CRP
27/11/2014 11:07
HALFYR
PRICE SENSITIVE
REL: 1107 HRS Chatham Rock Phosphate Limited
HALFYR: CRP: Results for the 6 months to 30 September 2014
Results for announcement to the market for the 6 months to 30 September 2014
Financial Result
Your directors submit the unaudited financial statements of Chatham Rock
Phosphate Limited (CRP) for the six months to 30 September 2014. The trading
result for the period was a loss of $1,870,507 (2013: loss of $675,788). An
analysis of the result is provided in the table below: (see attachment)
The increased deficit for the six months to 30 September 2014 is mainly due
to costs related to the AIM listing process that commenced during the period.
Operations Highlights
It's been an incredibly demanding, satisfying and yet at times frustrating
six months but as we approach the end of 2014, we can look back on having
achieved some significant milestones. Most satisfying and humbling is the
continued tangible financial support shareholders have shown for this
project. Since August, shareholders have contributed more than $6 million
towards our goal of a marine consent, bringing the total raised over the past
four years to more than $33 million.
Naturally, we all hope we will get a great return on our investment as we
advance this project towards mining; but the feedback from shareholders (both
in New Zealand and overseas) is they also want this project to succeed for
New Zealand's agricultural and environmental benefit, and for it to be the
first successful seabed mining project in the world.
We are all pioneers in a new industry - and your project team's focus is to
ensure we will continue to be well prepared, well-resourced and expertly
managed. The reason we receive such support from both shareholders and our
many other well-wishers is we have a strong group of leading experts in their
respective fields, who have designed such a powerful proposition that they
have made the job of sourcing the necessary funding comparatively easy.
The hearing
We have now (we hope) concluded the 26 days of hearings over seven weeks.
The Decision-Making Committee will formally close the hearing once they are
confident they have all the necessary information to make a decision. Chair
Neil Walter indicated that the assessment of completeness for the decision
would largely focus on our comprehensive draft conditions.
We're still hoping for a pre-Christmas decision. Whatever the time frame, the
latest tranche of money raised - thank you for your enthusiastic support -
gives us enough to keep the wheels turning in the New Year if we need to wait
a bit longer.
The Committee will consider four decision options - from a full grant for
what we applied, to a decline. We told the committee there was ample
evidence for full approval to mine for up to 35 years across the marine
consent area. We said the option of trial mining is not financially feasible
because of how much money we have invested already and the further capital
involved in building a suitable vessel.
Asked whether an option to grant consent for the smaller, already granted
mining permit area for 15 years was workable, we said it was not our
preference, because of future consenting costs and process. We noted that
this option would involve legal and practical issues such as undertaking
monitoring in a wider area, and providing for mining exclusion zones.
We've provided shareholders with regular updates on the hearing process,
including our views about its shortcomings - particularly relating to the
staff reports. Overall we think the process works, though it is expensive,
time consuming and has imperfections.
We recognise we are only the second seabed mining application using the new
Exclusive Economic Zone law, so the process is still being bedded in. For
example, we think the Crown played a useful role in our hearing process with
its submission, but were disappointed - given what it calls its growth agenda
(including exports) - it did not advance the wider economic impacts of the
project, and simply focused on conservation issues.
In summary, our key messages are:
- our proposal involves very limited environmental risks in a small area;
- it has economic, strategic and environmental benefits;
- it will not harm any other industry or resource user in New Zealand's
economy;
- the few material environmental risks can be managed by conditions;
- our proposed impacts are miniscule compared with those of fishing, which
should be taken into account in considering our application;
- our models are based on significant data, which can and will be further
validated; and
- Benthic Protection Areas should be replaced by more refined protected
areas.
In summary, the project offers new environmental benefits for New Zealand's
farming industry, by using a low cadmium, low carbon footprint, low run-off,
potentially organic product. It will create a new industry with strong ties
to agriculture - New Zealand's most important export earner. CRP's product
will enhance security of supply and reduce exposure to politically risky
sources of a critical input to New Zealand's biggest industry.
Financing
While the primary focus of the period under review has been the marine
consent process, the companion to that has been continuing to finance the
costs. Consenting is an expensive process - the company's shareholders pay
for all of the relevant costs of the Environmental Protection Authority, as
well as our own. In addition, your money has been invested in a range of
scientific reports, witness costs and of course the cost of the legal
guidance we have received.
Our best success in raising capital over the past year has come from ongoing
strong support from our Kiwi shareholders, plus a small group of overseas
investors - mainly from the United States and more recently from Britain and
Australia - complementing the earlier investments from corporate sources such
as our technical partner Boskalis and from Odyssey Marine.
We've had little success from our two attempts so far at a broader public
offering. Perhaps it's arguably too early in the process - certainly most
institutional investors tell us to "come back when you are permitted", even
though the share price will likely be much higher when the project is
"de-risked". However, local financial markets seem to have far more appetite
for raising substantial capital for early stage "tech" projects, than a
proposition such as ours.
Broader financial markets are obviously much less informed than our loyal
shareholders. So they are more unnerved when there is bad news. Our efforts
for an Initial Public Offering and listing on the London AIM market were
severely damaged by the negative decision regarding Trans Tasman Resources'
application for a marine consent.
Our decision to go to the London market was based on considerable enthusiasm
for our project earlier in the year. But as most experienced investors know,
markets run hot and cold - and it doesn't take much sometimes to change
sentiment.
Thus, we ultimately made the decision our AIM IPO would not fly in 2014,
though we remain determined to list our shares - given their unique appeal -
on an international market in 2015.
The future
While the hearing process and financing have been our main areas of focus
this year, we are also working on a range of other areas. We are talking with
Boskalis to advance our contract discussions and Najib Moutia continues to
undertake sales development work through his amazing array of international
industry contacts. We're also conducting pot trials of our product to
validate the positive findings of the extensive testing undertaken in earlier
years, among other research work.
We remain very confident we have done what it takes to get environmental
approval for our project. It's been a bit like a golf tournament: we've done
the preparation, we've played every shot with care and precision and the ball
has generally landed where we wanted it. Ultimately we - including all our
loyal shareholders - have done everything we can to win the prize.
We can't determine the outcome - but we definitely deserve to win.
Chris Castle
Managing Director
Robert Goodden
Chairman
27 November 2014
End CA:00258188 For:CRP Type:HALFYR Time:2014-11-27 11:07:15
