Widespread continues fast track work on Chatham Rise rock phosphate

Widespread Energy Ltd is aiming to deliver its first year progress report on the Chatham Rise rock phosphate project by Christmas – two months early –managing director Chris Castle told a Russian conference today.
 

Mr Castle is currently in Gelendzhik, Russia, presenting a paper on “the technical and environmental challenges and economic opportunities of marine phosphate extraction in New Zealand” to an international Underwater Mining Institute conference.
 

In February Widespread was granted MPL 50270, covering 4726 square km on the central Chatham Rise, east of Christchurch.  It has been working to fast track the prospect’s evaluation so directors can make a decision on whether to apply for a mining licence at the end of 2011.  This would reduce the normal four-year time frame to two.
 

As well as preparing the first year report to Crown Minerals Mr Castle said the project team is planning an exploration programme for 2011, including environmental data collection and seabed sampling, establishing fertiliser market linkages and a university research programme.
 

While in Europe Mr Castle is meeting with potential suppliers of research ships and equipment and companies specialising in a range of extraction techniques.
 

This year the project team has reviewed historical data gathered in earlier exploration cruises, undertaken environmental studies, completed a pre-feasibility study and project valuation and evaluated underwater radiometric and seismic surveys.
 

The aim of the second year of activity will be to further define the resource and complete a bankable feasibility study following likely seabed sampling and environmental baseline monitoring, he told the conference.
 

A study by Rockpoint Corporate Finance earlier this year found the project had a realistic possibility of being commercially viable.  It found that, based on conservative modeling, the project has a current value of $20.9 million and could earn net profit before tax of $40 million a year.

Widespread’s own models put that figure as high as $80 to $100 million a year.
 
In addition to its financial potential, the project offers a number of benefits to New Zealand including:

• Reduced exposure to currency and commodity risk and reduced import burden
• Known, fixed costs
• Reduced carbon footprint from lower transport costs
• Possible export earnings.  The project is also New Zealand owned and controlled.

The challenges identified of extracting the resource include its sporadic distribution (it averages 66 kg/m but there is great variability).  Also extracting phosphate at 400m depth has not been done, though other minerals have been extracted at greater depths.  The phosphate, in nodules of 2mm to 150mm is located in a 1m layer of the soft, chalky clay sediment.  Mr Castle said extraction techniques were still being researched.  
 

He also said environmental considerations were a very important part of the work being done and the company has a wide-ranging programme of consultation with fishing, conservation, Maori and other interest groups.

On behalf of the Board

Chris Castle

Gelendzhik, Russia, 7 October 2010

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