Resource World Magazine

46 www.resourceworld.com O C T O B E R / N O V E M B E R 2 0 1 7 Chatham Rock Phosphate planning offshore mining project by Ellsworth Dickson CHATHAM ROCK PHOSPHATE LTD. [NZP-TSXV, CRP-NZAX, 3GRE-FSE] is making preparations to mine phosphate from the seabed on the Chatham Rise off the east coast of New Zealand. Unlike, say, Nautilus Minerals, which plans to mine metals using underwater mining machines, Chatham would utilize a dredging process to be carried out by a modified dredging ship. In a press release, Chris Castle, Managing Director, noted that there is a need for New Zealand to secure its own low-cadmium and ethical phosphate resource for use as fertilizer to grow crops which was highlighted by recent news that Panamanian authori- ties detained a Moroccan phosphate shipment from the Western Sahara after the Polisario independence movement claimed the cargo has been transported illegally. In addition, in 2019, the Europium Union will set a 60 mg/ Kg P 2 O 5 cadmium limit on phosphate rock that will eliminate all rock sourced from some mines in Morocco, Egypt, Israel, Senegal, Togo, Tunisia, Naura and Christmas Island which will only exac- erbate the situation. The size of Chatham's estimated 20-year Mining Permit area, granted in 2013, totals 820 km 2 . The company also needs an envi- ronmental permit called a 'Marine Consent' that was declined in February 2015 due to concerns regarding damage to the seabed and seabed marine life. However, while there will be unavoidable benthic (seabed) impact in the mined areas, it has now become apparent that most environmentally significant areas will not be mined and each mining area is small. Essentially, bottom-dwelling marine life does not like to live in a phosphate deposit. "I can confirm that our mining area is in an area so unproduc- tive for marine life that the fishing industry set it aside saying that they would not bottom trawl there," Castle told Resource World. Experts involved in the permitting process have agreed that the phosphate mining project is unlikely to affect marine mam- mals, sea birds and major fish stocks. The toxicology effects in the water column will be very low and uranium is not an issue. As such, the company is re-applying for its Marine Consent permit next year. Chatham's phosphate resource is estimated at 23.4 million tonnes P 2 O 5 with a present project value of $427 million. The phosphate nodules lie at a depth of 400 metres and were formed 5-10 million years ago. The company does not need to buy or build dredging equipment as it proposed that the Royal Boskalis Group [BOKA-EURONEXT] be the mining contractor and carry out the phosphate dredging. Boskalis, which has a fleet of over 900 vessels and 10,000 employ- ees in 90 countries, has been working with Chatham since 2011 to develop conceptual mining designs. Boskalis has also participated in Chatham's environmental permitting process. Operating assumptions are for one dredging vessel with a load capacity of 50,000 tonnes to operate a 12-day cycle for 30 cycles per year that would target a production rate 1.5 million tonnes per year. This would comprise: one day to the mining site, three days mining, one day to port, three days unloading and four days allowance for weather and maintenance. Contract price of 30% P 2 O 5 ex-Morocco is $120/tonne. If sold to make what is known as Superphosphate in New Zealand, Chatham's rock is worth ~$110/tonne. If sold as reactive phos- phate rock (RPR), retail value in New Zealand is $255/tonne. If sold internationally as RPR, the estimated price is ~$150/tonne. Historic field trials and recent pot tests have established that Chatham's product is an RPR and therefore suitable for direct application. Based on these assumptions, the company forecasts annual earnings of $99 million before royalties and taxes. It is expected that capital would be repaid in less than a year. Taxes and royal- ties would amount to about $35 million annually. The world's ever increasing population will require greater land productivity that phosphate fertilizer can provide. As global markets continue to grow it has been estimated there will be a need for a 70% increase in food production by 2050. Castle is encouraged that another ocean mining project has been given the green light. Trans-Tasman Resources has planned an iron sand mining project offshore New Zealand that would return 90% of the sand to the seabed in a controlled manner. Chatham Rock Phosphate has 15,466,000 shares outstanding, 17,436,000 fully diluted. n The Royal Boskalis Group's Queen of the Netherlands dredging ship, when modified, could mine 1.5 million tonnes of seabed phosphate rock. Photo courtesy Royal Boskalis Group. MINING

• Cover