30 March 2011
As announced to the market in early January, the Widespread Chatham Rise Joint Venture jointly funded three mining concept studies with four of the largest dredging companies in the world (with two jointly undertaking one study). The license area owned by the joint venture is located approximately 450km offshore and extensive historical research on the license area has indicated the potential for economic concentrations of rock phosphate, the primary constituent of fertiliser. The rock phosphate occurs in nodules of 2-150mm in size and rests in a 1 metre deep layer of sandy silt at the floor of the ocean in water depths of 375-425 metres.
The key purpose of the mining concept studies is to demonstrate for the joint venture that extracting rock phosphate from the license area is both technically and economically feasible. The studies propose extraction techniques for the rock phosphate with specific attention to minimising environmental impact. These studies are therefore a critical part of ensuring that proceeding with the project and ultimately seeking a mining license is viable.
The first concept study was received at the beginning of this month and as announced to the market at that time, it considered that extraction of rock phosphate from the license area is technically feasible and the estimated costs of extraction that were provided in the study are within the costs envisaged by the financial model for the project. Accordingly, this study is considered to be a strong endorsement that the project is economically feasible.
The remaining two concept studies have now been received. On the same basis as set out above, these studies both also endorse the project as being technically and economically feasible. Each of the three studies proposes a differing extraction technique and accordingly the joint venture has several options available to it to consider.
The three studies will now be considered by several experts that have been engaged by the joint venture to provide advice. It is anticipated that a preferred partner will be selected following the joint venture receiving this advice and following negotiations with the dredging companies concerned.
The joint venture is very pleased with the outcome of these studies and considers them a strong endorsement of the project.
For and on behalf of the Board
Widespread Energy Limited