News & Media
Odyssey Provides Operational Update
**Gairsoppa & Mantola Recovery Operations Completed for 2012 - Resuming Spring 2013**
Tampa, FL – September 25, 2012 – Odyssey Marine Exploration (NasdaqCM: OMEX), pioneers in the field of deep-ocean exploration, today provided an operations update on several projects.
Due to current weather conditions in the North Atlantic and the previous commitment of the Seabed Worker to another charter, operations on the SS Gairsoppa and SS Mantola shipwrecks have been deferred until weather in the area is appropriate for operations in the second quarter of 2013. The ship is offloading approximately 17,000 additional ounces of silver and other artifacts in Falmouth before it continues on to Norway to conclude the charter. This additional silver bullion, originally thought to indicate another area of the ship containing silver cargo, was the only additional silver found in the areas inspected since offloading the first cargo of silver.
Work on the project aboard Seabed Worker began on June 4, 2012. During the 83 operational days (days not affected by weather delays, transit or time in port) of this period, the Odyssey team surgically opened and cleared approximately 70% of the holds and compartments of the SS Gairsoppa which were suitable for transporting silver cargo. These areas were opened and inspected using the ROV controlled hydraulic shears, deck removal tool and small grab system operated from nearly three miles above the shipwreck site. During these operations, a total of 1,218 silver ingots, which are expected to yield approximately $44 million at current silver prices, were recovered from the SS Gairsoppa as well as several hundred artifacts which have been declared to the UK Receiver of Wreck. Based on experience and data gained this season, and armed with improved tools and technology, it is expected that the rest of these areas can be searched and cleared within 30-45 operational days upon Odyssey’s return to the site.
Operations on the Mantola were also conducted to test ship and equipment capabilities during the early part of the expedition, and recovery operations on that shipwreck are planned to continue immediately after completion of the Gairsoppa.
The monetization of the silver recovered from the Gairsoppa to date is underway and expected to be completed before the end of this year. At current silver prices and after accounting for contractual obligations to the UK government and Galt Resources, the recovery to date will result in an increase of approximately $26 million to Odyssey’s net income in 2012.
Odyssey anticipates that an additional 1,599 insured silver ingots, representing approximately 1.8 million ounces, and what could be a substantial amount of uninsured silver remains on the Gairsoppa site. Documentation of the insured silver lists four separate lots with individual numbers for each ingot. The inscribed number on every silver ingot recovered to date matches this documentation. Silver from only three of the four lots has been recovered and none of the lots have so far been fully accounted for. The fact that a substantial amount of the insured and manifested cargo remains to be recovered leaves open the possibility that the uninsured cargo, which according to sources including “Lloyd’s War Losses” could total an additional three million ounces or more, may be located with the remainder of the insured silver on the shipwreck. In addition, there is a reported 600,000 ounces of insured silver believed to remain on the SS Mantola.
“We’re pleased with the operational results to date on this project even though the combination of weather and the end of any additional charter extensions prevented us from completing work on the final areas of the site for now. We recovered about $44 million in silver bullion in a record-breaking operation. Our team has proven their ability to efficiently execute complex operations at a depth of 4,700 meters (15,600 feet) to complete both the deepest cargo salvage and largest recovery of precious metals ever accomplished. We’ve proven that we can make precise cuts, gain access to interior areas of a steel shipwreck, and recover cargo from a shipwreck deeper than the Titanic,” said Mark Gordon, Odyssey President and COO. “There is only a limited area of the Gairsoppa that remains to be inspected and cleared, and we’re confident that operations can be completed quickly in 2013. We will execute the completion of both the Gairsoppa and Mantola projects as part of our new commodity shipwreck program which includes at least four other shipwrecks under salvage agreement which were reportedly carrying more than $230 million of commodity value.”
Odyssey President and COO, Mark Gordon will be reviewing the Gairsoppa and Mantola program as well as other operations currently underway during a presentation at the Craig-Hallum Alpha Select conference on September 27, 2012, at 10:00 am E.T. which will be available as a webcast thru this link http://wsw.com/webcast/ch2/omex/.
Progress on Other Shipwreck Projects
Odyssey expects to be simultaneously engaged in two or more historic shipwreck projects during the fourth quarter of this year.
Odyssey has provided a report to the Maritime Heritage Foundation detailing the monitoring of the site of HMS Victory (1744) from 2008 until 2012. This detailed monitoring program documented damage caused by human and natural forces to the shipwreck site including cannon dragged over 200 meters from the site by fishing trawlers. This report is available at http://www.shipwreck.net/pdf/OMEPapers24-FINALHIGH.pdf. Odyssey has also provided a revised archaeological project design to the Maritime Heritage Foundation developed as a result of the impact report.
Lord Lingfield, Chairman of the Maritime Heritage Foundation commented, “The Foundation is delighted with the excellent scientific work accomplished to date by Odyssey on the site of HMS Victory (lost 1744). I have been informed that we should expect a response shortly from government concerning Odyssey’s proposed plan which has already been approved by our Scientific Advisory Committee, chaired by the eminent marine archaeologist Dr. Margaret Rule. We look forward to continuing to the next phase of this hugely exciting and important maritime heritage project.’”
While awaiting final feedback on the proposal, the Odyssey Explorer is conducting search and target inspection operations in a section of the “Atlas” survey area, which is a continuation of our extensive survey of a large area in the English Channel and Western Approaches where a number of high value shipwrecks have been lost throughout history.
Odyssey is also in the process of finalizing terms with a sovereign government that will result in one or more salvage contracts which are expected to grant Odyssey rights to geographic areas that are thought to contain valuable shipwrecks. This Government’s proposal gives Odyssey 75% of any finds in the designated areas. Given the weather patterns in the geographic locations covered by these permits, the project is expected to get underway during the fourth quarter of 2012 and will continue through the winter.
In addition, the company is utilizing a chartered vessel to test a new advanced long-range, high-resolution acoustic search system on a deep-water, high-value target search operation. Odyssey has previously conducted multiple searches for this shipwreck but recently obtained evidence and research that appear to further pinpoint the wreck, so a localized search will now be undertaken, and will begin within the next week.
The company is also presently in discussions which may result in moving forward to the next phase of one of the historical shipwreck projects with the certain client companies of Robert Fraser & Partners if potential geo-political issues and a clear title acquisition strategy can be worked out to the satisfaction of all stakeholders.
Odyssey continues to execute on a diversification strategy that leverages the Company’s core competency of deep-ocean exploration and recovery. In 2012 Odyssey has achieved significant results that have accelerated this vital business transformation.
“Until recently, our business success was entirely dependent on the archaeological recovery of historic shipwrecks. Now, we also see significant value coming from two other developing business segments, seafloor minerals and modern commodity cargo recovery,” said Greg Stemm, Odyssey CEO. “Our business development strategy has ensured that we have a diverse portfolio of valuable marine assets around the globe that are beginning to generate cash flow and create additional shareholder value for Odyssey.”
In addition to a portfolio of significant historic shipwreck projects led by HMS Victory and bolstered by targets emerging from a new government agreement expected to be consummated imminently, the near-term potential asset value of Odyssey’s portfolio of commodity shipwrecks with pre-negotiated salvage contracts has grown to over $300 million with the addition of new salvage contracts for a minimum of four new wreck projects expected to get underway in the first half of 2013. Data available to Odyssey on these new modern shipwrecks narrows their respective locations to very precise areas.
Update on Odyssey’s Mineral Exploration Activities
The value of Odyssey’s seafloor mineral assets has recently grown dramatically with increased value in the Company’s equity stake in Neptune Minerals and the acquisition of significant equity in Chatham Rock Phosphate, a company focused on seabed deposits of phosphorite and other minerals.
Neptune's most recent private placement of $13.8 million is based on a valuation of $17.50 per share of Class B Common Stock. Neptune consummated a successful exploration program and has commenced its first ever drilling program to define a resource in some of their most highly prospective properties. “We are impressed with Neptune’s exploration success to date, and believe that the company is on an expedited path to monetizing its resources”, said Greg Stemm, Odyssey CEO. “We’re quite pleased to own 6.2 million shares of Neptune, and strongly believe that the company will continue to create significant shareholder value and is in the midst of transforming the seafloor massive sulfide industry.”
Meanwhile, Chatham Rock Phosphate recently secured a major investment from one of the world’s leading earthmoving and marine infrastructure companies, Royal Boskalis. The investment by this strategic partner is expected to expedite Chatham’s monetization timeline. Odyssey currently owns approximately 7.34% of Chatham.
About the SS Gairsoppa and SS Mantola
Odyssey is conducting the Gairsoppa and Mantola projects under contract with the UK Department for Transport. Under the terms of the agreements, which follow standard commercial practices, Odyssey bears the risk of search and recovery and retains 80% of the net salved value of the silver cargoes after recovering its expenses. These contracts have been extended through January 2014 and September 2014 respectively.
The Gairsoppa was a merchant ship torpedoed by a German U-boat during World War II. During the War, the UK Government insured privately owned cargo under their War Risk Insurance program. After making an insurance payment of approximately £325,000 (1941 value) to the owners of the silver cargo lost aboard the Gairsoppa, the UK Government became the owners of the insured cargo. As some sources, including ”Lloyd’s War Losses” indicate a total silver cargo worth £600,000 (1941 value) lost aboard the Gairsoppa, there may have been additional government-owned silver cargo aboard that would have been self-insured.
The SS Mantola was a 450 foot British-flagged steamer was struck by a torpedo from a German submarine in February 1917. The 165 crew members and 18 passengers abandoned the ship. All but seven crew members, who drowned when their lifeboat overturned, were rescued by the HMS Laburnum. In 1917, the British Ministry of War Transport paid a War Risk Insurance Claim for £110,000 (in 1917 value) for silver that was on board the Mantola when she sank. This sum would equate to more than 600,000 ounces of silver based on silver prices in 1917.
About HMS Victory
In 2008, Odyssey discovered HMS Victory (lost 1744) nearly 100km from where the ship was historically believed to have wrecked. The direct predecessor and inspiration behind Nelson's flagship, Balchin's Victory was the mightiest and most technically advanced vessel of her age. She was lost during a storm with all hands and was the last Royal Navy warship to be lost at sea with a complete complement of bronze cannon.
After period of joint consultation between the UK Ministry of Defense and the UK Department for Culture, Media and Sport, and a public consultation period, the title to HMS Victory was transferred to the Maritime Heritage Foundation in January 2012. The Foundation is a charity established to locate shipwrecks, investigate, recover and preserve artifacts to the highest archaeological standards and to promote knowledge and understanding of Britain's maritime heritage, has now assumed responsibility for the future management of the wreck site. The Foundation has contracted with Odyssey to provide a full range of archaeological, recovery, conservation and other services.
About Odyssey Marine Exploration, Inc.
Odyssey Marine Exploration, Inc. (Nasdaq:OMEX) is engaged in deep-ocean exploration using innovative methods and state-of-the-art technology. The Company is a world leader in shipwreck exploration, conducting extensive search and archaeological recovery operations on deep-ocean shipwrecks around the world. Odyssey also has a minority ownership stake in Neptune Minerals, a company focused on discovering and commercializing high-value mineral deposits from the ocean floor and in Chatham Rock Phosphate, Ltd, a company focused on discovering and commercializing seabed deposits of rock phosphate and other minerals. Odyssey also provides contracting services, including proprietary deep-ocean expertise and equipment, to governments and companies around the world.
Odyssey offers various ways to share in the excitement of deep-ocean exploration by making shipwreck treasures and artifacts available to the general public, students, and collectors through its webstore, exhibits, books, television, merchandise, educational programs and virtual museum located at www.OdysseysVirtualMuseum.com. The company also maintains a Facebook page at http://www.facebook.com/OdysseyMarine and a Twitter feed @OdysseyMarine.
Following previous successful engagements in New Orleans, Tampa, Detroit, Oklahoma City, Charlotte, Baltimore, Sarasota, San Antonio, and Hot Springs, Odyssey's SHIPWRECK! exhibit is currently on display at the Museum of Science, Boston.
For details on Odyssey's activities and its commitment to the preservation of maritime heritage please visit www.shipwreck.net.
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