Chatham Rock faces hefty consents bill

Chatham Rock Phosphate has warned it is likely to face the full cost of its application for mining consents, but it plans to push ahead with a fresh application.

The listed company, which has an ambitious plan to mine phosphate from the seabed on the Chatham Rise, had applied to the High Court for a declaration that the costs charged by the Environmental Protection Agency (EPA) were unlawful.

In 2015 the EPA turned down Chatham Rock’s application, saying it would ‘‘cause significant and permanent adverse effects’’ with only modest economic benefits.

In March 2016, Wellingtonheadquartered Chatham Rock told the High Court that costs of nearly $900,000, which it had been invoiced, were excessive.

The company said this included overcharging for employee hours, excessive catering and unnecessary trips to the Chatham Islands.

But the High Court rejected the application, saying that although the costs of the consents application were high, this did not mean they were unreasonable.

‘‘Chatham Rock has provided a vast amount of detail in support of its concerns and claims but it has not been able to identify unlawfulness,’’ Associate Judge Warwick Smith said in his judgment.

In a statement to the New Zealand stock exchange, Chatham Rock said the decision was likely to mean it would have to pay the full costs invoiced by the EPA.

‘‘Our financial results for the last two years have been prepared on a conservative basis, assuming a worse-case [sic] scenario, and therefore the decision will have a limited effect on our formal balance sheet position.

‘‘However, the decision does have a negative impact on our cashflow position which we will be taking steps to remedy.’’

In 2016 chief executive Chris Castle warned that losing the case could impact the company’s viability. But yesterday he said that since 2010 the company had raised $39 million. ‘‘Putting it in that context, it’s not a body blow – it’s an inconvenience.’’

The company raised more than $500,000 in a rights issue at the start of December and has announced plans for a private placement.

‘‘We’re going along a path of raising the $6 million you actually need to reapply and get environmental consent,’’ Castle said.