CRP
27/11/2015 08:30
HALFYR
PRICE SENSITIVE
REL: 0830 HRS Chatham Rock Phosphate Limited
HALFYR: CRP: Interim report for the 6 months to 30 September 2015
Interim report for the 6 months to 30 September 2015
Financial Result
Your directors submit the unaudited financial statements of Chatham Rock
Phosphate Limited (CRP) for the six months to 30 September 2015. The trading
result for the period was a loss of $398,076 (2014 loss of $1,870,507). An
analysis of the result is provided in the table attached.
The deficit for the six months to 30 September 2015 reflected significantly
reduced operating costs. These costs continue to reduce.
Operations
As reported recently in our August and October announcements, and despite the
reduced size of the team CRP is very actively moving on a number of fronts.
Mostly pleasingly, we've continued to raise the money we need for the coming
year.
Over the past few months there's been a steady stream of support from
shareholders keen to support our plans for the coming year.
Thank you for your continued support and your faith in the company's
prospects.
Our funds position will also be aided by tapping into some capital associated
with the merger with Antipodes Gold, which we're doing in order to list on
the Canadian TSX-V market. Antipodes is also listed in New Zealand so
shareholders will enjoy the best of both worlds in terms of increasing
liquidity of our shares and having access to a broader investor base.
The Antipodes Gold shareholder meeting held in Vancouver on 24 November
gained shareholder approval of the sale of the Company's remaining assets,
for the proposed reverse takeover of Chatham Rock Phosphate, and for a change
of name (of the merged group) to Chatham Rock Phosphate Limited.
These transactions once completed will ultimately result in Chatham Rock
Phosphate being listed on the Toronto Stock Exchange.
They do not signal that Chatham is going into the gold mining or exploration
business - we are merely using the Antipodes "shell" to achieve this overseas
listing.
Together with the shell we inherit an experienced and well-connected
Toronto-based director, several hundred resources-sector shareholders
resident in a number of countries, and a local Canadian corporate support
structure. This merger will strengthen CRP, and usher in a new chapter for
the existing Antipodes shareholders.
Plenty of upside
The present share price of 0.8 cents values Chatham at $3.2 million, $1
million less than our market capitalisation in 2010, when we had no
management team, no contracts with Boskalis, no 20-year mining permit, no
legislation for applying for a marine consent, significantly less knowledge
about the deposit, no direct involvement or expertise in the phosphate
market, and only $250,000 in the bank. Even without the environmental
consent, or the certainly of gaining it, CRP's market value topped $40
million for most of the two and a half years to February.
Due to recent substantial investment, our directors and other associated
interests are now Chatham's biggest shareholder group. Together with hundreds
of others, including farmers, New Zealanders own more than half the company.
So what's the game plan?
To recap, it involves these key planks:
1. Focusing on the areas of the consenting process that need fixing, before
we make a final decision to resubmit, while
2. Diversifying both our portfolio of interests and our access to capital
markets.
Chatham Rise project still key
While we did not succeed with our initial consent application, much has been
learned by both us as an applicant and by the Environmental Protection
Authority. We are confident that this experience will valuably be translated
into improved and hopefully streamlined application and hearing processes.
Once we're confident with the process, we'll be able to resubmit an even
better environmental permit application. Chatham was turned down on limited,
unexpected and relatively minor issues. We are confident that these issues
can be dealt with robustly on resubmission.
We continue to believe the Chatham Rise project remains hugely valuable for
all the same reasons:
1. Security of fertiliser supply for the agricultural sector.
2. Environmental benefits such as a much lower run off impact on lakes and
rivers, much lower cadmium and much lower carbon footprint.
3. It's an ethical option, given that the current main source of phosphate
from North Africa is from a disputed territory.
4. It's highly profitable given its adjacent location (meaning we have no
incoming freight costs) and low mining costs.
5. Our estimated mining costs are roughly equivalent to the cost of shipping
competing product from the other side of the world. This means the world rock
phosphate price has to collapse to near zero before we can't compete.
6. Our annual forecast earnings before royalties and tax are approximately
$90 million.
7. We'll pay $34 million in annual taxes and royalties, plus millions in port
charges and create many high value and knowledge-based jobs in the port, on
the mining ship, undertaking environmental monitoring and broader scientific
research, in the agriculture and hospitality sectors and on the Chatham
Islands.
8. The economics are also hugely favourable when compared to fish bottom
trawling. The income earned by extracting phosphate would be $9,700,000 per
km2 (we'll be covering 30km2 a year) compared with only $9,000 per km2
annually from trawling.
9. Our project could enable New Zealand to become a world leader in marine
technology and expertise worth billions of dollars.
10. Our work at sea enhances the understanding and knowledge base of our
marine environment to help identify marine areas most deserving of
conservation.
11. The EPA's decision concluded mining would have no significant impact on
fishing yields or fishing industry profitability, marine mammals or seabirds.
Spreading the risk
We're confident we will get environmental approval next time, but we want to
broaden our investor appeal by becoming a more diversified operation so not
all our eggs are in one basket.
As well as the five marine applications in Namibia, we are developing
relationships with other players in the market, maintaining our relationship
with Boskalis, looking at other projects and entering the phosphate trading
market.
Farmer focus
It's important to continue to build support from a range of stakeholders
including farmers, as well as others, such as relevant government agencies.
Not surprisingly in the current circumstances, targeting the farmer market
for capital has had limited success in dollar terms but we decided, given
they're such an important target audience, we need to keep building our
stakeholder relationships.
We continue to remind farmers, many of whom are currently under siege
financially, our product is both a green option and one that could save them
money, bearing in mind Chatham Rise phosphate requires less-frequent
application and has high liming characteristics.
We remain puzzled by the view of environmental groups who fail to see the
irony of their opposition to our Chatham project. We don't understand how
they can condone New Zealand's importation of all our phosphate requirements
and we think it's hypocritical to support exporting our environmental
footprint to countries mining phosphate where it involves severe social and
environmental distress. And, of course, though environmental groups
conveniently ignore it, trawling affects 50,000 km2 a year, and yet requires
no environmental approvals.
Mexican project update
Odyssey Marine's Mexican marine phosphate project continues to get closer to
a decision and when this occurs it should have some positive side effects for
CRP. This is because CRP and the Mexican project have a director and some
shareholders in common, and also because CRP will no longer carry the
pioneering burden.
Looking Forward
The second half of this financial year should see CRP make significant
progress including the merger with Antipodes Gold (and the associated TSX.V)
listing, the completion of the present funding tranche, and an entry into
phosphate trading at a number of levels.
Chris Castle
Managing Director
Robert Goodden Chairman
27 November 2015
End CA:00274180 For:CRP Type:HALFYR Time:2015-11-27 08:30:32
