Ann: GENERAL: CRP: CRP Update Report 22 August

• Release Date: 22/08/14 15:32
• Summary: GENERAL: CRP: CRP Update Report 22 August
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					CRP
22/08/2014 15:32
GENERAL

REL: 1532 HRS Chatham Rock Phosphate Limited

GENERAL: CRP: CRP Update Report 22 August

Update
22 August 2014

EPA staff report raises questions

The issuing of a staff report by the Environmental Protection Authority
earlier this week was unfortunate and concerning for a number of reasons.

Though it - in the wider context - is most likely to end up being peripheral
noise we remain disturbed about the circumstances of how a report of such
dubious quality was issued.

While we were aware that the EPA intended to issue a report on 18 August, it
was frustrating and inconvenient the report was issued without considering
all relevant information and where we also believe it fails to show
appropriate balance.

Its negative view on our application is poorly informed, inaccurate and fails
to take account of a huge swathe of additional information we have either
recently provided, or are in the process of providing.

There are countless errors throughout its 175 pages.  One of the more blatant
shows a photograph of a dredging mechanism that bears no resemblance to what
we have planned to use from the outset.  A second more concerning example is
where, despite the EPA's own expert witnesses saying there are no concerns
about our proposals in various areas the report still comes down heavily with
expressions of supposed "uncertainty".

It is what we have come to expect from poorly informed critics or those
deliberately distorting our proposals. But such efforts are not what we
expect, or deserve from objective and professionally trained public servants.

We are concerned the report was not independently peer reviewed and that it
was not accompanied by suitable explanations of its role in the marine
consent process prior to its unfortunate release.

However all that aside, ultimately it is only one input into the
decision-making process and one we believe will be of marginal relevance as
we progress because we believe its quality and content speaks for itself.

Report timing another concern

We have also discussed the timing of the release with the EPA. We were aware
of the date of the report issue but unhappy about its proposed timing.
Unfortunately the EPA was determined to release its report despite this.

We were especially concerned a 175-page report was posted on the EPA website
in the middle of NZX trading without any context to explain its relevance to
the Marine Consent process and without CRP being given an opportunity to be
in a position to advise our shareholders and potential investors.

To its credit the EPA issued a clarification regarding the purpose of the
staff report, but unfortunately considerable damage had by then been caused.

It has to be said we remain puzzled about the report's value as an input into
the Decision Making Committee's process, and why it needed to contain any
conclusions or recommendations given that it had not taken account of all of
the relevant information.

In addition, the views of staff cannot be tested through the Marine Consent
process, because they do not give evidence.  Given it is both premature and
inaccurate we seriously question how it can serve that purpose and we will
encourage the DMC to focus instead on the evidence presented to it.

Share price impact

Not surprisingly, some shareholders were spooked by the report (and the
ensuing media coverage which of necessity was produced within a very short
time), which resulted in the share price being punished.  At one stage it
fell to as low as 8c before recovering to around 14c.  The price fall was on
small volumes and we think it will recover over time.

Marine Consent process

That said, we've always expected the Marine Consent process would be a roller
coaster in terms of our being in the limelight and people continuing to make
uninformed or critical comments about the project, or cherry pick information
and take it out of context.

We will keep our shareholders closely informed though these Updates to
provide broader context to our regular more formal announcements.  Please
contact us if you have any questions, concerns, comments or ideas!

With that in mind we thought it would be helpful to provide a bit more detail
about how the Marine Consent process works.

The first stage involved submitting the formal application in May after three
years of intensive scientific research and widespread consultation with
interested parties.  After that there was a period of public submissions,
completed in July, and three requests from the EPA for further information -
answers to the last remaining responses are being finalised next week.

Next month we start caucusing between experts to resolve differing views on
scientific evidence.   After that there will be up to two months of hearings
following, which the DMC will form its own view and make a decision before
Christmas.

It should be noted DMCs in other EPA projects have chosen not to follow staff
"advice".  They are, after all, an independent body, tasked with evaluating
evidence, not simply rubber-stamping the incomplete views of staff.

Since June the EPA has asked a total of 62 questions on three separate
occasions, some of which have required considerable additional research or
consideration. That was why we decided to extend the time frame for this part
of the process by a couple of weeks because we consider that this new
information is important and will address actual or perceived uncertainties.
We expect it will save time later on because it should resolve a number of
the concerns raised.

We remain very confident

Our view remains unchanged on our expectations of success in gaining the
Marine Consent.  All that has happened is that some staff at the EPA have
delivered a premature and incomplete report which we encourage everyone to
ignore.

Interestingly a number of shareholders have said the actions are the
equivalent of the staff in a court of law publicly stating their view on the
outcome of a trial before it has begun.  The point here is it is of little
overall relevance to the outcome, as well as being unhelpful to the process.

Chris Castle
managing director
[email protected] or +64 21 55 81 85
End CA:00254273 For:CRP    Type:GENERAL    Time:2014-08-22 15:32:16