Chatham Rock to delay exercise of options

Chatham Rock Phosphate [NZAX: CRP], which is seeking to mine phosphate nodules from the seabed on the Chatham Rise, will push out the date to exercise its listed options until 12 months after it receives marine consent to allow it share price to stabilise.

The Wellington-based company had planned to begin the exercise period 15 days from being issued a marine consent, which is currently the subject of hearings, closing the period three months after, but will extend that by another nine months, it said in a statement.

Volatility in the company's share price "principally due to a market misconception created by the EPA (Environmental Protection Agency) staff report" and more recent positive announcements about the project's prospects and capital raisings would be allowed to calm down with a longer exercise period, it said. The NZAX-listed shares dropped 9.7 percent to 14 cents today, and have slumped 48 percent this year.

"The board is of the view that the extension of the exercise period is in the best interests of CRP in order to give a longer period for the share price to recover and stabilise if the marine consent is granted," the company said. "This will give option holders a greater opportunity to see the share price exceed the exercise price of the options with a view to promoting the exercise of the options and providing the company additional working capital."

The listed options let their holders buy one share at 70 cents apiece, which would go towards the mining project. The options sank 71 percent, or 5 cents, to 2 cents today.

Chatham Rock is proposing to mine phosphate nodules at depths of up to 450 metres, initially within its 820 square kilometre mining permit area for five years. After that it would widen its activity to a 5,207 sq km area for up to a further 30 years. Annual extraction is targeted at 1.5 million tonnes of the nodules.

It's about halfway through a two-month hearing on deciding whether to grant consent for the project, which the company today said it's optimistic about winning approval.

Last week Chatham Rock released details of its business plan and marketing strategy, projecting tax-paid profits of $663 million over the 15-year life of the project, paying royalties of $102 million and tax of $258 million.

(BusinessDesk)