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Widespread Energy to start Chatham Rise exploration next year

Thursday 7th October 2010

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Widespread Energy plans to begin an undersea exploration programme on its Chatham Rise project in 2011, and will deliver its year-one progress report to Crown Minerals by the end of this year.

In February, the mineral investment company was granted a prospecting permit on the Chatham Rise, allowing them to test whether the area contains an estimated 100 million tonnes of rock phosphate, which could be worth $28 billion. The estimates come from 30-year-old data derived from exploration work carried out by the government and companies such as Fletcher Challenge in the 1970s and 1980s.

The company said in a statement that it has been working to fast track the evaluation phase so directors can make a decision whether to apply for a mining license at the end of 2011.

A study by Rockpoint Corporate Finance this year found that the project had a current value of $20.9 million and could earn a profit before tax of $40 million a year. A further $280 million is needed to take it to the startup phase, according to the company's website.

The project is highly speculative as extracting phosphate at depths of 400 meters has never been done before, and the company is still working on identifying the appropriate equipment needed.

Previously Widespead's managing director Chris Castle said the project would provide a locally produced alternative to the 1 million tonnes of rock phosphate imported into New Zealand annually.

Shares of Widespread Energy, which owns 90% of the joint venture, rose 7% on the NZAX yesterday to 15 cents.

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