European dredgers vie for Widespread Energy work

European dredgers vie for Widespread Energy work

By Pattrick Smellie

Jan. 5 (BusinessDesk) – NZAX-listed Widespread Energy Ltd. has selected three European dredging firms to undertake jointly funded pre-feasibility studies as the prospective Chatham Rise phosphate miner gears up towards listing in Canada or Australia by mid-year.

One of the two studies will be undertaken by Dutch dredging company Royal Boskalis Westminster N.V., and the other by a consortium of Rotterdam-based IHC Merwede and Belgian dredger D.E.M.E. (Dredging, Environmental and Marine Engineering).

The desk-top studies will be completed within eight weeks, at which point Widespread expects to choose a partner for detailed concept design, production testing, and ultimately the mining and dredging operation, said managing director Chris Castle.

Both phases are expected to take 12-to-18 months. While Widespread hopes to be mining by as early as 2013, Castle said there could be delays, given that legislation governing resource use in New Zealand’s Exclusive Economic Zone is likely to be delayed beyond the 2011 election.

Environment Minister Nick Smith had hoped to have EEZ legislation introduced before last Christmas, but it has yet to emerge.

Widespread is looking to tap into sea-floor phosphate in an exploration licence area covering 4,726 square kilometres of the Chatham Rise, some 600 kilometres east of Christchurch and at a depth of up to 400 metres. The company is targeting only around 300 square kilometres of that area, where phosphate deposits appear most heavily concentrated.

Phosphate has not previously been mined at such depths, although undersea dredging technology is well-established. The proposed mining area is along the top ridges of the Chatham Rise, meaning it should not affect such lucrative fish stocks as orange roughy, which populate much deeper waters around the undersea ridge that extends from the eastern South Island out to the Chatham Islands.

Widespread already has the marine science agency NIWA conducting baseline research on the area.

“As our next step, we’re going to decide what environmental information we need to collect ourselves.”

The project has the potential to replace New Zealand’s imports of phosphate, mainly used as an agricultural fertiliser, from Morocco, and to become a new source of export revenue and was estimated in an independent valuation last year to be capable of earning $40 million a year after tax.

The company is undertaking small-scale capital-raising to bring in a total of $1.5 million to allow both the pre-feasibility studies to occur, and to fund listing costs in either Australia or Canada, with the latter the more likely venue.

Widespread is represented in Canada by the chairman of Oceana Gold Corp., Jim Askew, who had successfully raised more than C$200 million for the New Zealand gold miner, Castle said. A group restructuring will be required before offshore listing, targeted for May. The project is currently 90%-owned by Widespread Energy, and 10% by an associate, Widespread Portfolios Ltd.

Widespread shares trade thinly, last changing hands at 13 cents a share on Dec. 8, and has traded at between 10 cents and 16 cents a share over the last year.

(BusinessDesk)

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