[Full announcement: CRP_Final_Annoucement__2014_Financial_Statements.pdf]
Final announcement for the year to 31 March 2014
Financial result
The results for the year to 31 March 2014 show an audited loss from operations of $1.42 million.
The company has experienced another year of significant progress, with 2014 shaping up to be transformational for the
company.
Operating Highlights
Over the past 12 months CRP has achieved several significant milestones, and we are confident that these successes will
continue. As this annual report was being prepared we submitted our marine environmental consent application to the
Environmental Protection Authority. This is the culmination of four years’ work and it’s where the bulk of the $NZ27
million we have raised has been spent.
At this stage in our development it’s worth revisiting the fundamentals of this ambitious plan to dig up phosphate from
the seabed more than 250 km from the nearest point of land. We’ve always believed the critical factors for this project
are:
1. Can the resource be defined?
2. Can it be mined?
3. Can the product be sold?
4. Can the project be permitted?
Can the resource be defined? – Since its discovery, scientists have tried to quantify the distribution and concentration of the phosphorite deposit.
A key achievement this past year was an independent estimate of the rock phosphate resource using modern techniques
developed to evaluate onshore mineral deposits. Completed by RSC Consulting, the study concluded:
•Inferred resources of 80 million m3 of phosphorite at an average grade of 290 kg/m3, an estimated 23.4 Mt of
phosphorite
•Average thickness of the mineral resource is 20 cm at the surface of the sea floor
•Additional exploration potential is in the order of 40 million m3, with an estimate of 8 to 12 Mt of contained
phosphorite at grades between 200 and 300 kg/m3
•The inferred resources are similar to earlier historical estimates undertaken on the Chatham Rise.
The exploration target of 8–12 million tonnes, currently excluded from the 23.4 million tonnes but within the mining
permit area, will be tested by further sampling and, if confirmed, may add to the total inferred resource. This means
that the existing data indicate sufficient resources are likely to be present to support at least 15 years mining at the
proposed extraction rate of 1.5 Mt per year, and there may be another 5-8 years of resources in the less well-sampled
areas within our mining permit.
There is additional exploration potential in the areas under application to the east (PPA 55967) and to the west (PPA
55971) of the existing permit areas. CRP applied for prospecting rights over these areas late last year when they were
relinquished by Kiwi Phosphate. We believe parts of those areas have good potential and we plan to undertake additional
exploration and build them into our longer term development aspirations.
Should we identify further commercial-level quantities of resource in the other areas (marked in yellow in the map
below) then, providing the required licences and permits were granted, mining operations would continue at the annual
rate of 1.5 million tonnes for a longer period of time.
Can it be mined? -
Royal Boskalis Westminster of the Netherlands, our dredging technology partner, continues to progress development of the
mining system and plan. Early in our discussions the company developed a mining system concept, based on well-proven
technologies and adapted for the deeper waters in which our resource lies. Boskalis continues to refine that system as
vessel options change and our knowledge of the project matures, but little has changed in general terms.
A core team, including key Boskalis personnel, meets fortnightly by telephone and Boskalis is actively supporting the
environmental consent application.
Can the product be sold? -
We continually receive enquiries from international phosphate companies, and Najib Moutia, our head of sales and
strategy, represents us in a range of forums – both in direct contact with customers and at conferences. Given the
particular attractions of our product, our regional location and the medium term political uncertainties regarding
international supply, we are in no doubt Chatham rock phosphate will be in high demand.
Can it be permitted? –
Gaining a mining permit and an environmental consent has been our primary focus for the past 18 months and we are
confident we will be successful. We have undertaken the scientific rigour and listened carefully to stakeholders and
believe we have sufficient knowledge of the likely environmental impacts of our project to address concerns and answer
questions raised during the consent process.
The Consenting Process
We submitted a draft environmental marine consent application in mid-2013 but decided to withdraw it because of lengthy
delays in the consideration of our mining permit. We did not have the resources to undertake both mining and
environmental consenting processes simultaneously.
Granting of the mining permit took 14 months because we chose to wait for the new minerals permitting law to come into
force, and then it took some time for the team at New Zealand Petroleum and Minerals to adjust to the new consenting
regime.
We received the mining permit in December 2013. Since then it has been full speed ahead to complete the environmental
application, and a new draft of the Environmental Impact Assessment (EIA) was submitted to the Environmental Protections
Agency (EPA) on 31 March 2014 for presubmission consideration of our marine consent application. The delay in the
process added to costs and time frames, but it allowed us to act on feedback from the previous version and the revised
application addresses all of the concerns raised by stakeholders.
During the second half of 2013 we undertook considerable additional scientific research and stakeholder consultation.
Consultation often led to additional scientific research. For example, when the fishing industry switched from being
quiet supporters to vocal opponents of the project, the research deepened our understanding of potential impacts on
commercially important fish species. That work identified no significant impacts, and we believe there is a very low
risk of impacts on commercial fisheries.
One of the most exciting developments arising from the additional effort is our work with NIWA to develop a spatial
planning process that identifies areas of the ocean with high biodiversity or resource potential, and supports
development decisions to balance conservation and economic values. This is a new way of looking at how the oceans can be
managed, with the best available data used to identify areas to set aside for environmental protection and others that
could be made available to harvest their resources. It’s an extension of the work the fishing industry did to establish
the more narrowly focused benthic protection areas.
Our delay in submitting our environmental marine consent application meant we became second in line, following Trans
Tasman Resources’ bid to extract iron sands from waters off the Taranaki Bight. We’ve been able to closely watch the
progress of that application and ensure any issues raised are adequately addressed in our own documentation.
Financing
Our project is novel, even by international assessments. There are a number of subsea mining projects but they are not
common. Investors generally regard permitting rather than the technology challenges as the biggest obstacle to success.
Despite this challenge, we have raised $NZ27 million over four of the most difficult years ever for capital accumulation
for mining projects. Our success is due to the quality of the resource, the quality of the team doing the work and the
loyal support of our shareholders.
Over the past year shareholders continued to invest in the company’s future. In June 2013 we undertook a small Initial
Public Offering to New Zealand investors. Unfortunately, uncertainty regarding our permitting and poor support from
sharebrokers meant we raised $NZ1.6 million, less than the $4 million target. However, strong contributions from
qualifying investors and a $NZ2.1 million shareholder rights issue subsequent to balance date resulted in healthy
capital raising.
In December we appointed Wimmer and Co. as our corporate advisers for capital raising in the London market. Although we
had long preferred the Toronto market for its breadth of mining and fertiliser stocks, its depressed state convinced us
to consider alternatives. We selected London because of its depth of capital with an appetite for risk and comparative
buoyancy, and although there are significant costs associated with the listing process we believe it can offer access to
capital not available on other markets. Progress with the listing on London’s alternative AIM market continues, with
listing expected during July in conjunction with $NZ8 million of capital raising.
The chart below demonstrates investors continue to believe in the prospects for the project and that shareholders have
been rewarded for their faith so far
The coming year
As noted at the outset, we believe the biggest – and best – events in CRP’s history are to come during 2014. The key
milestones expected over the rest of this year are the listing and capitalraising in the London market in July and the
granting of our marine consent in November.
Assuming those two events occur we believe the prospects for your company are extremely bright.
Again we thank you for your ongoing confidence and support.
Chris Castle Linda Sanders
Managing Director Chair
[Full announcement: CRP_Final_Annoucement__2014_Financial_Statements.pdf]