New Zealand Exchange Limited
P.O. Box 2959
Wellington
5 January 2011
Dear Sir,
Widespread Energy advises mining concept studies with dredging industry giants
Widespread Energy Limited, as operator of the Chatham Rise Rock
Phosphate Project, has reached agreement with three of the world’s
largest dredging companies to carry out two jointly funded mining
concept studies.
One study is being undertaken by Dutch dredging company Royal
Boskalis Westminster N.V., the other by a consortium of Rotterdam based
IHC Merwede and Belgium headquartered D.E.M.E. (Dredging, Environmental
& Marine Engineering).
The mining concept studies, which are expected to be completed within
eight weeks, are effectively engineering pre-feasibility studies. They
are being funded 50/50 by Widespread Energy and the dredging companies.
The requested studies will provide:
- A mining concept with an assessment of the technical feasibility of the mining concept.
- Considerations as to how to minimise environmental impact.
- Production estimates and a preliminary indication of capital and operational costs.
After the two studies have been completed, Widespread Energy will
review them and then (with the assistance of suitably qualified industry
experts) select an exclusive partner for detailed concept design,
production testing and, ultimately the mining/dredging operation.
Detailed concept design and production testing are expected to take at
least 12-18 months.
This process, as outlined, allows Widespread to tap, at a manageable
cost, the expertise of several world leaders in the dredging industry
without the necessity to make what could be a premature decision on a
preferred partner. Each of the dredging companies will also benefit from
being able to undertake a jointly funded pre-feasibility study before
being required to commit significant resources towards detailed concept
design and production testing.
The directors of Widespread Energy and the Chatham Rise Project team
are gratified that this project has attracted so much interest from
these and other leading dredging industry companies.
Royal Boskalis Westminster N.V.
Royal Boskalis Westminster N.V. is a leading global services provider
operating in the dredging, maritime infrastructure and maritime
services sectors. It provides creative and innovative all-round
solutions to infrastructural challenges in the maritime, coastal and
delta regions of the world. Its operations are broadly spread across all
continents and three market segments, giving the company a stable
foundation, the flexibility to capture a wide range of projects and
excellent prospects for balanced growth.
Its main product segment is Dredging & Earthmoving, which
includes port development, pipeline intervention activities, land
reclamation, and coastal and riverbank protection.
Its second product
segment is Maritime Infrastructure, which Boskalis is involved in
through its strategic partnership with Archirodon, a leading contractor
in this sector.
The third product segment is Maritime & Terminal
Services, through its strategic partnership with Lamnalco, one of the
world’s leading suppliers of maritime terminal services to the oil and
gas industry.
Boskalis continually invests in its versatile fleet, which currently
consists of over 1,100 vessels and equipment. Including its share in
partnerships, Boskalis has around 14,000 employees and operates in 65
countries across six continents.
IHC Merwede
IHC Merwede is focussed on the continuous development of design and
construction activities for the specialist maritime sector. It is the
global market leader for efficient dredging and mining vessels and
equipment – with vast experience accumulated over decades – and a
reliable supplier of custom-built ships and supplies for offshore
construction.
IHC Merwede has in-house expertise for engineering and manufacturing
innovative vessels and advanced equipment, as well as providing
life-cycle support.. Its integrated systematic approach has helped to
develop optimum product performance and long-term business partnerships.
The company’s broad customer base includes dredging operators, oil
and gas corporations, offshore contractors and government authorities.
IHC Merwede has over 3,000 employees based at various locations in
The Netherlands, China, Croatia, France, India, the Middle East,
Nigeria, Russia, Serbia, Singapore, Slovakia, South Africa, the United
Kingdom and the United States.
Technological innovation is, and will remain, the company's underlying strength: IHC Merwede, the technology innovator.
D.E.M.E.
D.E.M.E. was established as a holding company in April 1991, but its
roots go back to well into the 19th century. The origins of D.E.M.E.
are embedded in Flanders, the Dutch-speaking region of Belgium. The
capital of Europe, Brussels, is also the capital of Flanders. Its unique
location at the crossroads of Europe historically created great
prosperity. But the prerequisite for that prosperity has been hydraulic
engineering competence in dike construction, the fight against flooding,
deepening maritime access, and port construction.
As a Belgian dredging and hydraulic engineering group, D.E.M.E. has
won a prominent position on the world market in a highly specialised and
complex discipline. The company fosters a strong innovative approach
and has indeed been a trendsetter and a pioneer in technical innovation
throughout its history. The Group can look back on nearly 150 years of
experience in its core dredging and land reclamation activities and
hydraulic engineering. At present D.E.M.E. has a permanent workforce of
3,500 persons.
The D.E.M.E. Group is a group of international marine engineering
specialists and contractors with multi-disciplinary capabilities such
as:
Traditional core business: deepening and maintaining navigation
channels, dredging for major port infrastructure development, sand
winning and reclamation of new industrial or residential areas,
artificial islands, beaches and coast development.
Marine & civil engineering: Offshore related services, such as
trenching and backfilling and landfall constructions for pipeline
installation, precise stone dumping for protection of pipelines at
2,000m, marine drilling or monopil installation, breakwater and harbour
dam construction; marine heavy lifting and salvage operations.
Environmental techniques: Environmental dredging, cleaning and
treatment of contaminated sludge and polluted soils: brown field
rehabilitation
Chatham Rise Project Background
On 25 February 2010, a consortium comprising Widespread Energy and
associated company Widespread Portfolios Limited, (“the Joint Venture or
JV”) was granted an offshore prospecting permit by the Crown Resources
division of the Ministry of Economic Development covering an area of
4,726 km2 on the central Chatham Rise. The permit area, which is in New
Zealand territorial waters, is located 600 km east of Christchurch and
includes significant shallow seabed deposits of rock phosphate and other
potentially valuable minerals.
The initial term of the permit is two years with further priority
rights to either extend the prospecting permit or apply for a mining
licence.
An independent valuation of the project by Rockpoint Corporate
Finance in May 2010 found the project had a realistic possibility of
being commercially viable. It found that, based on conservative
modelling, the project 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
achieved, though other minerals have been extracted at greater depths.
The phosphate, in nodules of 2mm to 150mm, is located in a 1m layer of
sandy silt above a chalky clay sediment basement.
Environmental considerations are an important part of the work being
done and the company has an ongoing wide-ranging programme of
consultation with fishing, conservation, Maori and other interest
groups.
+64 21 5581985
chris@crpl.co.nz
PhosphateKing