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Chatham Rise dredging project signs research vessel, seeks capital

Thursday 8th December 2011

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Plans to mine phosphate from the offshore ocean floor of the Chatham Rise are a step closer with the signing of a US$1.2 million seismic survey-style evaluation for the target area identified by NZX-listed Chatham Rock Phosphate.

The move comes as the company seeks to raise between $2 million and $5 million in fresh capital to maintain momentum in the project ahead of a larger planned float for around $40 million, probably in Canada or Australia.

The offshore IPO was to have occurred before now, but is now delayed until next year, reflecting what the company said were “continuing adverse market conditions and the forthcoming year-end holidays.”

The newly announced survey agreement with NASDAQ-listed deep ocean expert, Odyssey Marine Exploration, in a deal that allows Odyssey to be paid in CRP stock at 20 cents a share, the issue price in the current limited capital-raising.

CRP managing director Chris Castle said the survey was “an important milestone,” which would provide “very significant additional data” for the project.

The company believes dredged phosphate could save the country $300 million a year in imports by replacing some one million tonnes of Moroccan phosphate, used for farm fertiliser, and create a new export industry.

The survey will occur in waters 450km east of Christchurch, between the South Island and the Chatham Islands, in an area CRP believes would be environmentally acceptable, to identify concentrations of rock phosphate nodules in a 200 square kilometre area judged to be “the most prospective area within CRP’s 4726 square kilometre prospecting licence.”

The underwater surveys will use multi-beam sounders to map seabed topography with a magnetometer, sediment sounder and sidescan sonar.

“The deep-tow package will be towed at a water depth of 350 metres one kilometre behind the vessel and will provide images of the seafloor for geological and environmental studies as well as mapping the nature of the sediment in the top few meters of the seabed,” said Castle in a statement.

The data will be used by Royal Boskalis Westminster, the Dutch company CRP has already contracted to undertake exploratory dredging, and will form baseline environmental information.

In a statement last week, CRP said its short term capital-raising would be “a combination of a new share purchase plan offer and through undertaking private placements with qualified investors.”

The share purchase plan will offer existing shareholders up to $15,000 of new shares, at 20 cents apiece, which was the share price at the time, although a 26 percent discount to the volume weighted average price of CRP shares over the last three calendar months (27.1 cents),” CRP said in its Dec. 1 statement.

The new capital will fund preparation for the offshore IPO and further develop the proposed mining programme.  Odyssey has the option to convert the contract price to shares within two years of March 1, 2012. CRP also has a put option, that would require Odyssey to take up the shares at March 1 in exchange for a one-for-one issue of options, exercisable within two years at 30 cents a share.

CRP shares rarely trade and remained quoted at 20 cents a share this morning.

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