NZX Announcement: Final Announcement for the year to 31 March 2014

To read the full announcement including financial statements - click here


Dear Chatham Rock Phosphate shareholder,

This announcement was released to NZX earlier this afternoon.



Chris Castle

Chief Executive Officer

Chatham Rock Phosphate Limited


Cell: +64 21 558 185

Skype: phosphateking



Final announcement for the year to 31 March 2014

Financial result

The results for the year to 31 March 2014 show an audited loss from operations of $1.42 million.  The company has experienced another year of significant progress, with 2014 shaping up to be transformational for the company.

Operating Highlights

Over the past 12 months CRP has achieved several significant milestones, and we are confident that these successes will continue.  As this annual report was being prepared we submitted our marine environmental consent application to the Environmental Protection Authority. This is the culmination of four years’ work and it’s where the bulk of the $NZ27 million we have raised has been spent.

At this stage in our development it’s worth revisiting the fundamentals of this ambitious plan to dig up phosphate from the seabed more than 250 km from the nearest point of land. We’ve always believed the critical factors for this project are:

1.      Can the resource be defined?

2.      Can it be mined?

3.      Can the product be sold?

4.      Can the project be permitted?


Can the resource be defined? – Since its discovery, scientists have tried to quantify the distribution and concentration of the phosphorite deposit.  A key achievement this past year was an independent estimate of the rock phosphate resource using modern techniques developed to evaluate onshore mineral deposits.  Completed by RSC Consulting, the study concluded:

·         Inferred resources of 80 million m3 of phosphorite at an average grade of 290 kg/m3, an estimated 23.4 Mt of phosphorite

·         Average thickness of the mineral resource is 20 cm at the surface of the sea floor

·         Additional exploration potential is in the order of 40 million m3, with an estimate of 8 to 12 Mt of contained phosphorite at grades between 200 and 300 kg/m3

·         The inferred resources are similar to earlier historical estimates undertaken on the Chatham Rise.

The exploration target of 8–12 million tonnes, currently excluded from the 23.4 million tonnes but within the mining permit area, will be tested by further sampling and, if confirmed, may add to the total inferred resource. This means that the existing data indicate sufficient resources are likely to be present to support at least 15 years mining at the proposed extraction rate of 1.5 Mt per year, and there may be another 5-8 years of resources in the less well-sampled areas within our mining permit.

There is additional exploration potential in the areas under application to the east (PPA 55967) and to the west (PPA 55971) of the existing permit areas.  CRP applied for prospecting rights over these areas late last year when they were relinquished by Kiwi Phosphate.  We believe parts of those areas have good potential and we plan to undertake additional exploration and build them into our longer term development aspirations.

Should we identify further commercial-level quantities of resource in the other areas (marked in yellow in the map below) then, providing the required licences and permits were granted, mining operations would continue at the annual rate of 1.5 million tonnes for a longer period of time.


Can it be mined? - Royal Boskalis Westminster of the Netherlands, our dredging technology partner, continues to progress development of the mining system and plan. Early in our discussions the company developed a mining system concept, based on well-proven technologies and adapted for the deeper waters in which our resource lies. Boskalis continues to refine that system as vessel options change and our knowledge of the project matures, but little has changed in general terms. A core team, including key Boskalis personnel, meets fortnightly by telephone and Boskalis is actively supporting the environmental consent application.

Can the product be sold? - We continually receive enquiries from international phosphate companies, and Najib Moutia, our head of sales and strategy, represents us in a range of forums – both in direct contact with customers and at conferences.  Given the particular attractions of our product, our regional location and the medium term political uncertainties regarding international supply, we are in no doubt Chatham rock phosphate will be in high demand.

Can it be permitted? – Gaining a mining permit and an environmental consent has been our primary focus for the past 18 months and we are confident we will be successful.  We have undertaken the scientific rigour and listened carefully to stakeholders and believe we have sufficient knowledge of the likely environmental impacts of our project to address concerns and answer questions raised during the consent process.


The Consenting Process

We submitted a draft environmental marine consent application in mid-2013 but decided to withdraw it because of lengthy delays in the consideration of our mining permit.  We did not have the resources to undertake both mining and environmental consenting processes simultaneously.

Granting of the mining permit took 14 months because we chose to wait for the new minerals permitting law to come into force, and then it took some time for the team at New Zealand Petroleum and Minerals to adjust to the new consenting regime.

We received the mining permit in December 2013.  Since then it has been full speed ahead to complete the environmental application, and a new draft of the Environmental Impact Assessment (EIA) was submitted to the Environmental Protections Agency (EPA) on 31 March 2014 for pre-submission consideration of our marine consent application. The delay in the process added to costs and time frames, but it allowed us to act on feedback from the previous version and the revised application addresses all of the concerns raised by stakeholders. 

During the second half of 2013 we undertook considerable additional scientific research and stakeholder consultation.  Consultation often led to additional scientific research. For example, when the fishing industry switched from being quiet supporters to vocal opponents of the project, the research deepened our understanding of potential impacts on commercially important fish species. That work identified no significant impacts, and we believe there is a very low risk of impacts on commercial fisheries.

One of the most exciting developments arising from the additional effort is our work with NIWA to develop a spatial planning process that identifies areas of the ocean with high biodiversity or resource potential, and supports development decisions to balance conservation and economic values.  This is a new way of looking at how the oceans can be managed, with the best available data used to identify areas to set aside for environmental protection and others that could be made available to harvest their resources.  It’s an extension of the work the fishing industry did to establish the more narrowly focused benthic protection areas.

Our delay in submitting our environmental marine consent application meant we became second in line, following Trans Tasman Resources’ bid to extract iron sands from waters off the Taranaki Bight. We’ve been able to closely watch the progress of that application and ensure any issues raised are adequately addressed in our own documentation. 


Our project is novel, even by international assessments.  There are a number of subsea mining projects but they are not common. Investors generally regard permitting rather than the technology challenges as the biggest obstacle to success.

Despite this challenge, we have raised $NZ27 million over four of the most difficult years ever for capital accumulation for mining projects.  Our success is due to the quality of the resource, the quality of the team doing the work and the loyal support of our shareholders. 

Over the past year shareholders continued to invest in the company’s future.  In June 2013 we undertook a small Initial Public Offering to New Zealand investors.  Unfortunately, uncertainty regarding our permitting and poor support from sharebrokers meant we raised $NZ1.6 million, less than the $4 million target.   However, strong contributions from qualifying investors and a $NZ2.1 million shareholder rights issue subsequent to balance date resulted in healthy capital raising.

In December we appointed Wimmer and Co. as our corporate advisers for capital raising in the London market.  Although we had long preferred the Toronto market for its breadth of mining and fertiliser stocks, its depressed state convinced us to consider alternatives.  We selected London because of its depth of capital with an appetite for risk and comparative buoyancy, and although there are significant costs associated with the listing process we believe it can offer access to capital not available on other markets.  Progress with the listing on London’s alternative AIM market continues, with listing expected during July in conjunction with $NZ8 million of capital raising. 

The chart below demonstrates investors continue to believe in the prospects for the project and that shareholders have been rewarded for their faith so far

The coming year

As noted at the outset, we believe the biggest – and best – events in CRP’s history are to come during 2014. The key milestones expected over the rest of this year are the listing and capital-raising in the London market in July and the granting of our marine consent in November.  Assuming those two events occur we believe the prospects for your company are extremely bright. 

Again we thank you for your ongoing confidence and support.


Chris Castle                                                                                      Linda Sanders

Managing Director                                                                           Chair