NZX Announcement: Media Release - CRP issues business plan guidance

23 October 2014 

Introduction

For commercial reasons Chatham Rock Phosphate has refrained from publishing detailed information of both its marketing strategy and other sensitive aspects of its business plan including prospective future profitability. However, in the context of the Environmental Protection Authority hearing of our Marine Consent application it is now necessary to do so in view of:

1.      Uninformed comment from opponents and their economists about the project’s economic viability;

2.      The increasing need to fully inform the decision-making committee (DMC) of the business logic that underlies this initiative and the flow-on economic benefits accruing to New Zealand.

As these matters are arising through the hearing process it is necessary to ensure that there is a fully and properly informed market for Chatham Rock Phosphate’s shares.

 Marketing Strategy

In recent years Chatham’s marketing vice president Najib Moutia has undertaken extensive market research and sales development in international and local rock phosphate markets. This research has involved contact on a regular basis with fertiliser manufacturers in many countries.

Relevant factors affecting the demand for CRP rock phosphate include a range of product characteristics including but not limited to:

·       the level of contained phosphorus

·       the normal levels of iron and aluminium

·       calcium carbonate levels

·       very low cadmium levels

·       ease of handling, including suitable angle of repose and low dust levels

·       and the opportunity to certify the rock as organic.

Due to these product characteristics CRP rock phosphate can be used to make either medium or high grade superphosphate, direct application fertiliser, or even dicalcic phosphate.

The dialogue with potential buyers has led to the development of sales projections by product use and by country for eight countries. The location of target countries is partially governed by freight costs and hence they are mainly in Australasia and Asia-Pacific. Sales or supply agreements have not been entered into however the high degree of interest received has given CRP confidence that such agreements can be secured following the project being fully permitted.

In each case product specific sales projections and expected selling prices have been developed based on intra-country market needs.

In summary approximately 1.15 million tonnes are expected to be exported annually and 350,000 tonnes used within New Zealand. Of this two thirds of the total are expected to be used to make single super phosphate and one third will be sold for direct application use, in six countries. Notably, rock sold for direct application use sells at a substantial premium in some markets so the product mix will be focussed towards maximising direct application use.

We believe the market for direct application rock phosphate in New Zealand is 100,000 to 200,000 tonnes a year with potential for significant expansion, given

·       this product has not been readily available from a local source

·       there is a desire or likely requirement to reduce leaching run-off effects, and

·       the ideal characteristics of our product for high country use and for maintenance in dairy farm application. 

We have commissioned updated pot trials to validate the work done in earlier years proving the strong performance of our product on New Zealand soils.  We are also evaluating the market potential for RPR on home garden use in New Zealand and internationally.

Indicative Project Economics & Cost Structures

CRP proposes to use one vessel to mine 30km² of seabed per annum, consisting of about three 2km wide by 5km long mining blocks. It is expected that the mining cycle will consist of approximately one day’s travel to the mining block, four to five  days mining, one day transit to port and three days unloading. Allowance is made within this cycle to accommodate weather delays and equipment servicing. This mining plan is intended to satisfy an annual production target of 1.5 million tonnes of phosphate.

Based on the  projected uses above and taking into account currently prevailing contract prices (not merely the World Bank-quoted spot price, which is simply a reference point) applicable to our product range we expect an average revenue per tonne of USD 125 (NZD 158) yielding annual project revenues of USD 187.5 million (NZD 237 million). These revenues are net of export freight costs.

After deducting expected contract dredging costs, incoming port charges, environmental monitoring costs, community contributions, biodiversity offset costs and business overheads, the annual profit before royalties is presently estimated to be USD 54 million (NZD 68 million). 

From this estimated profit Chatham is presently estimated to annually pay USD 5.4 million (NZD 6.8 m) in royalties and USD 13.6 million (NZD 17.2m) in income tax.

One of the key financial strengths of the project is the fact that the cost of transport of imported rock phosphate to New Zealand is about equivalent to Chatham’s current estimated mining costs, which gives the project a significant financial advantage.

CRP commissioned RSC Consulting Ltd (“RSC”) to undertake an independent Mineral Resource estimation study on its project earlier this year and prepare a report to comply with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2012 Edition (“Jorc Report”). The JORC Report considered that the project area contains a total of 80 million m³ of phosphate at an average grade of 290 kg/m³, classified as an Inferred Mineral Resource at a cut-off grade of 100 kg/m³ for a total contained 23.4 million tonnes of phosphorites.

This Inferred Mineral Resource is consistent with an expected project life of 15 years. Chatham Rock Phosphate will, based on our existing assumptions, earn tax paid profits of USD 525 million (NZD 663 million), pay royalties of USD 81 million (NZD 102 million), and pay income tax of USD  204 million (NZD 258 million) during this period. 

Other Economic Benefits

CRP will pay incoming port charges to the port where the operations and product stockpiles will be based. These are not yet quantified but will be (at the least) several million dollars a year. 

Further, a number of local employment opportunities will be associated with this project, including:

1.      Port support services relating to product handling

2.      Overseas phosphate export vessels provisioning support services ( 30+ ships)

3.      Survey vessel services

4.      Portside engineering services

5.      Jobs on the mining vessel

6.      Other jobs relating to environmental monitoring services

7.      Maritime training opportunities

8.      Ongoing scientific research and data gathering

9.      Mining vessel provisioning and bunkering

10.  Jobs arising from increasing farming outputs where CRP rock is used on marginal land

Conclusion

In summary, Chatham’s project financials offer significant economic benefits for New Zealand and the potential for attractive profitability for investors.   In addition it offers new environmental benefits for New Zealand’s farming industry, in terms of using a low cadmium, low carbon footprint, low run off, potentially organic product.  This project will create a new industry with strong ties to agriculture, our most important export earner.

Chatham Rock Phosphate product will enhance New Zealand’s security of supply, reducing our exposure to politically risky sources of a critical input to this country’s biggest industry.

 Chris Castle, Managing Director +64 21 55 81 85 or chris@crpl.co.nz

 

Warning - Forward Looking Statements

This release contains forward looking statements.  Forward-looking statements and information are not historical facts, are made as of the date of this release, and include, but are not limited to, statements regarding discussions of future plans, guidance, projections, objectives, estimates and forecasts and statements as to CRP's expectations with respect to, among other things, mineral properties and the matters described in this release.

These forward looking statements involve numerous risks and uncertainties and actual results may vary. Important factors that may cause actual results to vary include without limitation, the timing and receipt of certain approvals, changes in commodity prices, changes in interest and currency exchange rates, risks inherent in exploration results, timing and success, inaccurate geological and metallurgical assumptions (including with respect to the size, grade and recoverability of mineral reserves and resources), changes in development or mining plans due to changes in logistical, technical or other factors, unanticipated operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications, cost escalation, unavailability of materials, equipment and third party contractors, delays in the receipt of government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters), political risk, social unrest, and changes in general economic conditions or conditions in the financial markets.

NZX Announcement: Media Release - CRP says second staff report has no bearing on final decision

22 October 2014 

Chatham Rock Phosphate is pleased the second staff report, released by the Environmental Protection Authority today, contains no conclusions or recommendations, managing director Chris Castle said today.

“At our request the decision-making committee (DMC) agreed and directed that the staff report should contain no recommendations or conclusions.

“Following its release we still think the supplementary report has little relevance to the proceedings and still contend it should not have been prepared, because it only looks at information up to the start of the hearing and also ignores the very valuable work completed by expert conferencing. Even more critically, it does not consider evidence at the hearing.

“The DMC ruled the supplementary report should be prepared but not take account of developments during the hearing itself.  More importantly, the DMC said, given the scope for potentially significant developments to occur over the course of the hearing, it would be of questionable value for the supplementary report to include an overall conclusion or recommendation on the merits of the consent application. 

“We note this is in marked contrast to the first report which reached totally premature conclusions on the basis of information which would inevitably be, and has been, substantially supplemented through various steps of the hearing process. 

“We argued a recommendation in the supplementary report could create a premature and misleading impression about the likely outcome of the hearing.  This is precisely what happened with the first report where shareholders, prospective investors and other observers, many of them overseas, incorrectly concluded the EPA had already reached a decision. The first report halved the market value of the company and effectively cost CRP shareholders more than $15 million ”

The updated staff report contains a spreadsheet summary and analysis of the information up to the start of the hearing and expert witness conference reports.

“We are pleased the DMC agreed it would be unfair and contrary to the principles of natural justice that unknown report authors who have not and will not attend the hearing will reach conclusions without having heard the evidence.” 

Mr Castle said in contrast, the DMC will consider:

·       the information provided in the application and environmental impact assessment (470 pages and more than 30 scientific reports)

·       responses provided to 62 separate requests for information, including the preparation of additional research reports

·       the results of 14 separate rounds of expert conferencing covering everything from economics and ecosystem effects to fishing and mammals

·       the expert evidence heard over 25 days including answers to questions asked by the committee and counsel.

CRP notes there will be the opportunity to question the authors of the second staff report during the hearing process.

 

Chris Castle, Managing Director +64 21 55 81 85 or chris@crpl.co.nz

Chatham updates on EPA hearings

Update

6 October 2014

Hearings into third week

Our hearing travels to the Chatham Islands this week, with sessions held on Wednesday and Thursday.  A number of local individuals and groups are making representations both in support of, and in opposition to our proposal.

While we understand people have concerns, we believe our application addresses those, especially through suggested conditions, which include comprehensive monitoring.

You can follow every word of what happens in the hearings on the EPA website.  Proceedings of each day appear the day after. 

Check out:

http://www.epa.govt.nz/EEZ/chatham_rock_phosphate/Pages/default.aspx

Seven days down ……

Public hearings got underway on 25 September at the RA Vance stand at the Basin Reserve in Wellington, and continued each day last week.

We’ve had visits from a regular stream of people with an interest in the project and there’s been media coverage on TV, radio, newspapers and other electronic media. 

We’ve chosen to ignore the snapshot comments posted on social media from some submitter supporters randomly present at the hearings.  They are made completely out of context, are inaccurate and misleading.

Fundraising Opportunity

Following the recent capital raisings, including the last two successful shareholder rights issues, with a strong show of support from our 700 New Zealand shareholders, we now offer other investors a chance to participate at share prices last seen in 2010.

The shortfall from the most recent issue is being offered to qualified habitual investors in a limited, short term opportunity to participate.  The shares are offered at NZD 0.12 per share (or the approximate foreign currency equivalent). In addition, for each share issued, one CRPOB $0.688 option is offered.

We continue to believe these share price levels represent exceptional value and that after the Marine Consent grant the share price should be much higher.  If you are interested please immediately contact me.

Boskalis evidence very impressive

Three representatives from Boskalis made the long trip from Holland for a three-day visit to watch some of the relevant evidence first hand and to give their own expert evidence.

Sander Steenbrink, development dredging manager, talked about the close links and commitments between the two companies.  In a report by Business Desk he is quoted as saying Boskalis has a strong track record in managing these types of projects.  He considered measures to mitigate the impact of mining on the environment by leaving areas to aid re-colonisation of the marine ecosystem met the firm's corporate social responsibility goal of 'building with nature'.  He didn't think there were any technical concerns that would limit monitoring the project.

Boskalis senior engineer Jamie Lescinski said the modelling used to determine the impact of the plume of discharged sediment from the mining operation took a conservative approach. The plume is expected to average 10m above the seabed during a mining cycle, but she said it could go as high as 20m without any substantial variation.

Lescinski said lessons and samples from the initial mining stage would be used to model the potential impacts in expanded areas if the project proceeds to those later stages.

"I would advise that, before mining in a new area, a condition should be imposed that seabed samples need to be collected and analysed and that information should be used in the model as inputs to rerun operational predictions before moving into new mining," she said.

"My expectation is it would be similar, but that's an expectation. I would want to see that sediment first and see if there are any similarities to the area that's already known."

Gerard van Raalte, who has been overseeing the project for Boskalis, said project would draw on existing techniques and equipment, but would also need its own bespoke solutions to deal with unique issues.

"What we have developed so far is complex, but in fact it's a combination of state of the art techniques that are applied in a new context," van Raalte said. "We are convinced we have chosen the best available technology with the best environmental practices to mitigate as much as possible what we can do in the design stage."

He said the project will need extensive monitoring in the early stages to ensure it would be able to cope with any unexpected problems that arise.

Conferencing almost there

In the lead up to and the first days of the hearing there has been intensive conferencing by experts from CRP and submitters.  This is designed to find out agreed common ground and areas still in dispute. 

Areas covered include:

  • impacts on commercial fishing
  • fish
  • rock lobsters
  • sediment modelling
  • benthic ecology
  • seabirds
  • radioactivity
  • spatial planning
  • economics
  • toxicology and water quality
  • ecosystems effects.

There are a couple of sessions yet to complete including one on mammals.

It’s heartening to see how effective this process is and how much “noise” it removes from the hearing process – though it doesn’t stop some opposing legal counsel from inferring uncertainty even where it is negligible.

The conferencing is pretty intensive, especially as some of the experts are joining from all parts of the globe and sometimes in the middle of their night!  CRP is very grateful for the high level of professional input.

Chris Castle, Managing Director

chris@crpl.co.nz or +64 21 55 81 85

Boskalis defends track record at Chatham Rock hearings

Thursday 2nd October 2014

Royal Boskalis, one of the world's biggest dredging companies, defended its track record in making the case for a proposed phosphate mining project on the Chatham Rise, and is confident the measures it would take to protect the environment would aid recolonisation of the area by marine life.

The Rotterdam, Netherlands-based company is the proposed partner with NZAX-listed Chatham Rock Phosphate to mine phosphate nodules from the seabed on the Chatham Rise, some 450 kilometres offshore to the east of Christchurch, providing the engineering expertise to undertake the project. While the two companies haven't formally entered into a contract, Boskalis is an investor in and an integral part of Chatham Rock's application to mine the area, and three of the Dutch firm's representatives gave evidence to the five-member decision-making committee hearing submissions on the project in Wellington yesterday.

"It is important to note both CRP and Boskalis have committed to work together on this project," development dredging manager Sander Steenbrink told the committee. "We have come a long way and it would very difficult for another company to come and step into the project and do that work."

If another company was successful in winning the bid to undertake the project, it would have to negotiate the use of Boskalis's intellectual property, which was part of the Chatham Rock application.

Steenbrink said Boskalis has a strong track record around the world in managing these types of projects, and that he considered measures to mitigate the impact of mining on the environment by leaving areas to aid recolonisation of the marine ecosystem met the firm's corporate social responsibility goal of 'building with nature'.

He didn't think there were any technical concerns that would limit monitoring the project, which would be the deepest underwater mining project the firm has undertaken, at 450 metres. Rather, it would come down to issues of cost, Steenbrink said.

Duncan Currie, counsel for environmental lobbies Greenpeace, Kiwis Against Seabed Mining and Deep Sea Conservation Coalition, put several critical reports over Boskalis's environmental record to Steenbrink, which the Dutch executive said either hadn't come to his attention or had since been rectified.

Boskalis senior engineer Jamie Lescinski told the committee the modelling used to determine the impact of the plume of discharged sediment from the mining operation took a conservative approach. The plume is expected to be at an average of 10 metres above the sea bed during a mining cycle, but Lescinski said it could probably go as high as 20 metres without any substantial variation.

The impact of the plume and how it disperses the sediment is a key point of contention in the project. Boskalis plans to blast jets of water into the ocean floor to loosen the seabed and suck up sand for separation and extraction of the phosphate, before dispersing it through a hose. Among concerns is whether clay, referred to as chalk ooze and which typically lies below the proposed layer of sand to be mined, would be sucked up into the suction system, 

CRP wants to initially mine an 820 square kilometre area for five years before widening its activity to a 5,207 sq km area for up to a further 30 years.

Lescinski said lessons and samples from the initial mining stage would be used to model the potential impacts in expanded areas if the project proceeds to those later stages.

"I would advise that, before mining in a new area, a condition should be imposed that seabed samples need to be collected and analysed and that information should be used in the model as inputs to rerun operational predictions before moving into new mining," she said. "My expectation is it would be similar, but that's an expectation. I would want to see that sediment first and see if there are any similarities to the area that's already known."

Gerard van Raalte, who has been overseeing the project for Boskalis, told the hearing the Chatham Rise project would draw on existing techniques and equipment, but would also need its own bespoke solutions to deal with unique issues.

"What we have developed so far is complex, but in fact it's a combination of state of the art techniques that are applied in a new context," van Raalte said. "We are convinced we have chosen the best available technology with the best environmental practices to mitigate as much as possible what we can do in the design stage."

He said the project will need extensive monitoring in the early stages to ensure it would be able to cope with any unexpected problems that arise.

The hearings are continuing.

www.businessdesk.co.nz

NZX Announcement: Media Release - CRP Marine Consent hearing starts today

Media Release

CRP Marine Consent hearing starts today

25 September 2014 

Chatham Rock Phosphate today launched its application to the Environmental Protection Authority for a marine consent to extract rock phosphate nodules from the seabed on the Chatham Rise, 450 km from New Zealand.

CRP, a New Zealand NZAX listed company, has spent four years and nearly $30 million to research its proposals to mine 1.5 million tonnes for use on New Zealand farms and export markets.

Counsel James Winchester, in his opening submissions, said the research has found effects are confined to a small area.  He said the key conclusions from an enormous body of evidence were:

·       The area is not significant for fishing or spawning

·       There is expert consensus the effects on fish and fishing are low

·       Modelling of sediment plume shows the effects will be confined and the main impact on benthic (seabed) organisms will be within the mining blocks.  There will not be material adverse effects on fish, eggs or larvae over a wider area, with suspended solids quickly returning to normal between mining cycles.

·       Risks to marine mammals and seabirds from a single vessel and the mining operation are low and can be appropriately managed.

·       There will be significant and irreversible effects on the benthic environment where mining occurs, but these are unlikely to have flow-on consequences for the food web of the Chatham Rise.  While the impact included permanent effects on stony corals, these are present throughout the Exclusive Economic Zone and CRP is proposing significant mitigation.

CRP’s proposed mitigation includes mining exclusion areas covering one fifth of the marine consent area to include sensitive and important seabed features and benthic communities, and trials to create areas of hard substrate to enable recolonisation of stony corals and other species.

“It is submitted that the greatest impacts and risks to the fishing industry and the fish that they rely on arise from their own unregulated bottom trawling, rather than a very small amount of seabed disturbance in an areas that is not important for fishing or spawning.”

Mr Winchester began his submissions saying phosphate, a natural mineral, is as essential to life as water, oxygen and carbon.  It cannot be manufactured, there is no synthetic substitute and New Zealand has no on-land sources, so all phosphate is imported, much from politically unstable parts of North Africa.

“The availability of a high quality, low cadmium local source of rock phosphate on the Chatham Rise makes this a strategic resource of national significance.”

He said the proposed dredging process is one of the most environmentally benign forms of mining practised anywhere in the world.  No overburden removal is required and no chemicals are introduced to the environment.  Damage is minimal and restricted almost entirely to the mined area. 

In contrast the environmental costs and potential damage of using an alternative supply of phosphate involves removing vast quantities of overburden, containing much higher levels of cadmium and - shipped from the other side of the world - leaving a large carbon footprint.

Mr Winchester said CRP is proposing a suite of conditions to deal with risks and effects including an adaptive management approach.

Chris Castle, Managing Director +64 21 55 81 85 or

 

Click Image below to read full submission: 


NZX Announcement: September Project Update

Dear Chatham Rock Phosphate shareholder or stakeholder,

This update has just been released by NZX.


Regards,

Chris Castle

Chief Executive Officer

Chatham Rock Phosphate Limited

Email: chris@crpl.co.nz

Cell: +64 21 558 185

Skype: phosphateking

www.rockphosphate.co.nz 


Update

15 September 2014

Pace not letting up

The pace and level of activities by the CRP team is at full throttle as we work on a number of fronts to advance the project.

Our first focus is ensuring the Marine Consent process proceeds as scheduled so we can get a decision by the Environmental Protection Authority’s decision-making committee before Christmas. 

The second is continuing to finance the current very high level of activity and the inevitable associated costs. We’re approaching the peak of our spending commitments – financing all of the charges associated with the Marine Consent process. 

All up we estimate our and the EPA’s costs (which CRP pays for) will be around $4 million.  These include all of the experts for CRP and the EPA and all of the associated staff, travel, venue and other costs.

Hence the need for more money

We have announced two successful capital raising tranches over recent weeks.  One was for $1.24 million and one for $1.22 million.   The shares were issued at NZD 0.12 per share (or the approximate foreign currency equivalent). In addition, for each share issued, one CRPOB $0.688 option was issued.

To enable all shareholders to participate at these current prices directors resolved to extend the offer on the same terms.   The share offer is in the ratio of two new shares for every 17 shares you currently hold, with one non-voting option granted for every new share. You will be sent documents telling you about your entitlements and the relevant time frames. 

We naturally encourage everyone to help us raise the money we need to complete the Marine Consent process.  We really appreciate the money you’ve contributed in the past and hope you take advantage of what we believe will be temporary exceptional value at these share price levels.

In addition to the offer to shareholders, qualifying habitual investors will be able to take up any shortfall of shares not subscribed for by shareholders within three months of the offer closing.

Merger Talks

You may have noticed that as part of the “cleansing notice” regarding the issue we advised we have been in discussions with a publicly quoted company with respect to a potential merger transaction.

We can’t say much more at this stage.  The discussions are at an early stage, on-going and at present no agreement has been reached - binding or non-binding - on the terms of such a transaction.   Rest assured, if and when we get to a position where these discussions progress to a documented stage, we’ll announce further details.

Evidence and queries

In late August we submitted all of our evidence from our 31 experts.  While some is technical, there is some quite readable information about the project so it’s worth having a good look around the relevant part of the EPA website devoted to our project. http://www.epa.govt.nz/EEZ/chatham_rock_phosphate/Pages/default.aspx

In addition to our evidence the submitter evidence was filed last Friday.

As well as the evidence from our expert witnesses, we completed the mammoth task of providing detailed answers to 62 queries from the EPA. Every new report and piece of evidence increases our confidence we have built the case to demonstrate to the Decision Making Committee why this project should be approved.

All of the pieces of the jigsaw are building a compelling picture to demonstrate the environmental impacts are comparatively minor or can be readily managed and the benefits – both environmental and economic – are significant for New Zealand.

Hearings underway next week

Public hearings get underway next Thursday 25 September, and the venue will mostly be at the Basin Reserve in Wellington.  If you get the chance feel free to pop in and see the action, even for a few hours.

This week caucusing or discussions between expert witnesses will seek to identify areas of agreement and outstanding areas of contention.

We’re not the only one

We were delighted to see Mexican based undersea phosphate project Don Diego file its environmental impact assessment (EIA) with the Mexican Secretary of Environment and Natural Resources. A response is expected in 60 business days.

This is a great step forward for the marine mining industry, demonstrating the industry has real momentum and that well-researched and considered undersea phosphate mining projects have a major part to play in ensuring the world’s food security.

As with CRP, Don Diego used experts in marine dredging, plume modeling, sound propagation, ecotoxicology, phosphate research and engineering for the environmental studies and scientific findings in the EIA.

A non-technical summary of the EIA is attached.

Last word

Finally, if you missed it, it’s worth reading an article written by business journalist Pattrick Smellie regarding the concerns we had involving the EPA’s issue of a staff report.  http://www.stuff.co.nz/business/opinion-analysis/10436122/Politics-of-mining-keep-digging

We remain concerned the staff report was premature, contained many inaccuracies, demonstrated bias and most importantly was delivered at a point in time when the EPA staff were fully aware that it could be destructive to our financing arrangements.

We’re conscious we have many international shareholders who don’t fully understand the New Zealand environment.  There were several international media reports saying the staff report was the final decision – which of course it was not.  

Reassuringly, numerous local and international stakeholders saw the EPA staff report for what it was and expressed their views in writing to several Ministers.

Much more could be said about this now but that can wait.

Notwithstanding the EPA staff sideshow we remain totally confident that our project will be granted (by the EPA Decision Making Committee, not by the support staff) a marine consent as a logical outcome arising from our multi-million dollar investment, our fact based and science supported approach, and several person-years of effort.  

Chris Castle, Managing Director

chris@crpl.co.nz or +64 21 55 81 85

NZX Announcement: Notice of Offer of Same Class Financial Products for Issue

Dear Chatham Rock Phosphate shareholder or stakeholder,

This announcement, which relates to the rights issue, was filed with NZX this morning.

Regards,

 

Chris Castle

Chief Executive Officer

Chatham Rock Phosphate Limited

Email: chris@crpl.co.nz

Cell: +64 21 558 185

Skype: phosphateking

www.rockphosphate.co.nz

 

Monday 8 September 2014

Client Market Services

NZX Limited

Level 1, NZX Centre

11 Cable Street

Wellington 6011

 

Notice of Offer of Same Class Financial Products for Issue

Chatham Rock Phosphate Limited (Chatham Rock) intends to undertake a pro-rata 2 for 17 renounceable rights offer for new ordinary shares in Chatham Rock (New Shares) to Chatham Rock’s eligible shareholders (those on the share register on the record date of 5pm, Wednesday 10 September 2014) with one option (New Option, in the same class as Chatham Rock’s listed CRPOB options) to be granted for every New Share allotted (the Offer).

Pursuant to clause 17(1)(a) of Schedule 1 of the Financial Markets Conduct (Phase 1) Regulations 2014 (Regulations) and clause 19 of Schedule 1 of the Financial Markets Conduct Act 2013 (FMCA), Chatham Rock advises that:

1.       The Offer is being made in reliance upon the exclusion in clause 19 of Schedule 1 of the FMCA and Chatham Rock is giving this notice (Cleansing Notice) under clause 17(1)(a) of Schedule 1 of the Regulations.

2.       As at the date of this Cleansing Notice, Chatham Rock is in compliance with:

(a)     the continuous disclosure obligations that apply to it in relation to Chatham Rock listed shares and options; and

(b)     its “financial reporting obligations” within the meaning set out in clause 17(4)

of Schedule 1 of the Regulations.

3.       As at the date of this Cleansing Notice, there is no information that is “excluded information” within the meaning set out in clause 17(4) of Schedule 1 of the Regulations, other than:

(a)     as announced to the market, the filed Marine Consent and all applicable documents available at:http://www.epa.govt.nz/EEZ/chatham_rock_phosphate/Pages/default.aspx; and

(b)     Chatham Rock has been in discussions with a publically quoted company with respect to a potential merger transaction. These discussions are at an early stage, on-going and at present no agreement has been reached - binding or non-binding - on the terms of such a transaction. Should these discussions progress to a documented stage a market announcement will be made giving further details.

4.       The potential effects that the Offer and the issue of New Shares and New Options will have on the “control” (within the meaning of clause 48 of Schedule 1 of the FMCA) of Chatham Rock and the consequences of those effects are as follows:

(a)     As at the date of this Cleansing Notice, the substantial security holders in Chatham Rock are Subsea Investments II LLC, Boskalis Offshore Subsea Contracting B.V, Odyssey Marine Exploration Incorporated and Aorere Resources Limited.

(b)     If all eligible shareholders take up their pro-rata entitlements to New Shares and New Options under the Offer, their percentage shareholding in Chatham Rock will remain the same and there will be no effect on the control of Chatham Rock (provided that the entitlements of any ineligible shareholders are taken up by parties not having the pre-Offer capacity to exercise “control”).

(c)      In some cases, shareholders with registered addresses outside of New Zealand and Australia may not be eligible to participate in the Offer (and their percentage shareholding will be diluted as a result of the issue of New Shares and New Options), due to the legal requirements of the relevant jurisdiction being unduly onerous for Chatham Rock to make the Offer in that jurisdiction (as provided for in NZAX Listing Rule 7.4.3(h)). However, Chatham Rock does not anticipate that the combined percentage interest of any ineligible shareholders is not likely to be sufficiently significant for its dilution to have a material effect on the control of Chatham Rock if all eligible shareholders take up their entitlements.

(d)     If some eligible shareholders do not take up their full entitlement, such shareholders' percentage shareholding will be reduced (relative to those who did take up their full entitlement), and Chatham Rock will be entitled to allocate that Shortfall to other parties who have taken up their full entitlement under the oversubscription facility.

(e)     In addition, if there is a Shortfall under the Offer (following any applications for additional New Shares and Options, as described above), Chatham Rock will be entitled to place the Shortfall to any persons (subject to complying with applicable legislative instruments and the NZX Listing Rules) within three (3) months of the Offer closing.

(f)      The New Options will not carry voting rights and will only impact upon control if and when they are exercised into ordinary shares.

(g)     Accordingly, the Offer is not expected to have any material effect or consequence on the control of Chatham Rock.

On behalf of the Board,

 

Chris Castle

Chief Executive Officer

Email: chris@crpl.co.nz

NZX Announcement: Allotment of Shares and Capital Raising Update

Dear Chatham Rock Phosphate shareholder or stakeholder,

This announcement has just been released by NZX.

Regards,

 

Chris Castle

Chief Executive Officer

Chatham Rock Phosphate Limited

Email: chris@crpl.co.nz

Cell: +64 21 558 185

Skype: phosphateking

www.rockphosphate.co.nz

 

5 September 2014

Allotment of Shares and Capital Raising Update

Chatham Rock Phosphate Limited (NZX: CRP) is pleased to advise that it has today raised a further NZD$1.24 million in new capital from qualified investors.

As previously announced to the market CRP is undertaking a rights issue on a 2 for 17 basis; each right granting its holder the right to subscribe for one ordinary share in CRP (and one new option to be granted for each share allotted). Rights trading is due to commence on Monday 8 September, 2014.

Shares have today been issued at NZD0.12 per share (or the approximate foreign currency equivalent). In addition, for each share issued, one CRPOB $0.688 option has been issued.

Full particulars of today’s allotment are set out below.

 

Chris Castle

Chief Executive

Email: chris@crpl.co.nz