

Full particulars of the share issues are set out below. 

For and on behalf of the Board,

 

Chris Castle

Managing Director

NZX Announcement: Chatham issues July 2016 Update

Quarterly Update

11 July 2016

3.7 million thank-you’s

We’ve achieved some very satisfying milestones during the first half of 2016.  The highlight has been raising sufficient new capital to continue to progress our projects for the 15 months.

Our recent share purchase plan seeking $600,000 was oversubscribed.  Thank you everyone who subscribed, many sticking with us for several years and continuing to share our faith in our ultimate success.

We’ve also made various share placements to qualified investors (new and existing) over recent months and are also delighted to have new cornerstone shareholders from Malaysia, Switzerland and Germany. 

Since the initial rejection by the Environmental Protection Authority of our marine consent application in February last year we have raised $3.7 million – despite our share price having been slaughtered.

While we’ve had to dilute some existing shareholders to keep Chatham functioning by raising capital at much lower prices, we believepreserving some value and delivering on our goals will ultimately produce strong returns for all shareholders.

Our ability to raise money against the odds underscores the fundamental attractiveness of the Chatham Rise project and the perceptiveness of our ever-enlarging shareholder base.   Directors and management interests, along with our two new cornerstone investor groups, now each hold about 13% of the company. 

The present share price of 0.9c values Chatham at $7.24million - a sixth of our market value in February 2015. We believe Chatham is now in a stronger position than it’s ever been due to the knowledge gained during the marine consent application process.

 

Takeover Offer

Chatham continues to work with Antipodes Gold to complete the takeover offer to enable a listing on the Toronto Stock Exchange, hopefully in September.

Antipodes shareholders approved the proposed reverse takeover of Chatham, and we’ve now secured funding to operate until September 2017, are in the process of securing approvals from various authorities, developed large wads of documentation and so are now about 95% of the way there.  We expect offer documents to go out within the next few weeks. 

Together with the Antipodes shell we inherit some funds associated with the merger, a Toronto director, 1,003 resources-sector shareholders in a number of countries, and a Canadian corporate support structure. This merger will strengthen Chatham, complement our New Zealand listing and provide new opportunities for existing Antipodes shareholders.   

Recommending Chatham shares

During our capital raising we met with Geneva based investment banking firm RAMPartners SA whose analysts prepared an independent research report, which is now on our website.

Key points include a buy recommendation with a price target of 50c compared with the current market price of 0.9c.  RAMPartners project value of $472 million makes assumptions relating to the market price of rock phosphate, Chatham’s production costs and relevant currency interactions. It includes a detailed examination of the permit risk Chatham still faces and the evolving factors mitigating this risk. 

Encouragingly the valuation also concludes our management team “has the necessary skills, ability, devotion, focus and skin in the game” to make our project work.   The full research report is available to review on our website.

Acceptable impacts

Chief Operating Officer Ray Wood told the Marine Sciences Society this week regulators must decide on acceptable impacts if New Zealand is to achieve social, economic and environmental goals. Society must accept some development but minimise environmental impacts. Science helps society deal with uncertainty and decide on acceptable impacts.

He said environmental concerns highlighted by the EPA marine consent process were mostly allayed or more clearly defined through caucusing between interested parties and Chatham. Experts agreed mammals, sea birds, major fish stocks and primary productivity were unlikely to be affected, uranium was not an issue and water toxicology effects would be very low.

Even after that, the decision-making committee interpreted the results differently, declining the application based on perceptions of damage to the benthic (sea floor) environment, modest economic benefits compared to environmental effects, proposed adaptive management measures not addressing concerns and a requirement to favour caution and environmental protection.

We think the committee didn’t understand or trust the numerical modeling of either the plume (created during the mining process) or of benthic communities and so didn’t believe the proposed conditions could address the adverse environmental effects through adaptive management.

Science can predict environmental effects, through the laws of physics, chemistry and biology. Regulators want to minimise uncertainty by using the precautionary principle and adaptive management. But that shouldn’t result in paralysis by analysis, if risk thresholds are agreed, monitoring is adequate and operations stop if thresholds are exceeded.

The EPA has guidance to deal with risk and uncertainty under the hazardous substances law, but there is nothing equivalent in the Exclusive Economic Zone Act.

Uncertain outcomes shouldn’t be enough to deny permission for projects to proceed; they can be managed by agreeing risk thresholds.

Absolute effects and benefits are probably never known but probable maximum, minimum and likely effects and benefits are known. Science can reduce uncertainties by improving knowledge of risks and predicted effects and adaptive management reduces uncertainties through learning from outcomes.

The committee didn’t accept Chatham’s proposed conditions proposed because the members appeared unwilling to risk any environmental impact.

Operational Focus

Chatham will be reapplying for a marine consent following further consultation with stakeholders, a potential revision of the project and further research on some scientific issues.  We’re also:

·       Working with government ministries on improving the permitting process

·       Observing Trans Tasman Resources’ advance towards reapplying for a marine consent

·       Developing trading relationships with participants in the phosphate sector

·       Sourcing on-shore rock phosphate deposits

·       Building farming sector, academic, industry and central government support for the use of Chatham rock phosphate as an environmentally friendly product

·       Commissioning further pot tests to be followed byfield trials

·       Trying to resolve the fee dispute with EPA (the Office of the Ombudsman has agreed to investigate the EPA charges)

·       Pursuing a refund of overcharged mining permit fees with New Zealand Petroleum & Minerals

·       Presenting at fertiliser, resources sector and environmental conferences.

Both we and the EPA have learned a lot from our initial consent application.  We’re confident this will result in improved application and hearing processes and we’ll resubmit an even better application to robustly deal with the issues on which we were rejected.

 

Back at PDAC

For the 12th year I attended Toronto’s Prospectors and Developers Association of Canada convention, the world’s largest minerals investment and trade show. Investor interest was more focused given Chatham’s impending Canadian listing.

We had a speaking slot and a prime spot exhibition booth, and spoke to dozens of new and old contacts during the four-day event.

Chatham rock phosphate’s many benefits

We continue to believe the Chatham Rise project remains hugely valuable for all the same reasons:

Environmental benefits

  • much lower run off to lakes and rivers
  • very low cadmium
  • much lower carbon footprint
  • Security of fertiliser supply for farmers
  • An ethical source – New Zealand’s main source of phosphate is from a disputed territory
  • Highly profitable – forecast annual earnings of $90 million before royalties and tax, with low mining costs - equivalent to shipping cost

Good for New Zealand:

  • $34 million in annual taxes and royalties
  • millions in port charges
  • high-value, knowledge-based jobs in the port, on the mining ship, doing environmental monitoring and scientific research, in agriculture and hospitality and the Chatham Is
  • New Zealand could become a world leader in marine technology and expertise potentially worth billions of dollars
  • Our work at sea enhances knowledge of our marine environment to help identify areas most deserving of conservation.

 

For all these reasons we remain puzzled by environmental groups which, through opposing our Chatham project, condone New Zealand importing all our phosphate needs, so exporting our environmental footprint to countries mining phosphate where it involves severe social and environmental distress. 

Helping save our rivers

In following the dialogue about water quality in rivers and lakes and the escalating concerns about nitrate and phosphate run-off, we remind stakeholders about the environmental benefits of Chatham rock phosphate. To tease out a few points:

·       Reactive phosphate rock when applied directly to the soil binds in a manner is both a very effective fertiliser and can reduce the runoff of phosphate to waterways with up to 80% less finishing in the waterways when it rains heavily.

·       Cadmium levels in many New Zealand soils are at unacceptably high levels after decades of applying phosphate fertiliser from Nauru. Local manufacturers keep cadmium levels in phosphate fertilisers under 280 parts per million.  Because rock imported from Morocco (our main source) can be so high in cadmium, it needs to be blended with rock from other countries. Chatham’scadmium levels are about 20 parts per million so is potentially valuable as a blend for manufactured phosphate fertilisers.

·       While every kilo of phosphate based manufactured fertiliser applied to New Zealand soils generates carbon emissions of 216 grams, Chatham phosphate emissions are estimated to be a quarter of that, mainly due to much lower transport related emissions.

 

·       Chatham rock phosphate applied directly to the soil contains elevated calcium, critical for plant root development and nutrient uptake as well as improving soil structure and enhancing microbial life cycles.  Extensive independent field trials demonstrate Chatham rock phosphate is, over time, as effective a fertiliser as superphosphate.

 

Stakeholder Focus

We’re focused on building support from stakeholders including farmers, reminding them our product is both a green option and one that could save them money; requiring less-frequent application and with high liming characteristics.

To learn more about the issues facing the farming sector our executive team attended a seminar hosted by Abron and the Hawkes Bay Regional Council on how changes to fertiliser application and pasture management can improve a farm’s resilience, environmental footprint and financial performance, and the changing requirements to document farming practices and their environmental impacts.

Abron offers a fertiliser system designed to increase pasture and crop yields, produce healthier soils, and reduce environmental impacts.   As Chatham becomes involved in sourcing and marketing fertiliser products, especially rock phosphate intended for direct application and, we’re building relationships with the ultimate users, distributors and manufacturers of these products.

This strategy is being implemented now, before we develop our Chatham deposit, using our in-house expertise, because there’s a clear and increasing demand for more environmentally sound products. 

Soil and water quality

On that basis, we’ve argued the government should research the effect fertiliser use has on waterways. Crown Research Institutes and universities are looking to identify contaminant flow pathways and dilution processes in soil and water to help make better land management decisions and reduce environmental impacts. 

We’ve said it would be logical for the scope of this research to also consider the important role fertiliser plays in affecting both soil and water quality. 

The research could show how using Chatham rock phosphate as a local organic solution for New Zealand farms could help improve the quality of soil and water.

Annual General Meeting of Shareholders

We hope to see you at the 2016 AGM, being held at 5pm on Tuesday 26 July at BDO Wellington on Level 1, Chartered Accountants’ House, (previously the Tower building), 50 Customhouse Quay, Wellington.

 

Chris Castle

Chief Executive

Uncertainty should not paralyse development says Chatham Rock Phosphate

4 July 2016

Regulators must decide on acceptable impacts to achieve New Zealand’s social, economic and environmental goals, Ray Wood, Chief Operating Officer of Chatham Rock Phosphate, told the New Zealand Marine Sciences Society today.

In a review of the Environmental Protection Authority decision to decline Chatham’s marine consent application last year, Mr Wood said society must accept some development but endeavour to minimise its environmental impacts.  

“Science’s role is to help society deal with uncertainty and decide on acceptable impacts.” 

The consent process highlighted a number of environmental concerns, which were mostly allayed or more clearly defined as a result of caucusing between interested parties and Chatham.

Experts agreed marine mammals, sea birds, major fish stocks and primary productivity were unlikely to be affected, uranium was not an issue and water toxicology effects would be very low.

“But even after expert caucusing, the decision making committee interpreted the results differently from Chatham,” he said.

It declined the application on the basis of perceptions of significant and permanent damage to the benthic (sea floor) environment, modest economic benefits compared to environmental effects, proposed adaptive management measures not addressing concerns and a requirement to favour caution and environmental protection. 

“We think the committee didn’t understand or trust the numerical modeling of either the plume (created during the mining process) or of benthic communities.  Therefore the committee didn’t believe that the proposed conditions could address the adverse environmental effects through adaptive management.

 “Uncertainty is certain for all marine projects; sampling is difficult and expensive, data are often incomplete and regional context is often lacking.” 

Mr Wood said science is able to predict environmental effects, through the laws of physics, chemistry and biology.

“While regulators want to minimise uncertainty through the use of the precautionary principle and adaptive management, that should not result in paralysis by analysis.”

He said adaptive management allows approval if risk thresholds are agreed, monitoring is adequate and operations stop if thresholds are exceeded.

“Managing uncertainty requires confidence in the predicted nature and extent of effects and monitoring to identify variations from predicted effects.”

Mr Wood noted while the EPA has guidance to deal with risk and uncertainty under the hazardous substances law, there is nothing equivalent in the Exclusive Economic Zone Act.

“Uncertainty of outcomes is not sufficient to deny permission for projects to proceed. 

“Uncertainty can be managed.  Risk thresholds can be agreed if the effects and benefits are well defined and understood.”

Inherent uncertainties mean absolute effects and benefits are probably never known but probable maximum, minimum and likely effects and benefits are known.

He said science is able to reduce the scale of uncertainties by improving knowledge regarding risks and predicted effects.

Adaptive management reduces uncertainties through learning from outcomes.

Mr Wood said the committee did not accept the adaptive management conditions proposed by Chatham because it appears they were unwilling to risk any environmental impact.

He said Chatham would consider reapplying for a marine consent following further consultation with stakeholders, a review and potential revision of the project and further research on essential scientific issues.

Ray Wood, Chief Operating Officer +64 27 575 8989  or raywood@crpl.co.nz

 

Share Purchase Plan Allotment

1 July 2016

 Chatham Rock Phosphate Limited (NZX: CRP) is pleased to advise that its share purchase plan (SPP) has been oversubscribed. 

CRP received applications for $616,137.71 under the SPP (in aggregate) against a total offer of $600,000.

Given the size of the excess and the administrative costs associated with undertaking scaling, CRP has decided to allot shares for the excess as a placement under Rule 7.3.5.

As a result of the above, the offer has no shortfall and the underwriters are released from their underwriting obligations for the SPP.

Placements

In addition, CRP has issued 8,748,333 further shares to qualified investors (New Shares).  The New Shares were issued at an issue price of $0.006 per share, being approximately $52,500 in aggregate. This completes all issuances that were permitted to be made under the pre break announcement dated 19 April 2016.

Full particulars of the share issues are set out below.

The Board is thrilled with the outcome of CRP’s capital raising efforts and thanks shareholders for their support of the company.

For and on behalf of the Board,

 

Chris Castle

Managing Director

 

 

Chatham Rock Phosphate (CRP) attends farmers’ seminar

30 June 2016

Chatham Rock Phosphate (CRP) attends farmers’ seminar

As advised in earlier shareholder communications, CRP is committed to supporting the development of more sustainable and resilient farming practices in New Zealand.

To learn more about the issues facing farmers and the farming sector CRP's executive team attended a seminar on how changes to fertiliser application and pasture management can improve a farm’s resilience, environmental footprint and financial performance, and the changing requirements to document farming practices and their environmental impacts.

The seminar was in Hastings and was hosted by Abron and the Hawkes Bay Regional Council.

Abron has been established for nearly a decade, operates throughout much of New Zealand and offers a fertiliser system designed to result in increased pasture and crop yields, healthier soils, and reduced environmental impacts.  

CRP is becoming actively involved, both in New Zealand and overseas, in the sourcing and marketing of fertiliser products, most notably rock phosphate intended for direct application. This clearly involves building relationships with both the ultimate users (the farmers) and with distributors/supplier and manufacturers of these products.

This strategy is being implemented now, preceding the development of our Chatham Rise rock phosphate deposit, and using our existing in-house expertise, because there is a clear and increasing demand for more environmentally sensitive fertiliser products. 

 

Kind regards,

Chris Castle

CEO

Chatham Rock Phosphate Limited

+64 21 558 185