IIR releases independent report on Chatham Rock Phosphate

NEWS RELEASE 17-25 18 October 2017


Independent Investment Research (IIR) releases independent report on
Chatham Rock Phosphate

Today Australia based Independent Investment Research released an independent
research report on Chatham Rock Phosphate to its extensive international client list.
The report has also be published on the Bloomberg, Reuters, FactSet, Capital IQ
and Research Tree (UK) platforms

A summary of the report follows. The full report can be accessed from IRR (see link
below), is available from me on request, and is also accessible at
www.rockphosphate.co.nz.

For and on behalf of the Board,

Chris Castle
Chief Executive Officer
Chatham Rock Phosphate Limited
64 21 55 81 85 or chris@crpl.co.nz

Neither the Exchange, its Regulation Service Provider (as that term is defined under the policies of the
Exchange), or New Zealand Exchange Limited has in any way passed upon the merits of the Transaction and
associated transactions, and has neither approved nor disapproved of the contents of this press release.






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EQUITY RESEARCH
Metals & Mining

Chatham Rock Phosphate (TSXV:NZP, NZAX:CRP,
FSE:3GRE)
Initiation of Coverage
LOW CAPEX, HIGH QUALITY PHOSPHATE
Chatham Rock Phosphate Limited (“CRP” or “the Company”) is working towards a planned 2022
start of production from its 100% owned offshore Chatham Rise Phosphate Project ("CRPP" or "the
Project"), located in ~400m of water on the Chatham Rise, some 450km east of Christchurch in New
Zealand.
The current resource, estimated to contain some 24.3 Mt of high quality phosphorite nodules, with an
estimated grade of 21.5% to 22% P2O5, is sufficient to support a 15 year, 1.5 mtpa operation, with
significant resource upside. The Company is currently working towards a late 2018 submittal of a re-
application for the "Marine Consents" environmental approval, with a 20 year Mining Licence
previously granted in 2013.
KEY POINTS
Low capex operation: The development strategy is to develop the Project using contract
mining/dredging, to obviate the requirement to raise and spend the significant capital required to buy
and fit out a suitable dredge. To that end, the Company has worked closely with Netherlands based
Boskalis Offshore Subsea Contracting B.V. ("Boskalis"), one of the largest dredging companies
globally, who is also the technical partner on the CRPP. The planned vessel also includes on-ship
processing, resulting in ports being the only required onshore facilities.
Ready access to ports: To that end the Project is located within 500km of five New Zealand ports
with the capability of handling the planned vessel; of these four have dry bulk material handling
facilities, with the only expected cost to the Company being handling charges on a per tonne operating
basis.
Strong financial metrics: Given the above, and using current estimated revenues and operating
costs, the CRPP has the potential to provide ~US$41 million/year in free cash flow to CRP, and an
average annual EBITDA of US$58 million.
Quality resource: Work to date has highlighted the quality of the CRPP phosphate, in being a
highly reactive phosphate rock ("RPR"), suitable for most applications, including being used to
produce single superphosphate ("SSP"), and being suitable for direct application as a substitute for
both SSP and triple superphosphate ("TSP") - this quality is supported by the results of agronomic
work to date.

Low contaminants: A key feature of the Chatham Rise phosphate is the low level of toxic elements,
in particular cadmium; the EU is in the process of legislating lower levels of cadmium in phosphate
fertilisers, which will preclude supply from current major producing areas and thus increase demand
for the cleaner products.
Supportive shareholders: Recent capital raisings have seen the entry of cornerstone investors
from Switzerland, Germany and Singapore, with representatives being appointed to the board; the
cornerstones hold some 30% of CRP, with the other Board members holding an additional 10%, thus
aligning their interests with those of other shareholders.
Stable, mining jurisdiction: New Zealand is a stable mining jurisdiction, having a long history of
mining for various commodities.
Well leveraged to success: With a market capitalisation of ~C$7 million CRP is well leveraged to
positive news flow.
FINANCIAL POSITION
As of June 30, 2017, the Company had C$0.779 million in free cash and no debt.
CRP also has restricted cash of C$0.481 million, held in trust and representing approximately 64% of
an unpaid amount claimed by the EPA currently in dispute with the Company.
There are currently ~1.5 million in the money warrants on issue with the potential to bring in C$560k
in cash if exercised.
Over the fifteen months to June 30, 2017, the Company spent C$1.526 million on operating activities.
Over the same period the Company has raised C$2.656 million after costs, with the most recent
raising being a brokered private placement of C$0.442 million, through the issue of 884,587 units
each consisting of one C$0.50 ordinary share and half a two year warrant with an exercise price of
C$1.00.
The Company has announced that it expects to have to raise an additional US$14.14 million over the
next three years largely to fund activities related to project permitting, which will include offshore
activities.
CAPITAL STRUCTURE
CRP currently has 14,988,184 fully paid ordinary shares on issue.
The Company underwent a 10 for 1 consolidation in March 2017, concurrent with listing on the TSX
Venture Exchange.

Warrants on issue include 1,524,618 discretionary warrants with an exercise price of C$0.366 before
March 17, 2018, and 442,294 warrants with an exercise price of C$1.00 before June 28, 2019 - the
latest warrants were issued as part of the latest capital raising.
Cornerstone investors hold ~30%, with Board and Management, not including the cornerstone
investors or their representatives on the Board, holding an additional ~10%.
The Top 20 shareholders hold 57.79%.
CRP has ~1,500 shareholders.
CRP PEERS
Our research presents in tabular form the various ASX and TSX listed phosphate developers with
published resources.
We have converted AUD denominated share prices and market capitalisations to CAD at a 1:1
exchange rate.
CRP is the only listed phosphate company with an offshore project - the only other offshore phosphate
project is the Sandpiper Project owned by Namibia Marine Phosphate, a private company majority
held by Mawarid Mining of Oman.
What our research highlights is the relatively low market capitalisation of CRP, and the uplift
potential with project de-risking as compared to its peers globally in the sector.
VALUATION SUMMARY
We have completed a risked DCF valuation for CRP, with this presented in a tabular form in our
research report. This is a base case valuation, with significant upside on de-risking, particularly with
grant of the Marine Consents. The per share valuation is based on the current share structure diluted
for raisings of US$14.14 million as flagged by the Company. We would expect this risked base case
valuation of C$1.64/share to increase as the project is advanced and de-risked - a critical driver of
value will be the approval of the "Marine Consents".
Full Report
Only recipients of this email can access the full report for gratis from our website or request for the
full copy of the report from client.services@independentresearch.com.au. You may have already
received our note via our platform recently - if so, you can elect to unsubscribe below.

Kind regards,
Caroline Elton, Head of Distribution & Investor Platforms

Notices
 Refer to our website for full details of the
research and associated disclosure »
 Also available on Bloomberg, Reuters,
FactSet, Capital IQ, Research Tree (UK)
subscribers»
 The research should be read with our
disclaimer noted in the report and our
website »
 For Daily News
http://news.independentresearch.co
 @IndepResearch


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