Widespread Energy advises mining concept studies

Widespread Energy advises mining concept studies with dredging industry giants

Widespread Energy Limited, as operator of the Chatham Rise Rock Phosphate Project, has reached agreement with three of the world’s largest dredging companies to carry out two jointly funded mining concept studies.

One study is being undertaken by Dutch dredging company Royal Boskalis Westminster N.V., the other by a consortium of Rotterdam based IHC Merwede and Belgium headquartered D.E.M.E. (Dredging, Environmental & Marine Engineering).

The mining concept studies, which are expected to be completed within eight weeks, are effectively engineering pre-feasibility studies. They are being funded 50/50 by Widespread Energy and the dredging companies.

The requested studies will provide:

• A mining concept with an assessment of the technical feasibility of the mining concept.
• Considerations as to how to minimise environmental impact.
• Production estimates and a preliminary indication of capital and operational costs.

After the two studies have been completed, Widespread Energy will review them and then (with the assistance of suitably qualified industry experts) select an exclusive partner for detailed concept design, production testing and, ultimately the mining/dredging operation. Detailed concept design and production testing are expected to take at least 12-18 months.

This process, as outlined, allows Widespread to tap, at a manageable cost, the expertise of several world leaders in the dredging industry without the necessity to make what could be a premature decision on a preferred partner. Each of the dredging companies will also benefit from being able to undertake a jointly funded pre-feasibility study before being required to commit significant resources towards detailed concept design and production testing.

The directors of Widespread Energy and the Chatham Rise Project team are gratified that this project has attracted so much interest from these and other leading dredging industry companies.

Royal Boskalis Westminster N.V.

Royal Boskalis Westminster N.V. is a leading global services provider operating in the dredging, maritime infrastructure and maritime services sectors. It provides creative and innovative all-round solutions to infrastructural challenges in the maritime, coastal and delta regions of the world. Its operations are broadly spread across all continents and three market segments, giving the company a stable foundation, the flexibility to capture a wide range of projects and excellent prospects for balanced growth.

Its main product segment is Dredging & Earthmoving, which includes port development, pipeline intervention activities, land reclamation, and coastal and riverbank protection.
Its second product segment is Maritime Infrastructure, which Boskalis is involved in through its strategic partnership with Archirodon, a leading contractor in this sector.
The third product segment is Maritime & Terminal Services, through its strategic partnership with Lamnalco, one of the world’s leading suppliers of maritime terminal services to the oil and gas industry.

Boskalis continually invests in its versatile fleet, which currently consists of over 1,100 vessels and equipment. Including its share in partnerships, Boskalis has around 14,000 employees and operates in 65 countries across six continents.

IHC Merwede

IHC Merwede is focussed on the continuous development of design and construction activities for the specialist maritime sector. It is the global market leader for efficient dredging and mining vessels and equipment – with vast experience accumulated over decades – and a reliable supplier of custom-built ships and supplies for offshore construction.

IHC Merwede has in-house expertise for engineering and manufacturing innovative vessels and advanced equipment, as well as providing life-cycle support. Its integrated systematic approach has helped to develop optimum product performance and long-term business partnerships.

The company’s broad customer base includes dredging operators, oil and gas corporations, offshore contractors and government authorities.

IHC Merwede has over 3,000 employees based at various locations in The Netherlands, China, Croatia, France, India, the Middle East, Nigeria, Russia, Serbia, Singapore, Slovakia, South Africa, the United Kingdom and the United States.

Technological innovation is, and will remain, the company's underlying strength: IHC Merwede, the technology innovator.

D.E.M.E.

D.E.M.E. was established as a holding company in April 1991, but its roots go back to well into the 19th century. The origins of D.E.M.E. are embedded in Flanders, the Dutch-speaking region of Belgium. The capital of Europe, Brussels, is also the capital of Flanders. Its unique location at the crossroads of Europe historically created great prosperity. But the prerequisite for that prosperity has been hydraulic engineering competence in dike construction, the fight against flooding, deepening maritime access, and port construction

As a Belgian dredging and hydraulic engineering group, D.E.M.E. has won a prominent position on the world market in a highly specialised and complex discipline. The company fosters a strong innovative approach and has indeed been a trendsetter and a pioneer in technical innovation throughout its history. The Group can look back on nearly 150 years of experience in its core dredging and land reclamation activities and hydraulic engineering. At present D.E.M.E. has a permanent workforce of 3,500 persons.

The D.E.M.E. Group is a group of international marine engineering specialists and contractors with multi-disciplinary capabilities such as:

Traditional core business : deepening and maintaining navigation channels, dredging for major port infrastructure development, sand winning and reclamation of new industrial or residential areas, artificial islands, beaches and coast development.

Marine & civil engineering : Offshore related services, such as trenching and backfilling and landfall constructions for pipeline installation, precise stone dumping for protection of pipelines at 2,000m, marine drilling or monopil installation, breakwater and harbour dam construction; marine heavy lifting and salvage operations.

Environmental techniques : Environmental dredging, cleaning and treatment of contaminated sludge and polluted soils: brown field rehabilitation

Chatham Rise Project Background

On 25 February 2010, a consortium comprising Widespread Energy and associated company Widespread Portfolios Limited, (“the Joint Venture or JV”) was granted an offshore prospecting permit by the Crown Resources division of the Ministry of Economic Development covering an area of 4,726 km2 on the central Chatham Rise. The permit area, which is in New Zealand territorial waters, is located 600 km east of Christchurch and includes significant shallow seabed deposits of rock phosphate and other potentially valuable minerals.

The initial term of the permit is two years with further priority rights to either extend the prospecting permit or apply for a mining licence.

An independent valuation of the project by Rockpoint Corporate Finance in May 2010 found the project had a realistic possibility of being commercially viable. It found that, based on conservative modelling, the project could earn net profit before tax of $40 million a year. Widespread’s own models put that figure as high as $80 to $100 million a year.

In addition to its financial potential, the project offers a number of benefits to New Zealand including:

• Reduced exposure to currency and commodity risk and reduced import burden
• Known, fixed costs
• Reduced carbon footprint from lower transport costs
• Possible export earnings.

The project is also New Zealand owned and controlled.

The challenges identified of extracting the resource include its sporadic distribution (it averages 66 kg/m but there is great variability). Also extracting phosphate at 400m depth has not been achieved, though other minerals have been extracted at greater depths. The phosphate, in nodules of 2mm to 150mm, is located in a 1m layer of sandy silt above a chalky clay sediment basement.

Environmental considerations are an important part of the work being done and the company has an ongoing wide-ranging programme of consultation with fishing, conservation, Maori and other interest groups.
On behalf of the Board

Chris Castle

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