Introduction to Chatham Rock Phosphate

Transcription

1 14 July 2017

2 Introduction to Chatham Rock Phosphate Formed Listed on the TSX.V, NZAX and Frankfurt Stock Exchange Mineral asset - inferred JORC code 23.4Mt phosphorite resource offshore NZ Granted 20 year mining permit Dec 2013 Core business - sourcing and marketing reactive rock phosphate in NZ and international markets Working on resubmitting environmental permit after initial decline Feb 2015 Plan to dredge deposit using contractor Royal Boskalis; targeted start 2022 Chatham actively seeking to acquire other phosphate sources to reduce portfolio risk 2

3 Overview Our business plan Significance of direct application rock What Chatham has achieved already Why we believe Chatham will get the environmental permit next time Funding programme Why the Chatham project is such an attractive investment 3

4 The business plan Chatham aims to be premier supplier of low cadmium, direct application phosphate to NZ and global agricultural sector We re passionate about the benefit of direct application fertiliser to sustainable farming Our objectives remain to: Achieve consent of the Chatham Rise project and develop the asset Diversify our product mix from other reactive rock phosphate sources 4

5 Why focus on direct application rock phosphate? 1 Unique resource with special characteristics 2 Direct application rock phosphate significantly more environmentally friendly reducing waterways run off and improving soil health 3 Loss of phosphate nutrient into waterways is also wasting a finite resource 4 Sells at a significant premium despite lower production costs 5

6 Chatham Rise Rock Phosphate location 6

7 Boskalis 235m Conventional Trailing Suction Hopper Dredge 7

8 Project Conceptual Designs 8

9 Regional Port Access 9

10 What we have already achieved Increasingly valuable and strategically located mineral deposit Well-defined and well-studied deposit with knowledge gained by spending $US66m A 20 year mining permit Feasibility studies by our technical partner Boskalis that will contract mine for us A market for our product and a strong competitive position location, product characteristics, security of supply A great management team 10

11 All we need an environmental permit Why we will get it next time: Fill information gaps and communicate the science better Demonstrate wider support from key stakeholders (farming, environmentalists) More streamlined hearing process from lessons learned Subsequent law changes have improved the process Other projects will be permitted before we apply no longer first 11

12 Marine Consent Application - next steps 1. Re-affirm government support for project 2. Raise finance to complete application and EPA hearing process ($US 4.2m including field studies) 3. Plan resubmission process: Consult stakeholders Gather further data including field studies Reformat information from previous application Complete application and related management plans 4. Re-submit time frame: 15 months after raising funds 12

13 5 year budget Chatham Rock Phosphate 5 Year Budget ($US,000) 12 month periods Opening Cash $855 $3,440 $810 $3,662 $1,382 Preparation of Consent re-application $840 $1,260 Hearing Costs $1,050 $1,050 Pastoral field studies $175 Mining and exploration permit work programme $175 $2,954 $2,800 Corporate Costs $775 $810 $845 $880 $915 Existing options exercised $840 Funds to be raised $4,200 $7,700 $1,400 Year end cash position $3,440 $810 $3,662 $1,382 $467 Cumulative funds raised $4,200 $5,040 $12,740 $14,140 $14,140 13

14 Why project is such an attractive investment No development capital required project will be contract-mined per tonne using a modified dredge Strategic location mining costs equal cost of shipping from other side of the world. World price has to collapse to near zero before Chatham can t compete Annual forecast earnings before royalties and tax - $US65 million project highly profitable given no incoming freight costs and low mining costs Project independently valued at $US200m to $US300m present market cap ~$US6.2m (at Cdn 58 cents) 14

15 Attractive investment (2) Will pay $US25m in annual taxes and royalties, plus millions in port charges. Hence will have central and local government support Will create many high-value knowledge-based jobs in the port, on the mining ship, undertaking environmental monitoring and broader scientific research, in the agriculture and hospitality sectors and on the Chatham Islands. Hence broad-based community support and social licence Security of fertiliser supply for NZ agriculture Hence farmer support Environmental benefits much lower run off impact on lakes and rivers, much lower cadmium and much lower carbon footprint. Hence likely to have support from environmental and local water catchment authorities Current main phosphate source in NZ is from a disputed territory in North Africa subject to UN sanctions. Ethical supply option 15

16 Environmental + ethical + financial + economic benefits = Good for NZ (for more detail see ) Low run off to rivers and lakes Very low cadmium Much reduced carbon footprint Improved soil health Benefits for Environment Taxes, jobs and knowledge $35m a year in tax and royalties High value knowledge based jobs NZ leadership in marine technology potentially worth billions Marine environment knowledge identifies conservation priorities NZ can have own supply without depending on other countries NZ wouldn t export environmental footprint to countries where mining phosphate involves social and environmental distress Ethical, secure supply Strongly profitable Annual earnings of $99m before royalties and tax Capital repaid in less than a year

17 Phosphate rock market facts ($US) Actual contract prices of 30% P2O5 ex Morocco are presently $120 (not $99 as per World Bank) Freight to NZ/Asia now $30, landed cost is $150 If sold to make superphosphate in NZ, value of CRP rock is presently ~ $110 If sold as reactive phosphate rock (RPR), retail value in NZ is $255. If sold internationally as RPR the estimated price is ~ $150 ($40 over the value of the rock based on P content. This is because RPR is as effective as TSP (triple superphosphate) which costs up to $160 more than SSP) The demand for RPR will continue to grow in parallel with the demand for organic products Chatham rock phosphate is ultra-low in cadmium (< 10 mg/kg P2O5) The European Union will set a 60mg/Kg P2O5 cadmium limit in 2019 This will eliminate all rock sourced from Egypt, Israel, Boucraa (Morocco),Youssoufia, Senegal, Togo, Tunisia, Nauru & Christmas Island Analysts consider that this will result in initial price premiums of $30 - $50 EU cadmium limit further lowered to 20 mg/kg P2O5 in 2030 will eliminate other sources and increase the premium further 17

18 Chatham mining costs compared with market 18

19 March June Sept Dec March June Sept Dec March June Sept Dec March June Sept Dec March June Sept Dec March June Sept Dec March June Sept Dec March 60,000,000 50,000,000 Highlighting the Investment Opportunity Market value vs funds raised 2010 to 2017 (NZD) 40,000,000 30,000,000 Edison Research buy recommendation CRP applies for mining licence 20,000,000 TTR marine consent rejected 10,000,000 - Market Cap CRP marine consent rejected CRP regroups CRP lists on TSX.V

20 Conclusion