TAMPA, Fla., Aug. 17, 2020 (GLOBE NEWSWIRE) -- 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 Results
Total 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 Information
Odyssey 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. Investors
The 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 Barton
Odyssey Marine Exploration, Inc.
(813) 876-1776 x 2562
laura@odysseymarine.com