Sea-bed mining developer Chatham Rock Phosphate has pushed out expectations to begin operations on the Chatham rise to mid-2016, as the separate mining and marine licences have taken longer than expected to process.
For its half-year to September, Chatham Rock posted a $675,788 loss, compared to a $870,000 loss for the same period a year ago, and maintains more than $1 million in cash and equivalents.
With expectations the more than six-month overdue mining licence will be granted soon, Chatham chief executive Chris Castle said yesterday it would look to raise more, unspecified, capital to fund the environmental consent process, the marine licence.
Craigs Investment Partners broker Peter McIntyre said the project was ''in the high-risk basket'' and, as with all mining proposals, was capital-intensive in the early stages.
That would not be a surprise to most shareholders, who had been ''supportive so far''.
''It comes down to the execution risk, in getting the licences, both for Chatham and investors. Castle has outlined to shareholders they need more capital to get under way,'' he said.
Despite the frustrating delays, and having spent more than $20 million to date on the project, Chatham has not been deterred.
It recently lodged an application for two new prospecting licences, to the west and east of its existing prospecting area, after separate, private company Kiwi Phosphate relinquished its permits over those areas.
Chatham's 18.7% shareholder Boskalis will be the operator, and funder, to suction-dredge the top 300mm of sand containing pebble-sized phosphate, in depths up to 425m on the Chatham Rise, seeking 1.5 million tonnes per year, while Chatham becomes a shore-based phosphate trader.
Chatham Rock had expected its mining licence by May, but approval is still to come, which has pushed lodging of the marine consent application into next year.
Mr Castle said Chatham shared shareholders' frustration with the delays, but it was confident at being ''close to getting over the line, with the final few outstanding issues close to being resolved''.
''As the first [mining licence] of this type under the new Crown Minerals Act, [permitting agency] NZ Petroleum and Minerals has undertaken a robust assessment process, but the upshot is it has taken considerably longer than we expected,'' he said.
Chatham had raised $24.5 million during the past three years, including an initial public offering in June, which raised about $1.5 million which Mr Castle described yesterday as a ''limited success'', given Chatham had wanted $4 million to $10 million.
He said investment in Chatham ''continued to be on the radar'' of some local institutions wanting the project to be ''de-risked'' by gaining the two licences, but in the meantime, further investment had come from mainly international investors, primarily private equity funds and high-net-worth individuals.
''The additional time and cost involved in the mining licence process has meant the marine consent timeline has been pushed into 2014,'' he said.
Chatham planned to submit its formal marine consent application in the first quarter of the new year. It anticipated receiving that consent in the third quarter of 2014, and the revised target start date for operations was now in the second half of 2016.
''Once we receive the mining licence we will re-engage with a range of local and international investors to raise the capital needed to fund the environmental consent process,'' Mr Castle said.
