Odyssey Marine Exploration, Inc. (NASDAQ: OMEX), a global subsea
mineral exploration and development company, has reached an
agreement with Altos Hornos de México, S.A.B. de C.V., Minera del
Norte S.A. de C.V. and Phosphate One LLC (collectively AHMSA) to
terminate a 2015 Stock Purchase Agreement (SPA) and associated
Notes and Pledge Agreements in return for a cash payment of $9.0
million and the issuance of 304,879 shares of Odyssey’s common
stock.
To fund the termination and release agreement with AHMSA,
Odyssey entered into a note and warrant purchase agreement with an
institutional investor for the issuance of an 11% senior secured
note in the principal amount of up to $14 million that will mature
in September 2024 and a warrant to purchase up to 3,703,704 shares
of Odyssey’s common stock at $3.78 per share. The company will use
the funds available after the $9 million payment to AHMSA to pay
legal fees and expenses related to the company’s pending NAFTA
arbitration and the financing transaction, working capital, and
other general corporate expenses.
These transactions removed approximately $32 million of
principal and interest in indebtedness, comprising $24 million in
senior secured notes and $8 million in senior secured convertible
notes, from Odyssey’s balance sheet. Taking into consideration the
newly issued $14 million in notes, the net reduction in
indebtedness (principal and interest) is $17.45 million.
The termination and release agreement with AHMSA provides for
the termination of the right to purchase 15.65 million shares of
Odyssey’s convertible preferred stock under the SPA and the
termination of the right to convert existing indebtedness into
almost 1.9 million shares of Odyssey’s common stock. After giving
effect to the issuance to AHMSA of the new shares of common stock
and the warrant, the net effect of the transactions is to reduce by
approximately 13.4 million shares the number of shares of common
stock potentially issuable by Odyssey.
As part of the transaction, Odyssey and Exploraciones Oceánicas
(ExO) obtained a waiver from Poplar Falls, LLC, the funder under
the litigation financing for the NAFTA arbitration, to allow
Odyssey and ExO to self-fund up to $5 million of any remaining
NAFTA legal fees and expenses instead of incurring additional
litigation funding that would require payment of an amount equal to
four times the amount funded plus 1% of an award amount per million
funded from any award by the NAFTA Arbitration tribunal.
“Terminating the SPA with AHMSA and the associated indebtedness
clears the way for multiple other opportunities in the near to
mid-term, from strategic investments to industry partnerships
intended to increase the value of our mineral portfolio, create
shareholder value, and provide access to critical minerals,” said
Mark Gordon, Odyssey’s Chief Executive Officer and Chairman of the
Board.
“We continue to focus on strengthening our balance sheet and
making Odyssey’s capital structure more attractive to current and
future stakeholders. These transactions represent a major milestone
in reaching this goal,” explained Christopher E. Jones, Odyssey’s
Chief Financial Officer. “Additionally, we believe that by removing
this indebtedness and the overhang represented by the shares
issuable under the SPA and convertible notes, this transaction is
accretive to shareholders, makes Odyssey a more attractive
investment, and allows Odyssey additional flexibility in achieving
operational milestones in the development of subsea mineral
projects.”
Odyssey Operations Update: Minerals for the Future
Odyssey focuses on providing minerals for the future: critical
mineral types that can be extracted economically with minimal
environmental impact while offering the potential to provide an
abundant source of minerals that will benefit society. The company
believes subsea phosphorite deposits and polymetallic nodule
resources are two of the best options for near-term extraction.
As part of our efforts, Odyssey plans to deploy a 6,000-meter
Remotely Operated Vehicle (ROV) to support the company’s mineral
programs in the coming months in the South Pacific region. The
equipment and technical experts working on it can carry out
detailed surveys, capture high-resolution videos and images, and
conduct mineral and environmental sampling critical to the research
and exploration process. Launching in Spring 2023, the Odyssey ROV
will meet the growing demand for deep-ocean ROV services in the
Cook Islands and throughout the region.
ExO Phosphate Project Update
Odyssey discovered and developed the ExO Phosphate Project, one
of the largest deposits of phosphate in the world.
In 2012, ExO, a company in which Odyssey holds an approximately
56% interest, was granted a 50-year mining concession (extendable
for another 50 years at ExO’s option) by Mexico. Odyssey conducted
significant offshore exploration, sampling, and environmental
testing and, in 2014, completed an NI 43-101 compliant technical
report.
With the assistance of experts in marine dredging who have
completed more than 200 projects in Mexican waters using the
proposed technology and leading environmental scientists from
around the world, Odyssey spent three years preparing an
environmentally responsible development plan for the deposit, which
lies 25-40 km offshore in Baja California Sur, Mexico. Odyssey
believes the Mexican Ministry of the Environment and Natural
Resources (SEMARNAT) rejected the environmental permit necessary to
move forward with the project in April 2016 for political rather
than environmental reasons.
ExO challenged the decision in a Mexican federal court. In March
2018, the Tribunal Federal de Justicia Administrativa (TFJA), an
11-judge panel, unanimously ruled that SEMARNAT denied the
application in violation of Mexican law and ordered the agency to
re-take its decision. After SEMARNAT denied the necessary permit
again, ExO refiled the case, and Odyssey began the NAFTA proceeding
against Mexico to protect our shareholders’ interests and
significant investment in the project. OMEX management remains open
to a commercial solution to the project
Odyssey’s claim on behalf of itself and ExO seeks compensation
of over US$2 billion on the basis that SEMARNAT’s wrongful denial
of authorization has destroyed the value of our investment in the
country and is in violation of various provisions of NAFTA. Filings
in the case were completed in 2022, and many are available on the
ICSID website. Additional information about the case and evidence
is included in Odyssey’s 10-K and 10-Q filings at www.sec.gov and
on Odyssey’s website at www.odysseymarine.com/NAFTA.
Although neither Odyssey nor its legal counsel can predict the
length of the TFJA’s or the NAFTA arbitration tribunal’s
deliberations or the outcome of either of the proceedings, the
company remains confident in the merits of its cases.
CIC Project Update (Polymetallic Nodules)
Odyssey is a consortium member of and marine operations provider
for CIC Ocean Research, which holds an exploration license in the
Cook Islands’ Exclusive Economic Zone. Odyssey owns approximately
14.5% of CIC in non-voting shares.
The CIC team completed a series of exploration activities in its
license area in 2022, sampling the bottom sediment while collecting
baseline data to understand the local and regional environment. CIC
is planning additional offshore exploration and research activities
for 2023 to continue to gather geological and environmental data in
line with the company’s license requirements and the Cook Islands’
seabed mineral regulations.
Odyssey has invested more than $4.5 million of in-kind services
to the project and cash financing of more than $1.5M to date.
More information about Odyssey’s current project portfolio and
business development strategy can be found on its website
www.OdysseyMarine.com.
About Odyssey Marine Exploration
Odyssey Marine Exploration, Inc. (Nasdaq: OMEX) is a deep-ocean
exploration pioneer engaged in the discovery, validation, and
development of subsea mineral deposits in a socially and
environmentally responsible manner. Odyssey provides marine
services for private clients and governments interested in
exploring their Exclusive Economic Zones to survey, map, and
identify any potential mineral resources. The company focuses on
exploring polymetallic nodules (battery metals to power the future)
and subsea phosphate deposits (fertilizer to feed the future),
which the company believes will benefit society now and in the
future. For additional details, please visit www.odysseymarine.com.
An investor presentation is available in the Investors section of
the website.
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, 2021, which was filed with the Securities and
Exchange Commission on March 31, 2022. 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20230310005129/en/
Laura Barton Odyssey Marine Exploration, Inc. (813) 876-1776 x
2562 laura@odysseymarine.com
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