Odyssey Marine Exploration, Inc. (NASDAQ:OMEX), a deep-ocean
exploration pioneer engaged in the discovery, development and
extraction of deep-ocean minerals, reported results for the second
quarter ended June 30, 2020, and provided an update on current
company operations and projects.
Odyssey’s key focus during the quarter continued to be the
Exploraciones Oceanicas (ExO) phosphate project in Mexico. This
project could provide access to a critical resource needed to
produce fertilizer, helping to provide food security to the Mexican
people and supplying the phosphate needs of North America for at
least 50 years.
Odyssey’s legal teams are working two separate, but concurrent
processes, while Odyssey continues to work through diplomatic
channels in attempts to reach a mutually beneficial agreement with
Mexico. “Odyssey is ready to move this important project forward
for the benefit of the people of Mexico as well as our
shareholders,” said Mark Gordon, Odyssey Chairman and Chief
Executive Officer. “We continue to work in good faith with the
current administration to reach a mutually beneficial outcome for
the project. While we are hopeful an agreement will be reached, we
must continue to pursue our North American Free Trade Agreement
(NAFTA) claim against Mexico to protect our shareholders’
rights.”
The merits of Odyssey’s NAFTA claim against Mexico are extremely
strong. Odyssey’s NAFTA legal team will file the company’s first
Memorial in the coming weeks. The Memorial will be Odyssey’s first
filing in this case and will lay out the strong and compelling
evidence supporting Odyssey’s claim. This will be Mexico’s first
opportunity to review the evidence, which strongly corroborates the
prior unanimous decision of Mexico’s own federal court (the
Tribunal Federal de Justicia Administrativa or TFJA) in 2018 that
the denial of the environmental permit was illegal under Mexican
environmental law.
The filing will also make clear that the denial was not due to
any valid environmental reasons, and, in fact, was ready to be
approved until Rafael Pacchiano, Mexico’s former Secretary of the
Environmental and Natural Resources, intervened and unexpectedly
ordered that the permit be denied for political reasons.
While the NAFTA legal team focuses on that filing, the Mexican
legal team continues to pursue the case at the TFJA seeking the
annulment of the second arbitrary denial of the environmental
permit by Pacchiano in 2018. ExO’s latest filing in this court was
submitted on August 3, 2020.
In addition to the ExO Phosphate project and new mineral
projects in development, the company also owns a majority interest
in Bismarck Mining, a company that holds an exclusive exploration
license near Lihir Island in Papua New Guinea. The license area is
adjacent to one of the world’s highest producing gold deposits,
which is currently being mined by one of the world’s largest gold
mining companies, Newcrest Mining.
Although the Covid-19 pandemic has delayed the company’s
offshore plans on this project this year, the Odyssey team has
established important business relationships in PNG to support
legal administration, operations logistics, and government and
community relations. More information about this project can
be found on Odyssey’s website (www.odysseymarine.com).
Odyssey also provides services to CIC, a mineral development
company working in the South Pacific. Odyssey receives cash and
equity for providing offshore, research and back office services to
CIC. “This model of working with strategic partners in a manner
that generates equity in seafloor resource projects demonstrates
how Odyssey is executing our business plan in a manner that adds
real value to the company by offsetting some of our overhead
expenses while diversifying our portfolio of seafloor mineral
projects,” added Gordon.
“A key element to advancing our various valuable projects and
achieving the best outcome for Odyssey shareholders on the ExO
project, whether through the full NAFTA process or through an
earlier settlement, is that Odyssey and ExO have access to
sufficient cash to sustain full operations through the maximum
expected duration of the NAFTA timeline,” Gordon continued.
“Between existing financing vehicles, a multi-million dollar
payment expected in 2020 from an agreement related to a shipwreck
project, the sale of equity in deep ocean mineral projects and
other identified funding sources, we are extremely confident that
we will have adequate capital to achieve these objectives.
“We continue to reduce expenses and carefully
manage cash. Although expenses look higher year to year for the
second quarter, the cash required was reduced. Almost $2.6
million of second quarter expenses were one-time
NAFTA legal expenses that have been funded through a
specialized $10.0 million litigation funding agreement.
An additional $0.4 million included non-cash charges for
share-based compensation and a debt discount amortization,”
concluded Gordon.
Second Quarter 2020 Financial
ResultsTotal revenue in the current quarter was $0.5
million, a $0.3 million decrease compared to the same period a year
ago. The revenue generated in each period was a result of
performing marine research, project administration and search and
recovery operations for our customers and related parties.
One company we provided these services to is a deep-sea mineral
exploration company, CIC.
Marketing, general and administrative expense
decreased $0.3 million to $1.3 million for the three-month period
ended June 30, 2020 compared to $1.6 million from the same period
in the prior year. The key items contributing to this $0.3
million was a decrease of $0.1 million in employee incentives and
compensation, $0.1 million in reduction of maritime legal services
related to the HMS Victory and a reduction of $0.1 million of
professional corporate services.
Operations and research expenses increased by $1.6 million from
2019 to 2020 primarily as a result of the following items: (i) a
$2.1 million increase in financed professional fees, which are
primarily legal and other expenses directly associated with our
NAFTA litigation pursuit, (ii) a $0.2 million decrease in our
marine services contracted labor and (iii) a $0.2 million savings
in operational overhead reductions.
Consolidated financial statements as well as
Odyssey's Quarterly Report on Form 10-Q for the period
ended June 20, 2020, are available on the company's website
at www.odysseymarine.com as well as
at www.sec.gov.
About Odyssey Marine
Exploration Odyssey Marine Exploration, Inc. (Nasdaq:OMEX)
is engaged in deep-ocean exploration using innovative methods and
state-of-the-art technology to provide access to critical resources
worldwide. Our core focus is the discovery, development and
extraction of deep-ocean minerals. Odyssey also provides marine
services for private clients and governments. For additional
details, please visit www.odysseymarine.com.
Forward Looking
InformationOdyssey Marine Exploration believes the
information set forth in this Press Release may include "forward
looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of
1933 and Section 21E of the Securities Act of 1934. Certain factors
that could cause results to differ materially from those projected
in the forward-looking statements are set forth in "Risk Factors"
in Part I, Item 1A of the Company's Annual Report on Form 10-K for
the year ended December 31, 2019, which was filed with the
Securities and Exchange Commission on March 30, 2020. The financial
and operating projections as well as estimates of mining assets are
based solely on the assumptions developed by Odyssey that it
believes are reasonable based upon information available to Odyssey
as of the date of this release. All projections and estimates are
subject to material uncertainties and should not be viewed as a
prediction or an assurance of actual future performance. The
validity and accuracy of Odyssey's projections will depend upon
unpredictable future events, many of which are beyond Odyssey's
control and, accordingly, no assurance can be given that Odyssey's
assumptions will prove true or that its projected results will be
achieved.
Cautionary Note to U.S.
InvestorsThe U.S. Securities and Exchange Commission (SEC)
permits mining companies, in their filings with the SEC, to
disclose only those mineral deposits that a company can
economically and legally extract or produce. We use certain terms
in this press release, such as "measured", "indicated," "inferred"
and "resources," which the SEC guidelines strictly prohibit us from
including in our filings with the SEC. "Inferred mineral resources"
have a great amount of uncertainty as to their existence, and great
uncertainty as to their economic and legal feasibility. It cannot
be assumed that all or any part of an inferred mineral resource
will ever be upgraded to a higher category. U.S. investors are
cautioned not to assume that part or all of the inferred mineral
resource exists, or is economically or legally mineable, and are
urged to consider closely the disclosures in our Form 10-K which
may be secured from us or from the SEC's website at
http://www.sec.gov/edgar.shtml.
CONTACT:Laura BartonOdyssey Marine Exploration,
Inc.(813) 876-1776 x 2562laura@odysseymarine.com
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