6 December 2011
We are pleased to advise that Chatham Rock Phosphate has today executed a charter agreement with Odyssey Marine Exploration, Inc. (Odyssey) under which Odyssey will undertake site investigation work for Chatham Rock Phosphate in its offshore permit area on the Chatham Rise. Reaching this agreement is an important milestone as it is expected to provide very significant additional data for the Chatham Rise project.
Details of the Ship Charter
Odyssey’s vessel “Dorado Discovery” will be departing soon from Auckland for 11 days and for a further period in January. The “Dorado Discovery”, 100m in length, is specially set up for deep-sea marine mineral exploration and has been undertaking such work in the SW Pacific for the last 15 months. The forthcoming Chatham Rock Phosphate work, to be undertaken 450km east of the South Island, will focus on underwater surveys with sophisticated multi-beam sounders to map the seabed topography and a special instrument package that contains a magnetometer, sediment sounder and sidescan sonar.
The deep-tow package will be towed at a water depth of 350m one kilometre behind the vessel and will provide images of the seafloor for geological and environmental studies as well as mapping the nature of the sediment in the top few meters of the seabed.
Odyssey provides and operates the vessel and equipment with Chatham Rock Phosphate managing the work program. The data will be used by our partner, Netherlands dredging company Royal Boskalis Westminster, to refine their already completed preliminary design of the phosphate recovery system. The data will also form important baseline data of the environment.
The survey will focus on the 200 square kilometres of sea floor which is already identified as the most prospective area within CRP’s 4726 square kilometre prospecting licence.
Equity Conversion Rights
The cost to Chatham Rock Phosphate for the work being undertaken in December is estimated at USD$1.2 million. Under the agreement these costs will accrue and bear interest before being satisfied as follows:
- Payment in Cash: Chatham Rock Phosphate may pay all or part of these costs in cash on or before 1 March 2012 provided it gives Odyssey seven days notice in writing of its intention to do so.
- Conversion by Odyssey: Following 1 March 2012 or, on receipt of the notice specified above where the costs are eligible for conversion, Odyssey may elect to convert all or part of the costs to ordinary shares of Chatham Rock Phosphate.
- Conversion by Chatham Rock Phosphate: At any time prior to 1 March 2012, Chatham Rock Phosphate may give notice to Odyssey to convert all or part of the costs to ordinary shares of Chatham Rock Phosphate on 1 March 2012. If Chatham Rock Phosphate makes this election, it must also issue one option to Odyssey for every 1.5 shares that are converted. The options issued on this event would be exercisable into ordinary shares on the basis of one option for one share, have an exercise price that is 150% of the conversion price and a term of two years during which they must be exercised.
The conversion price, whether the conversion is elected to occur by Odyssey or Chatham Rock Phosphate will be $0.20 per share. However, if Chatham Rock Phosphate issues shares at a lower price on or before 1 March 2012 the conversion price may then reduce.
This is a positive development for Chatham Rock Phosphate as it allows us to maintain momentum with our work programme whilst undertaking our current capital raising efforts. We are also very gratified by the interest shown by Odyssey in our company.
On behalf of the Board,
Odyssey Marine Exploration, Inc. is engaged in deep-ocean exploration and is the world leader in the field of deep-ocean shipwreck exploration. The Company is publicly traded on the NASDAQ Capital Market under the symbol OMEX.
Odyssey utilizes innovative methods and state of the art technology on both their own and leased vessels to conduct advanced survey, sampling and recovery operations in the world’s deep oceans. The Company’s latest discovery, the SS Gairsoppa shipwreck was discovered nearly 4700 meters deep.
Odyssey has fielded one of the world’s most sophisticated deep ocean mineral exploration systems on the 330 foot vessel the Dorado Discovery and is taking a lead in developing technology for marine mining exploration. The company owns a significant stake in Neptune Minerals, a company focused on discovering and commercializing high-value mineral deposits from the ocean floor and has provided proprietary deep-ocean expertise and equipment to Neptune under contract. Odyssey recently concluded a 100 day charter for Neptune Minerals which documented several new discoveries of SMS deposits with assay results indicating substantial incidence of high grade gold, silver, zinc and copper ore. Odyssey also provides deep-ocean contracting services to governments and companies around the world.
Additional information about Odyssey Marine Exploration is available at www.shipwreck.net
About Chatham Rock Phosphate
Chatham Rock Phosphate Limited holds an offshore prospecting permit covering an area of 4,726 km2 on the central Chatham Rise. The permit area, which is in New Zealand territorial waters, is located 450 km east of Christchurch and includes significant shallow seabed deposits of rock phosphate. The initial term of the permit is two years with rights to either extend the prospecting permit or apply for a mining licence.
Establishment of a rock phosphate industry in New Zealand territorial waters has a significant number of economic, environmental and market benefits.
The economic benefits include
- Import substitution of up to $300 million annually
- Possible exports to near markets
- Reduced commodity risk for fertiliser manufacturers and farmers
- Reduced foreign exchange risk for fertiliser manufacturers and farmers
- Development of a new NZ industry
- Generation of additional income for the local economy
- Security of supply (most rock phosphate is imported from North Africa and the Middle East)
The environmental benefits include
- Local product is significantly lower in cadmium and uranium than imported product
- Much lower carbon footprint than imported product
- If applied as a direct application fertiliser, CRP has less run off than super-phosphate, is applied less frequently, and is a more effective, slower acting product
- Extraction will occur in accordance with International Marine Mining environmental guidelines
The market benefits include
- Much cheaper source than Morocco
- Nominally 25+ years security of supply
- Known extraction costs could enable less volatile price contracts, which will benefit fertiliser companies, farmers and agriculture outputs generally
Environmental considerations are essential and CRP has an ongoing wide-ranging programme of consultation with fishing, conservation, Maori and other interest groups around these matters.