CRP Update March 2017

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Update

March 2017

A new era for Chatham Rock Phosphate

I write this as I meet with existing and prospective shareholders on a visit to investors in Europe. 

Then I’m off to the PDAC (Prospectors and Developers Association of Canada) convention, held in Toronto starting Sunday 5 March. (Our booth number if you are passing is #2752.)   Our attendance each March is a great opportunity to talk to investors and others with an interest in our project.  The timing is perfect given we have just completed the friendly takeover of Antipodes Gold to enable our listing on the Toronto venture exchange.

 

Welcome to Antipodes Shareholders

This letter is partly to provide Antipodes shareholders with some background regarding the company they have now inherited.  I am very pleased to welcome about 1000 Antipodes shareholders to add to a similar number of CRP shareholders, many of whom have shared our vision for more than a decade.

We are a company with significant forward momentum to become a key player in the world market for low-cadmium reactive rock phosphate, basing this initially on our unique phosphate deposit on the Chatham Rise. But more about that later.

To all Antipodes shareholders: This update is one of a series we regularly send out to our shareholders, usually by email in the interests of efficiency and saving costs. This is being posted to you with a request for you to provide your email address so I can communicate directly with you in that manner.

Please send an email to me at chris@crpl.co.nz with subscribe in the title and I will add you to our email list. Our newsletters come from me, as I believe in communicating directly with our shareholders, and I encourage and welcome feedback. You will not start receiving automated responses from our website.    With this note I also attach a fact sheet.

This fact sheet and our latest investor presentation can be found on our website, www.rockphosphate.co.nz which I encourage you to visit.  It will provide you with a great overview of who we are.  The direct links to these documents are

http://www.rockphosphate.co.nz/s/CRP-Fact-Sheet-23-Feb-2017.pdf 
http://www.rockphosphate.co.nz/s/CRP-Feb-26-2017-Presentation.pdf

 

CRP vision based on numbers and beliefs

CRP is a highly unusual mining company in that our mining project has a very strong list of environmental benefits to add to an impressive array of ethical, financial and economic pluses.  The following market analysis adds to our many other compelling reasons to invest.

Contract sale prices of 30% P205 (phosphate) ex Morocco are presently $US120, significantly higher than the $US99 figure usually quoted by the World Bank. Once freight to Asia of $US30 is added, the landed cost is $US150. 

If sold to make superphosphate in New Zealand, the value of CRP rock is presently around $US110.  However if sold as reactive phosphate rock (RPR) – an organic product – the retail value in New Zealand is $US255. If sold internationally as RPR the estimated price is about $US150 ($US40 over the value of the rock based on phosphate content. This is because RPR is as effective on pasture land as TSP (triple superphosphate) which costs up to $US160 more that SSP (single superphosphate).

Based on these market behaviours and the range of the other information we continue to gather, we are convinced the demand for RPR will continue to grow in parallel with the demand for organic products.

But wait there’s more!   Chatham rock phosphate is ultra-low in heavy metal cadmium (< 10 mg/Kg P2O5).  This will be of huge additional value once the European Union sets a 60mg/Kg P2O5 cadmium limit in 2019.  We understand this will eliminate all rock sourced from Egypt, Israel, Boucraa (Morocco), Youssoufia, Senegal, Togo, Tunisia, Nauru & Christmas Island.  

Analysts consider this will result in initial price premiums of $US30 - $50 for low-cadmium sources of rock phosphate.  When the European Union cadmium limit is further lowered to 20 mg/Kg P2O5 in 2030, it will eliminate other sources and increase the premium further. The following shows the compelling financial reasons why our product is so good.

In a nutshell

Based on this logic, we believe selling high quality RPR with ultra-low cadmium will become a very profitable business and a major contributor to the New Zealand economy as well as being ethically and environmentally on the side of the angels.

The following graphic is a summary of our key benefits.  You will see low cadmium is mentioned as just one benefit.  The premium being paid for RPR (which we think can only increase) is one of the contributors to our very strong forecast profitability

You can be our advocates whenever our project is raised in conversation.  To remind you why we continue to believe the Chatham Rise project remains hugely important, here are the key reasons: 

 

To recap on progress so far in 2017:

Operations: The CRP team has undertaken a major stock take of where the Chatham Rise project is currently sitting and to plan next steps. An independent environmental specialist provided a gap analysis of the project in order to optimise our resubmission strategy.  A  resulting two-day planning session identified a large number of actions. While the stock take showed we’re in pretty good shape, there’s still a huge amount to do for a second application. Once we’ve firmed up a couple of key issues, we’ll provide an update on timeframes and the scope of the work required.

Watching TTR: We’ve been attending key parts of the Trans Tasman Resources hearing in Wellington to help inform our strategy.  TTR is reapplying for a marine consent to mine iron sands off the Taranaki coast. Its hearing started on 16 February and is currently scheduled to finish on 20 March, with a decision due after a further 20 working days.  The Environmental Protection Authority, which is running the application process, is regularly updating its website regarding the application.  Check out: http://www.epa.govt.nz/EEZ/whats-going-on/current-applications/ttr-2016/Pages/default.aspx

Dutch Government research grant: CRP and its Dutch technical partners Boskalis and Deltares have received Dutch government research funding to improve the environmental management of marine mining.  The increased global interest in marine mining has highlighted the need to develop tools ways to predict, adaptively manage and reduce the environmental effects of marine mining. The research will investigate the behaviour of re-deposited material using state of the art laboratory analyses and computer modelling to assess the plume dispersion and the continuous process of settling, deposition and bed formation of sand and silt. The results will reduce uncertainties regarding predicting re-suspension and dispersion of the material being returned to the seabed.  The Dutch Ministry for Economic Affairs stimulates public-private partnerships between research organisations and companies by awarding funds to reviewed high quality research proposals.  The results are being developed using the vast amount of data already available for the Chatham Rise marine mining project, but will have direct relevance to all projects in the offshore mining and dredging industry.

 

Looking ahead

Over the coming months I look forward to meeting some of our new shareholders.  Our annual meeting is an opportunity to get together and we normally hold that meeting in Wellington in late July.  We will provide you with some pre-warning so you might be able to combine a trip there with meeting other shareholders.

In the meantime, if you have any questions, please email or call me.

Regards

Chris Castle, Managing Director
chris@crpl.co.nz or +64 21 55 81 85
skype: phosphateking