Phosphate mining bid still all go

02:24, Jul 24 2013

Investors have snubbed Chatham Rock Phosphate's share offer but the Takaka-based company is still confident that its pioneering plan to suck phosphate nodules from the ocean floor can go ahead.

The company aimed to raise a minimum of $4 million and up to $10m from the offer of shares and options, but got only $1.58m.

The new shares and options were allotted last week.

Chief executive Chris Castle said it was a disappointing response but the offer achieved a good result given that it was non-brokered. "It has successfully increased the profile of Chatham, including among institutions and the farming and rural communities. We are delighted to welcome a further 120-plus new investors into Chatham Rock Phosphate."

The capital raised would allow the company to work toward achieving further milestones and de-risking over the coming months, which would enable capital in future to be raised at higher prices. "That would mean Chatham could minimise dilution of existing shareholder interests," he said.

Chatham Rock Phosphate has now raised $23.5m of the estimated $30m needed before production can begin.


The company, part-owned by Dutch dredging and shipping giant Royal Boskalis and American venture capitalists, is still aiming for a startup in 2015, using a ship to vacuum the sea floor 400 metres below, hoovering up sand, silt and phosphate nodules from gravel to tennis-ball sized lumps for sale unprocessed to the fertiliser market in New Zealand and overseas.

It estimates the resource is worth $6 billion, and has forecast earnings of $62m to $100m a year for 15 years.

Production from the 820-square-kilometre area between Canterbury and the Chatham Islands is planned to begin in mid-2015, mining 1.5 million tonnes a year.

Seabed mining has never been done at this depth.

But the company has told the Nelson Mail that Royal Boskalis looked at the project for 18 months before deciding to invest, and has the technology to do it.

But the phosphate is in a benthic protection area, where bottom trawling is prohibited, and the plan is being opposed by the fishing industry and environmental groups.

Deepwater Group chairman George Clements labels it "strip-mining" and has said it "risks ruining New Zealand's sustainable fisheries and our international reputation", while Greenpeace calls it "madness".

To go ahead it requires both a mining licence and a marine permit.

Mr Castle said the mining licence application had "proven to be a bit more complex than initially anticipated", but was being "actively progressed" by New Zealand Petroleum and Minerals, the licensing authority.

Mr Castle and company chairwoman Linda Sanders - a Listener financial columnist - are in Europe talking to current and potential investors.

From there they said today that the marine permit application had been submitted to the Environmental Protection Authority as planned on July 9, and they were waiting to find out if it was accepted as complete.

It will then involve a process including public submissions, a hearing, and a decision required within 140 days of lodgement date.

"People are very interested in the project but it is regarded as novel and so it is not surprising investors are cautious," Ms Sanders said.

Mr Castle and Ms Sanders, a couple for more than 30 years, are based in Golden Bay but Chatham Rock Phosphate also has a small Wellington office.

The company has a large number of New Zealand shareholders.