- Release Date: 21/05/13 10:30
- Summary: GENERAL: CRP: Edison ups Chatham Rock Phosphate valuation
- Price Sensitive: No
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CRP 21/05/2013 08:30 GENERAL REL: 0830 HRS Chatham Rock Phosphate Limited GENERAL: CRP: Edison ups Chatham Rock Phosphate valuation 21 May 2013 Edison ups Chatham Rock Phosphate valuation Edison Investment Research now values Chatham Rock Phosphate (CRP) at $400 million on an unrisked basis, or $2 per fully diluted share. The research report says CRP continues to make significant de-risking strides with its seafloor rock phosphate mining project. "In particular, the environmental consenting process and timeline facing CRP are now much more certain. With front-end engineering making good progress, technical risk is also falling. The steps taken by CRP to add organisational mass are also positive. "On an unrisked basis, we value CRP at $2 a share. As it continues to achieve milestones over the balance of 2013 and into 2014 we expect the valuation gap to continue to narrow." The unrisked $2 valuation is up from $1.87 at Edison's last update, with key sensitivities being to exchange rate, commodity price and contract mining costs. Analyst John Kidd said the consenting processes CRP faces are now much clearer and, assuming CRP lodges its marine consent application in June, a decision would be required under law by January 2014. He also noted the significant capital cost of equipping a mining vessel will rest with CRP's mining partner and cornerstone shareholder Royal Boskalis. "Since Boskalis took its 20% stake in 2012 indications are increasingly encouraging. Detailed engineering design is reported to be moving positively towards Q3 2013 completion, after which final commitment decisions can be taken. Q4 2013 remains for now very much in play for a final investment decision, as does an early 2015 start date for mining operations." Mr Kidd notes as CRP's application may be the first discretionary activity application to be handled under the new regime, there will be strong incentives for officials, regulators and ministers to ensure a robust, efficient and transparent process. He said the appointment of three directors and Chief Operating Officer Ray Wood added significant depth to CRP's governance and capability. "CRP's business model is notable for its lack of capital intensity. "As Boskalis will provide the seaborne infrastructure necessary to undertake mining activities, assuming a positive final investment decision, CRP's capital requirements will be limited to the amount required for onshore and corporate operations. CRP's business will be largely that of a commodity trader, supported by a long-term probably fixed-rate contract mining agreement with Boskalis." Mr Kidd notes CRP is evaluating options for raising the last $US7.5 million of capital required for funding in the period to the start of production with a focus on minimising dilution. CRP commissioned Edison to provide independent research coverage because share-broker analysts do not research the company. To read the report go to www.rockphosphate.co.nz Chris Castle 021 55 81 85 or [email protected] About Edison Investment Research Edison Investment Research is one of the world's largest independent equity research houses. Edison's global team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. Edison provides services to more than 400 retained corporate and investor clients from offices in London, New York, Berlin, Sydney and Wellington. End CA:00236437 For:CRP Type:GENERAL Time:2013-05-21 08:30:05
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