Wednesday 10th December 2014
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Chatham Rock Phosphate, whose business case hangs on gaining a marine consent to mine phosphate nodules off the sea bed east of New Zealand, is among 15 companies to gain research and development grants from Callaghan Innovation.
The NZAX listed company has raised more than $33 million from shareholders over the past four years to fund its development, including bringing in dredging experts, building a business case and hiring experts for its consent hearings. With virtually no revenue until it can make sales of phosphate, the Wellington based company posted a $1.87 million loss in its first half.
The Callaghan grants are aimed at helping "innovative companies that produce world leading, high value products and high quality jobs for New Zealanders to invest in innovation, boost growth and increase exports," Science and Innovation Minister Steven Joyce said in announcing the latest funding round today.
The three year "Growth Grants" administered by Callaghan allow recipients to claim back 20 percent of eligible R&D spending, capped at $5 million a year, implying annual R&D spending of up to $25 million.
Chatham Rock managing director Chris Castle said his company hadn't yet quantified its R&S spend but it was unlikely to reach the cap. To qualify for a grant, a business must commit to spend at least $300,000, and at least 1.5 percent of revenue, a year on R&D in New Zealand.
Joyce said the latest round of grants amounted to $13 million. A total of 125 hi-tech companies have so far been awarded Growth Grants to a total value of $309 million. The grants were introduced in the 2013 budget and replaced Technology Development Grants, which 16 companies are receiving.
Castle said the grant was a vote of confidence from the government in Chatham Rock's potential. "In effect it is government funding, which we're quite excited about," he said.
One of Chatham Rock's first research priorities was to demonstrate the effectiveness of direct application of its phosphorite rock onto pasture and develop a domestic and international market for this mineral, Castle said. That would include field trials supervised by AgResearch and Lincoln University, he said.
Other priorities included collecting environmental data from the Chatham Rise, trials of techniques to re-establish marine life where mining had taken, testing the company's mining system on the Chatham Rise and monitoring the sediment plume generated by the mining, he said.
Chatham Rock shares surged 29 percent to 22 cents, valuing the company at $46 million.
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