Dear Chatham Rock Phosphate shareholder,
This report was released by Edison Investment Research in London last night and has just been filed with NZX.
Chief Executive Officer
Chatham Rock Phosphate Limited
Cell: +64 21 558 185
Edison Group has kept a unrisked valuation above $2 for Chatham Rock Phosphate in its latest update in which it examines the company’s ongoing efforts to raise the last of the capital it needs to start producing rock phosphate from the seabed on the Chatham Rise.
The unrisked $2.04 valuation is not much changed from that earlier in the year, but Edison has raised its risk assessment on the basis of a slowing in regulatory approvals and Chatham raising only part of the capital it still needs, in the recent Initial Public Offering.
Edison notes that “explicit positive sentiment received by CRP from government authorities in April, informing that its mining permit application would be treated with priority, has yet to bear fruit”.
“Uncertainty has weighed on investor confidence, which was an undertone to a weak result from a recently completed public capital raising.”
Edison estimates Chatham needs $7 million to fund its pre-development work, of which half are costs associated with the environmental consenting process.
“CRP has launched a further offer to professional investors that, if successful, and combined with an assumed early part-exercise of a significant tranche of success-related share options by an existing cornerstone investor, should serve to meet its remaining pre-commissioning capital needs.”
The non-retail linked offer is for up to 5 million shares at 32c to raise $1.6 million followed by a further 5 million shares at 35c to close two weeks after the grant of a mining licence to raise a further $1.75 million. The new shares will have a 2-for-1 70c option exercisable within three months of the marine consent being granted.
Edison says the extended approval processes have added a delay of six months to the timelines the company was targeting until a couple of months ago.
“We now consider it more likely that a distinct two-stage investment decision will unfold, with the stages reflecting the sequenced granting of a mining permit and marine consents.
The first stage would likely see contract miner Boskalis commit to an initial capex programme involving low-risk, transferable equipment that could be redeployed in the event of further delay or worse. The main commitment would come following the project receiving marine consents, probably in mid 2014, which would act as a trigger for Boskalis to commit the substantial spend to procure and fit out the mining vessel.
To see the report go to www.rockphosphate.co.nz/investors
For further information please contact Chris Castle on 021 55 81 85
2013 is shaping up as a watershed year for Chatham Rock Phosphate, Edison Investment Research says in its latest update.
“CRP is moving closer to demonstrating a commercially and technically viable undersea mining project,’ Edison says.
“Risks still remain but the most significant are easing,” according to analyst John Kidd in a fresh assessment released today.
He notes that in the second half of 2012 CRP achieved two major milestones. In July global dredging major Royal Boskalis subscribed for a 20% shareholding in CRP, while in September CRP lodged a mining licence application. In December CRP announced it had reached agreement with Boskalis to complete detailed project design for mining operations.
“CRP is progressing the appraisal and potential development of a large permit area 450 km offshore from the east coast of New Zealand. The area has been known since the 1950s to contain large deposits of high grade rock phosphate on or near the seabed, 400 m below the surface. New Zealand is a significant consumer of rock phosphate as a feedstock for fertiliser manufacture, most of which is currently imported from Morocco.”
Edison has been employed by CRP to provide independent research in the absence of analysts preparing any on smaller NZX listed companies. Edison Investment Research is a leading international investment research company staffed by over 100 professionals. The team of 65+ analysts produce research on over 500 companies, making Edison one of the largest dedicated equity research teams worldwide. Edison’s research is read by institutional investors, alternative funds and wealth managers in more than 100 countries.
Wellington based Mr Kidd said in December “if and when CRP continues to pass further significant milestones over 2013-14, we expect the market to continue to de-risk CRP’s share price towards our un-risked valuation, currently at $1.87 a share.”
The share price is currently 36c, having reached a peak of 46c.
Chris Castle – +64 21 55 81 85 or email@example.com
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
22 August 2012
Independent research on Chatham Rock Phosphate (CRP) prepared by Edison Investment Research (Edison) says the most significant risks relating to the project are easing.
“CRP is moving closer to demonstrating a commercially and technically viable undersea mining project, risks still remain but the most significant are easing.”
“Doubts over the technical viability of undersea seabed mining at the depths CRP is contemplating have reduced substantially, with global dredging major Boskalis taking an equity stake in CRP.
“The other main risk, mining and environmental approvals, will be CRP’s major focus over the coming 12 months.”
CRP commissioned Edison to produce independent research because share-broker analysts do not research the company.
CRP managing director Chris Castle said a summary report is included in Edison’s Asia Pacific quarterly report issued this week. A full report on CRP will be available early next month.
He said he valued Edison’s independent assessment and believed CRP has a strong story to tell. It would inform investors both in New Zealand and internationally and CRP could be measured against a range of international companies.
Edison is a leading international equity research company providing independent research on small and medium sized listed companies for institutions and investment advisers. New Zealand has more than 200 companies listed on the NZX, NZAX and Unlisted exchanges but analysts generally only research the top 50.
Edison is one of the largest independent investment research companies worldwide with more than 350 corporate clients, including a big focus on mining research with nine dedicated mining analysts and coverage of 75 mining companies on major exchanges.
Edison sends its research directly to a relevant international investor audience and provides readership data to its corporate clients. The research reports are distributed to a global database of professional investors, advisors and analysts in major financial centres world wide, plus organisations like Bloomberg, Reuters, Factset and Yahoo Finance.
To read the report go to http://rockphosphate.co.nz/reports/archives/2012/08/22/edison-research-crp-de-risking-continues/
Chris Castle - Managing Director CRP
+64 21 55 81 85 or email@example.com
3 May 2012
Chatham Rock Phosphate has commissioned Edison Investment Research to produce independent research over the next year.
Chief executive Chris Castle said investors and sharebrokers often ignore Chatham Rock Phosphate as an investment opportunity because analysts do not research it.
“We’re really active and we have a great story to tell, but the regulations governing financial advisers constrains them from recommending us as an investment because no third party research on our company presently exists”
“It’s a chicken and egg situation because we are quite small and our potential trading volumes may not justify a broking firm’s investment in research, even though we may prove to be a great investment for their clients.”
“The independent assessment that Edison offers to investors is really important. We are very happy to face that analytical scrutiny.”
Edison is an international research company providing independent equity research on companies for institutions and investment advisers. New Zealand has more than 200 companies listed on the NZX, NZAX and Unlisted exchanges but analysts generally only research the top 40.
“We think Edison offers a real opportunity for CRP to boost our profile to a new group of investors among the New Zealand investment community and potential international investors.
“It also means potential investors can compare us with other companies internationally. The New Zealand market, especially for smaller companies, is thinly traded and doesn’t have any comparable companies in our industry.”
Edison is one of the largest independent investment research companies worldwide with more than 300 corporate clients, including a big focus on mining research with nine dedicated analysts and coverage of 75 mining companies on major exchanges around the world.
Edison sends its research directly to a relevant international investor audience and provides readership data to its corporate clients. The service includes an introductory analysis and regular updates, a profile on the Edison website and distribution to a wide database of professional investors, advisors and analysts in major financial centres world wide, plus organisations like Bloomberg, Reuters, Factset and Yahoo Finance.
021 55 81 85 or firstname.lastname@example.org