Exercise of CRPOA Options and Allotment of Ordinary Shares

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15 April 2011

Chatham Rock Phosphate has approximately 16  million $0.10 options on issue which expire on 30 June 2011 and are  quoted on the NZAX market under the code CRPOA.

As previously  advised to the market, Chatham Rock Phosphate is encouraging the early  exercise of these options to enable it to continue the work programme on  Mineral Prospecting License 50270 prior to undertaking a proposed  initial public offering in Canada.

Exercise forms have been  received for 854,000 options for which ordinary shares have today been  allotted. This has raised $85,400 in total and full details are set out  below.

On behalf of the Board,

Chris Castle
Managing Director
Email: chris@widespread.co.nz
Phone: 021 55 81 85

Class of security: Ordinary Shares
ISIN: NZWENE0003S0
Number issued: 854,000
Exercise price: $0.10 per share
Payment in cash: Yes
Fully paid: Yes
Percentage of class: 2.47%
Reason for the issue: Under the terms of issue of the options they may  be exercised to receive ordinary shares on a 1:1 basis at any time prior  to 30 June 2011 through the return of a completed exercise form and  payment of the $0.10 exercise price.
Authority for the issue: NZAX Listing Rule 7.3.11(b)(i)
Date of issue: 15 April 2011
Total number of securities on issue following allotments: 35,380,660 ordinary shares, 15,226,276 listed options

Download CRPOA Options and Allotment of Ordinary Shares PDF

 

Asset Swap transaction with Widespread Portfolios completed

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A special meeting of Widespread Energy and Widespread Portfolios was held on 30 March to consider a resolution to approve an asset swap transaction between the companies. The resolution was passed by both companies. All other conditions to the asset swap transaction are also now satisfied and accordingly the transaction has now been completed.

Completion of this transaction has resulted in the following key outcomes:

  • Widespread Energy now owns as its sole investment 100% of Mineral Prospecting License 50270 over part of the central Chatham Rise to pursue the development of a rock phosphate resource. This project has been valued under the transaction at NZD$34 million.
  • Widespread Energy has divested to Widespread Portfolios all of its interest in Akura Limited, Green Gate Limited and Petroleum Exploration Permit 38526 over the Kotuku oil seeps on the West Coast.
  • Widespread Energy has allotted 4,099,627 ordinary shares for 70.587 cents per share to Widespread Portfolios thereby increasing its control percentage in Widespread Energy by 8.1% to 26.26%. Particulars of this allotment are set out below.

The Board of Widespread Energy thanks security holders for their support and now considers that the company’s operations are rationalised and in order to pursue a Canadian initial public offering and TSX listing this year.

 

Name Change for Widespread Energy

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With the new single investment focus for the Company the Board of Widespread Energy has determined that now is an appropriate time to re brand the company. It is intended to change the name of the company to CHATHAM ROCK PHOSPHATE LIMITED.

Upon this change occurring the company’s ticker codes with NZX will change from “WEN” (for ordinary shares) to “CRP” and from “WENOA” for listed options to “CRPOA”.

It is intended that this change will be implemented over the next few weeks and an announcement will be made to the market when the effective date for the change is determined.

 

NZX Announcement: Mining Concept Studies for Chatham Rise Project Now Completed

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30 March 2011

As announced to the market in early January, the Widespread Chatham Rise Joint Venture jointly funded three mining concept studies with four of the largest dredging companies in the world (with two jointly undertaking one study). The license area owned by the joint venture is located approximately 450km offshore and extensive historical research on the license area has indicated the potential for economic concentrations of rock phosphate, the primary constituent of fertiliser. The rock phosphate occurs in nodules of 2-150mm in size and rests in a 1 metre deep layer of sandy silt at the floor of the ocean in water depths of 375-425 metres.

The key purpose of the mining concept studies is to demonstrate for the joint venture that extracting rock phosphate from the license area is both technically and economically feasible. The studies propose extraction techniques for the rock phosphate with specific attention to minimising environmental impact. These studies are therefore a critical part of ensuring that proceeding with the project and ultimately seeking a mining license is viable.

The first concept study was received at the beginning of this month and as announced to the market at that time, it considered that extraction of rock phosphate from the license area is technically feasible and the estimated costs of extraction that were provided in the study are within the costs envisaged by the financial model for the project. Accordingly, this study is considered to be a strong endorsement that the project is economically feasible.

The remaining two concept studies have now been received. On the same basis as set out above, these studies both also endorse the project as being technically and economically feasible. Each of the three studies proposes a differing extraction technique and accordingly the joint venture has several options available to it to consider.

The three studies will now be considered by several experts that have been engaged by the joint venture to provide advice. It is anticipated that a preferred partner will be selected following the joint venture receiving this advice and following negotiations with the dredging companies concerned.

The joint venture is very pleased with the outcome of these studies and considers them a strong endorsement of the project.

For and on behalf of the Board
Widespread Energy Limited

Chris Castle
Managing Director
chris@widespread.co.nz

Download a pdf of this announcement

 

Chatham Rise Rock Phosphate Project valued at $34 million

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Two independent reports support a current value for the Chatham Rise rock phosphate project of $34 million.  Widespread Portfolios (WID) and Widespread Energy (WEN) today issued advice of shareholder meetings and associated documents relating to a proposed asset swap between the two companies which shareholders will vote on at the end of March. To view the full media release click here.

 

NZX Announcement: Update on Mining Concept Studies for Chatham Rise Project

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1 March 2011

As announced to the market in early January, the Widespread Chatham Rise Joint Venture has jointly funded three mining concept studies with four of the largest dredging companies in the world (with two jointly undertaking one study).

The license area owned by the joint venture is located approximately 450km offshore and extensive historical research on the license area has indicated the potential for economic concentrations of rock phosphate, the primary constituent of fertiliser. The rock phosphate occurs in nodules of 2-150mm in size and rests in a 1 metre deep layer of sandy silt at the floor of the ocean in water depths of 375-425 metres.

The key purpose of the mining concept studies is to demonstrate for the joint venture that extracting rock phosphate from the license area is both technically and economically feasible. The studies propose extraction techniques for the rock phosphate with specific attention to minimising environmental impact. These studies are therefore a critical part of ensuring that proceeding with the project and ultimately seeking a mining license is viable.

The first concept study has been received and considers that extraction of rock phosphate from the license area is technically feasible and proposes a dredging technique that could be employed for extraction. Actual particulars of the technique itself are confidential at this time. In any event, the technique ultimately employed will depend upon which dredging partner is eventually chosen by the joint venture and on further physical data being obtained from the license area that does not compromise the proposed technique.

Importantly this first study adopted conservative assumptions where there are physical data uncertainties and accordingly it is considered that the finding of technical feasibility is robust and a strong endorsement of the technical viability of the project.

This first study also opines on the economics of extracting the rock phosphate in terms of extraction volumes and costs. Very pleasingly for the joint venture, these economics are consistent with the joint venture’s own models and valuations. These models and valuations will be discussed in detail in the meeting documentation that will be circulated to securityholders shortly in connection with restructuring ownership of this project.

It is considered that this first study is a strong indication that the project is economically viable.

A draft second study has been received by the joint venture as well. It does not yet consider the economic viability of extraction however it proposes a differing extraction technology to the first study and also indicates that extraction is technically feasible. The second part of this study covering economics and the third study are expected later this month.

The joint venture is very pleased with the outcome of the studies received to date and consider them a strong endorsement of the project. The directors of each of Widespread Portfolios and Widespread Energy also consider that these results reinforce the need to restructure ownership of the project and undertake a significant offshore capital raising as detailed in market announcements yesterday so that the project can be aggressively pursued.

For and on behalf of the Board
Widespread Energy Limited

Chris Castle
Managing Director
chris@widespread.co.nz

Download a printable pdf of this announcement

 

News Update

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Updated at 7:39 am 16 February 2011

Widespread Energy is meeting with brokers in Canada to try to raise money to fund the mining of phosphate on the seabed of the Chatham Rise.

The energy exploration company was granted a two-year prospecting permit in February 2010 to explore an area 450 km east of Christchurch.

Phosphate is used to make fertiliser and the resource is potentially worth $6.7 billion.

The company says it has raised about $1.5 million over the last 15 months from its own shareholders.

Managing director Chris Castle says it is now trying to attract Canadian shareholders to raise about $34 million.

Chris Castle says the money will be spent on trial mining and further exploration of the resource, with mining possibly beginning in 2013.

He says the mining will be carried out by European dredging companies.

Mr Castle says developing the resource would also have environmental benefits, as the local reserve appears to have much lower levels of toxic chemical cadmium than imported phosphate.

 

Likely low cadmium rock phosphate source available in NZ

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Developing a New Zealand source of phosphate could minimise the health risks associated with cadmium, according to Widespread Energy Ltd.

Widespread is evaluating the economic potential of developing a reserve of 30 to 100 million tonnes of rock phosphate, which has tested low levels of cadmium.  The reserve is located on the seabed in shallow waters of New Zealand’s Chatham Rise.

The Ministry of Agriculture and Forestry announced on Friday it is planning to manage the gradual build up of cadmium in New Zealand soils through the cadmium contained in imported phosphate.

Tests of samples of the Chatham Rise rock phosphate by the local industry shows it has minimal cadmium levels.

“While those tests are not conclusive, they are encouraging,” Chris Castle, Widespread managing director said.

“We have been aware of the cadmium issue and we see our potentially low cadmium levels as one of the environmental benefits of developing a local phosphate resource.

Widespread is currently planning an international initial public offering to finance the development of the resource.  A local resource will also reduce New Zealand’s carbon footprint through lower transport costs, and benefit the country’s balance of payments and foreign exchange exposure.

A key part of extracting the resource will focus on environmental impacts by minimising seafloor disturbance and extracting the resource from less than 1/1000th of the Chatham Rise.

“This project potentially offers major environmental and economic benefits for New Zealand, especially because rock phosphate can be applied directly as a slow release fertiliser, with none of the nitrogen run-off problems caused by super phosphate,” Mr. Castle said.

The MAF cadmium control programme follows research that shows cadmium levels have gradually increased over decades. The strategy recommends farmers and growers work closely with their fertiliser representatives to determine the most cost effective, efficient and appropriate fertiliser application and land management options.

An NZPA report says the main concerns raised by cadmium are that chronic exposure can lead to kidney damage, bone disease and may be a risk factor in breast cancer.  The build-up of cadmium levels in sheep made MAF ban the export of some offal from animals older than 2-1/2 years. 

Testing showed up to 28 percent of sheep kidneys and 20 percent of cattle kidneys sampled between 1989 and 1991 exceeded the maximum residue levels allowed in New Zealand meat of 1 mg per kg. Health guidelines for soil contamination at the time had a maximum level of 3mg/kg of soil.

The natural average level of cadmium in NZ soils is 0.16mg/kg, but when farmland is taken into account, the average is more than double that, 0.35mg/kg, and soils on farms which have had a lot of super phosphate, such as dairy farms, can have as much as 2.52mg/kg.
Dairying areas with high fertiliser use tend to have the highest average contamination, including Taranaki (0.66mgkg), Waikato (0.60mg/kg) and the Bay of Plenty (0.52mg/kg).

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 450 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.

For further information please call Chris Castle on 021 55 81 85 or email chris@widespread.co.nz