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CRP de-risks as progress continues says Edison

This announcement was released to NZX a few minutes ago. To see the Edison report follow the following link - Our section is on page 27. <>

7 December 2012

CRP de-risks as progress continues says Edison

Chatham Rock Phosphate’s (CRP) share price will continue to de-risk as it progresses its project to establish its undersea mining operation, Edison Investment Research (Edison) says in its latest Asia-Pacific quarterly update on the company.

“With a mining licence application having been lodged with authorities during the last quarter, marine consents and project engineering will be CRP’s key area of focus over the coming year.”

Edison has been engaged by CRP to provide independent research in the absence of analysts preparing any on smaller NZX listed companies.

The Managing Director of CRP Chris Castle said the market took the initial Edison research coverage, followed closely by CRP’s licence application, very positively with the CRP share price doubling to a peak of 46c in less than two weeks.

Wellington based Edison analyst John Kidd said “if and when CRP continues to pass further significant milestones over 2013-14, we expect the market to continue to de-risk CRP’s share price towards our un-risked valuation, currently at $1.87 a share.”

Mr Kidd says CRP still faces a number of significant hurdles before it will be in a position to consider a final investment decision. In addition to project engineering, CRP’s biggest challenge lies in securing marine consents for its operation.

“While a new regulatory regime to deal with far-shore marine operations provides much-needed clarity, the risk of delay, deferral and even denial still remains.”

He says a notable feature of the business model is the lack of capital intensity through the planned use of contract mining.

“Most of the capital required will come from global dredging major Royal Boskalis, with which CRP has a close relationship.” He believes the 20% stake Boskalis has taken in CRP following a two-year advisory period significantly de-risks the project.

Mr Castle said the current capital raising is expected to be the final tranche before a final investment decision is made.

“CRP has achieved considerable past success in tapping the private placement market and it is likely this will again be targeted. A capital raising is also a necessary prerequisite to completing a TSX-V listing which CRP is aiming to do during the first half of 2013.”


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