Ann: FORECAST: CRP: Forecast CRP financial benefit from currency movements

• Release Date: 27/01/15 11:46
• Summary: FORECAST: CRP: Forecast CRP financial benefit from currency movements
• Price Sensitive: No
• Download Document  5.07KB

					CRP
27/01/2015 11:46
FORECAST
PRICE SENSITIVE
REL: 1146 HRS Chatham Rock Phosphate Limited

FORECAST: CRP: Forecast CRP financial benefit from currency movements

Media Release
Forecast CRP project financials benefit significantly from exchange rate
changes

27 January 2015
Chatham Rock Phosphate today released updated key figures related to the
financial forecasts for its project following the recent strengthening of the
United States dollar, relative to both the Euro and New Zealand dollar.
A core assumption to the company's project revenues are that they priced in
US dollars and that most operating costs are denominated in Euros. A result
of the recent foreign exchange movements is that all key revenue and profit
numbers are therefore significantly higher, particularly in New Zealand
dollar terms. This is compared to the forecasts included in our market
announcement of 23 October when CRP provided a range of financial estimates
during its marine consent application hearing to the Environmental Protection
Authority.  The figures were provided then to clarify some uninformed
comments that arose during the hearing and to ensure there was a properly
informed market for the company's shares.  A decision on the marine consent
is due by 10 February.
In the light of the significant changes to the exchange rates, CRP believes
it is timely to update those key numbers relating to indicative project
economics and cost structures. Shareholders are cautioned that while this
demonstrates the positive effect that a high US dollar and low Euro can have
on the economics of our project, adverse movements in these currencies can of
course have adverse effects on these economics.
Based on existing revenue and cost assumptions, the projected annual profit
before royalties is now estimated to be USD69 million (NZD93 million), up
from USD54 million (NZD 68 million) announced in October.  Expressed in New
Zealand dollar terms this is a 36.8% increase in the projected trading result
before royalties and taxes. This figure is calculated after deducting
estimated contract dredging costs, incoming port charges, environmental
monitoring costs, community contributions, biodiversity offset costs and
business overheads.

From this estimated profit Chatham now expects to annually pay royalties of
USD6.9 million (NZD9.3 million) up from the previous estimate of USD5.4
million or NZD6.8 million, and USD17.4 million or NZD23.5 million in income
tax (previously USD13.6 million or NZD17.2m).

Over an expected project life of 15 years CRP now expects to earn tax paid
profits of USD673 million or NZD905 million, up from October estimates of
US525 million or NZD663 million. Based on the updated exchange rates, total
royalties would be USD104 million or NZD140 million, up from USD81 million or
NZD102 million, and income tax would be USD262 million or NZD352 million
(previously USD 204 million or NZD 258 million) during the 15 year period.

Valuing CRP on an EBIT (earnings before income and tax) multiple of 6 (which
could be considered reasonable for international fertiliser companies) places
a value for the company of NZD503
 million when the company is in production (expected in 2017/18), compared
with a current market capitalisation of NZD42 million.

Stakeholders are encouraged to review our announcement of 23 October when
considering this announcement as it included additional assumptions relevant
to these forecasts.

Chris Castle, Managing Director +64 21 55 81 85 or [email protected]
Warning - Forward Looking Statements

This release contains forward looking statements.  Forward-looking statements
and information are not historical facts, are made as of the date of this
release, and include, but are not limited to, statements regarding
discussions of future plans, guidance, projections, objectives, estimates and
forecasts and statements as to CRP's expectations with respect to, among
other things, mineral properties and the matters described in this release.

These forward looking statements involve numerous risks and uncertainties and
actual results may vary. Important factors that may cause actual results to
vary include without limitation, the timing and receipt of certain approvals,
changes in commodity prices, changes in interest and currency exchange rates,
risks inherent in exploration results, timing and success, inaccurate
geological and metallurgical assumptions (including with respect to the size,
grade and recoverability of mineral reserves and resources), changes in
development or mining plans due to changes in logistical, technical or other
factors, unanticipated operational difficulties (including failure of plant,
equipment or processes to operate in accordance with specifications, cost
escalation, unavailability of materials, equipment and third party
contractors, delays in the receipt of government approvals, industrial
disturbances or other job action, and unanticipated events related to health,
safety and environmental matters), political risk, social unrest, and changes
in general economic conditions or conditions in the financial markets.
End CA:00260054 For:CRP    Type:FORECAST   Time:2015-01-27 11:46:43