Royal Boskalis Westminster N.V. (Boskalis) will take a 20 percent shareholding in Chatham Rock Phosphate and assume a seat on the board, in a world-first for the undersea mining industry.
It is the first time a major dredging company has taken a substantial equity position in an undersea mining project.
Boskalis has been issued shares at an issue price of $0.22 to give it a 15% shareholding in CRP. Subject to shareholder approval, which is intended to be sought in early September, Boskalis will be issued additional shares to move to a 19.99% shareholding. The Board of CRP expects to appoint a nominee of Boskalis as a director of CRP in a few weeks time.
CRP holds a prospecting permit to develop an undersea rock phosphate resource, 400m below the surface, on the Chatham Rise east of New Zealand.
Peter Berdowski, CEO Boskalis, said CRP offers a unique opportunity for Boskalis to get involved in the fledgling deep-sea mining industry.
“This is a very interesting growth opportunity allowing us to draw on our wealth of expertise and to contribute this to the successful development of this unique project, together with our partner Chatham.”
CRP Managing Director Chris Castle said he was honoured Boskalis, the industry’s global leader, had chosen to support this innovative New Zealand project.
“Boskalis is a great partner and works very collegially with CRP, despite the difference in size and scope of the companies. It has amassed centuries of knowledge of the marine industry and can call on the best resources globally.”
The agreement allows for Boskalis to subscribe for up to 20 percent of CRP’s issued capital, and to appoint a nominee to the CRP board. The key terms of the agreement are summarised below.
It follows meetings at the Boskalis headquarters in Papendrecht, the Netherlands, in late June to review the past year of activities since Boskalis was appointed as the project’s technical partner to design a process to extract phosphate nodules from the seabed.
The next stage of the project for the remainder of 2012 will involve Boskalis refining its system for recovering and separating the phosphate nodules, applying adapted and proven technologies. The key considerations include capital and operating costs and minimising possible environmental effects.
CRP holds an offshore prospecting permit covering an area of 4726 km2 on the central Chatham Rise. The permit area, in New Zealand territorial waters, is located 450 km east of Christchurch and includes significant shallow seabed deposits of rock phosphate. The initial term of the permit is two years with rights to either extend the prospecting permit or apply for a mining licence.
Establishment of a rock phosphate industry in New Zealand territorial waters has a significant number of economic, environmental and market benefits.
Royal Boskalis Westminster N.V. is a leading global services provider operating in the dredging, maritime infrastructure and maritime services sectors. Boskalis provides creative and innovative solutions to infrastructural challenges in the maritime, coastal and delta regions of the world including the construction and maintenance of ports and waterways, land reclamation, coastal defense and riverbank protection. It offers a wide variety of marine services through SMIT and has other strategic partnerships in the Middle East (Archirodon) and in offshore services (Lamnalco).
The company holds important home market positions in and outside of Europe. Boskalis has a versatile fleet of over 1,100 units and operates in over 75 countries across six continents. Including its share in partnerships, Boskalis has approximately 14,000 employees.
Key terms of Arrangement
CRP and Boskalis have entered two agreements – a contract for services and an investment agreement.
The contract for services provides for Boskalis to undertake a range of services to CRP in three phases:
- The first phase of services has already been provided and consisted of initial design work on a rock phosphate extraction and recovery system and providing support to CRP on the survey cruises undertaken earlier this year with Odyssey Marin Exploration. The cost of these services to CRP is €500,000.
- The next phase of work will occur over the next six months and will include the provision of geotechnical reports, the conceptual design of recovery and separation systems, environmental impact assessments and transportation options for rock phosphate recovery. The cost of these services to CRP will be approximately €630,000.
- The final phase will occur in the first half of next year and will consist of the final detailed design of the rock phosphate recovery and separation system. The cost of this phase is estimated to be €4 million with the parties splitting those costs equally.
The contract for services then provides that payment for the above work will be met under the terms of an investment agreement between the parties. The investment agreement provides that:
- 14,759,628 fully paid ordinary shares in CRP (representing a 15% shareholding) are issued to Boskalis at an issue price of $0.22 per share.
- The costs incurred for the phase one work detailed above are applied against the issue price due for the shares.
- Subject to shareholder approval, further shares are to be issued to Boskalis so that it has a 19.99% shareholding in CRP.
- Boskalis may provide the balance of the issue price for the shares to CRP either in cash or in satisfaction of the costs payable by CRP for the services provided under the second and third phases of the contract for services.
- If the issue price is not paid in full within 12 months, then all shares that have not been paid for will be transferred back to CRP for cancellation.
Subsea Partial Conversion
In addition to the share issue to Boskalis, CRP has also issued 3,962,376 ordinary shares to Subsea Investments II, LLC (Subsea) at an issue price of $0.20 per share.
This allotment arises from a partial conversion of the convertible loan advanced by Subsea as approved by shareholders in April this year. This partial conversion reduces the amount owed by CRP under the loan by approximately $800,000 to approximately $2.55 million. Subsea’s percentage shareholding in CRP is maintained at 19.99% as a result of this allotment.
As previously advised to shareholders, it is intended to seek shareholder approval under the Takeovers Code to permit full conversion of the loan and for Subsea to increase its shareholding percentage above 20%. This approval is intended to be sought at the same time as the approval for the further issue of shares to Boskalis.
Source: rockphosphate, July 30, 2012