The deficit for the six months to 30 September 2013 reflected continued high activity levels of our work programme for the Chatham Rise Rock Phosphate Project.
Operations highlights
We continue to make significant progress across a number of fronts though it can sometimes seem like two steps forward and one step back.
One of the more exciting developments has been our recent application for two new prospecting licences adjacent (to the west and east) of our existing prospecting licence. It follows the decision by Kiwi Phosphate to relinquish its interests in the area.
We have identified areas within that territory where we believe that there are commercially viable deposits. We don’t envisage our total mining footprint will increase significantly but the additional areas under our control would enable us to cherry pick the best deposits and leave significant fallow areas.
Mining Licence
Our main focus for the period under review has been on attaining the grant of a Mining Licence through the Government agency New Zealand Petroleum and Minerals.
We had initially expected approval shortly after the passing of the new Crown Minerals Act in late May. However the process has proved longer and more complex than we anticipated and so your Board decided to focus on achieving that licence before submitting our application for the “second leg of the double” – the Marine Consent.
The team has worked to satisfy the requirements of the new regime. This has involved weekly progress meetings with officials and the provision of considerable additional information.
We share our shareholders’ frustration about the delays to the project’s time frames this has caused. As the first of this type under the new Crown Minerals Act NZP&M has undertaken a robust assessment process, but the upshot is it has taken considerably longer than we expected.
We are continuing to make good headway in gaining our Mining Licence and at the time of writing we are confident we are close to getting over the line, with the final few outstanding issues close to being resolved.
Marine Consent
The additional time and cost involved in the Mining Licence process has meant the Marine Consent time-line has been pushed into 2014.
We plan to submit our formal application in the first quarter of the New Year. The centrepiece of this application is a comprehensive Environmental Impact Assessment, comprising well over 1200 pages and including more than 30 reports produced by a variety of experts.
We produced a near-final version in early July before deciding to hold off formally submitting it. Since then the team has worked to further improve it – incorporating recent data gathered by NIWA, and building in feedback from peer-reviews and ongoing consultation.
The consultation has been very valuable as it has raised questions we’ve been able to address and has helped us hone and simplify the messages we consider central to an understanding of our proposals.
Capital raising
Our capital raising has continued during the period. We undertook an Initial Public Offering in the New Zealand market in June, with limited success. We raised around $1.5 million and gained another 125 local shareholders during an offering that involved a roadshow around New Zealand, numerous media interviews and promoting the offer at the Field Days event at Mystery Creek near Hamilton.
We were proud of the offer document produced, which received a lot of favourable comment as providing an informative profile of the project.
While we continue to be on the radar of some local institutions, they are waiting for the project to be “de-risked” through gaining the Mining Licence and Marine Consent before taking the plunge.
In the meantime we have attracted further investment from predominantly international investors, primarily private equity funds and high net worth individuals.
We have raised $24.5 million over the past three years. Many of our original investors continue to support our various capital raisings and your board remains grateful for your continued support.
The Edison Group provided an update of our operations in September, which assessed Chatham’s value above $2, based on an analysis of our business plan.
Consultation and conferences
During the period we’ve continued to engage with stakeholders, including meetings with Labour MPs, another visit to the Chatham Islands and environmental groups.
We’ve presented at conferences both internationally – including our fourth Underwater Mining Institute forum – and in New Zealand, where we’ve spoken to The Australasian Institute of Mining and Metallurgy, the Institute of Chartered Accountants and a Mining Summit targeting international investors.
The focus ahead
Once we receive the Mining Licence we will re-engage with a range of local and international investors to raise the capital needed to fund the Environmental Consent process. These investors have continued to follow our progress with interest and we anticipate renewed support from a number of them post the mining licence grant.
Based on our current business plan we anticipate receiving our Marine Consent in the 3rd quarter of 2014. During that period we’ll continue to work with our technical partner Boskalis on ship design prior to starting the two-year ship conversion process.
Our revised target date for starting operations is now in the second half of 2016.
Change in Auditor
We can also advise that Crowe Horwath has resigned from the office of auditor of the company. We thank Crowe Horwath for their assistance over their time as auditor. The Board has appointed KPMG as the new auditor of the company.
On behalf of the Board
Linda Sanders Chris Castle
Chairman Managing Director
22 November 2013
+64 21 5581985
chris@crpl.co.nz
PhosphateKing