27 September 2012
Edison Investment Research values Chatham Rock Phosphate shares on a success case at $1.87 a share in its first independent report on the company, issued today.
Wellington based analyst John Kidd said CRP is moving closer to demonstrating a technically and commercially viable undersea mining project.
He says the equity stake taken by Boskalis significantly reduces doubts over the project’s technical viability.
He notes CRP’s main focus over the next year will be managing the other main area of risk – mining and environmental approvals.
“In our view Boskalis deciding to join the project at an equity level after completing extensive hands-on due diligence over 18 months is a very material endorsement of the project and of the confidence it has in the technical viability of its mining concept.”
Mr Kidd says on most scenarios there is substantial upside to the current share price.
The report notes that while recovering phosphate from 400m depths would be a world first, three dredging companies were confident it was viable.
The unrisked $1.87 valuation is based on a US$10 million capital raising in 2012 prior to a listing on the TSX-V and assumes full dilution of shares and options. The unrisked valuation on an undiluted basis (assuming existing options are not converted) is around $2.29. Last sale price for the shares is 23 cents.
Mr Kidd says the main value drivers are the rock price, foreign exchange movements and mining costs.
The link to the full report is here
Edison Research website : www.edisonresearch.com
Chris Castle - Managing Director CRP - +64 21 55 81 85 or firstname.lastname@example.org