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TAMPA, Fla., April 01, 2019 (GLOBE NEWSWIRE) -- Odyssey Marine Exploration, Inc. (NASDAQ:OMEX), a pioneer in the field of deep-ocean exploration, reports financial results for full year ended December 31, 2018, and provides an update on current projects and future plans.
“In 2018 we continued to leverage our core capabilities building the framework and assets on the mineral side of our business and have now completed our transition. Heading into 2019, we are mission-focused on developing subsea mineral assets to create and realize near-term and short-term value. This means we will continue to enlarge our subsea mineral portfolio through development of new deposits, acquisition of mineral rights/deposits and through our leveraged contracting model, which allows us to earn equity in deep-sea mineral projects. We will also move our existing and new mineral projects up the value curve from research and permitting into exploration, testing, resource evaluation and mine planning,” said Mark Gordon, Odyssey CEO and President.
Odyssey’s most advanced mineral project is the Exploraciones Oceanicas (ExO) phosphate deposit in Mexico. After conducting extensive resource evaluation and environmental testing and modeling, ExO submitted a 4,600-page environmental impact assessment, which demonstrated that the project is environmentally responsible with minimal direct impact and no long-term effects on the marine environment, to SEMARNAT, Mexico’s environmental agency.
Without regard for the scientific facts, the former Secretary of SEMARNAT ordered the permit denied. Mexico’s highest administrative court, the Tribunal Federal de Justicia Administrativa (“TFJA”) confirmed in a unanimous 11-0 decision the illegal and arbitrary nature of the former Secretary’s actions, annulling the denial. Although this Tribunal ordered the former Secretary to provide scientific and factual support justifying the decision or to issue the permit, the Secretary ordered reinstatement of its original decision without relevant factual or scientific justification.
The ExO project relies on proven dredging technology with a long history of utilization in Mexican waters. Mexico has approved over 200 dredging projects using this technology in the past 20 years, some in areas more environmentally sensitive than the ExO project. A prime example of the prejudicial treatment applied to ExO is SEMARNAT’s 2018 approval of a seabed dredging project that will impact 1,400,000 cubic meters of seabed in areas that SEMARNAT itself designated as of high environmental relevance. The project area and neighboring areas include the habitat and presence of several varieties of sea turtles, bottlenose dolphins and sea lions.
In January, Odyssey took the additional legal step of presenting Mexico with a notice of its intention (NOI) to file a claim against Mexico under Chapter Eleven of the North American Free Trade Agreement (NAFTA). Filing a NOI initiates a consultation period during which Odyssey and the Mexican Government will seek amicably to resolve this dispute. On March 22, 2019, Mexico published Odyssey’s NOI, which is also available here: https://www.odysseymarine.com/notice.
“Although we continue to have the utmost confidence in the environmental and economic merits of the project, we’ve been disappointed with the actions of the former Secretary of SEMARNAT, who ignored objective evidence, invented grounds for opposition that had no scientific basis and failed to carry out a review consistent with the department’s legislative mandate and procedural rules,” added Gordon. “We intend to work diligently and in good faith with Mexico’s President Andres Manuel Lopez Obrador’s administration during the NAFTA NOI consultation period to achieve an equitable resolution to move the project forward. However, should such an outcome not prove possible, Odyssey intends to proceed to arbitration under Chapter Eleven of NAFTA.”
Gordon continued, “Odyssey is focused on more than just the ExO phosphate deposit. In line with our goals to increase and enhance our mineral project portfolio, we expect to soon execute an agreement to acquire a controlling stake in a company that has rights to a mineral-rich seafloor deposit in the South Pacific. Significant exploratory work on this deposit that has already been conducted leads us to have high confidence in the potential strategic and economic value this opportunity presents. Closing of this transaction and continued development of new mineral assets will offer powerful diversification to Odyssey’s expanding portfolio of seafloor mineral properties.”
Odyssey’s Current Projects
Odyssey provides services for multiple mineral and shipwreck projects under leveraged contract models whereby Odyssey is paid to perform services while retaining a significant back-end share of the future net proceeds from these projects or an equity ownership share of the project. The combined potential cash flows from these projects are expected to fund operations for multiple years while simultaneously increasing the value of projects in which the company has an equity ownership position.
Offshore operations continue on a 2018 contracted project that is expected to generate revenue during 2019. We are providing a range of marine related services to this and other clients.
Odyssey is also planning offshore operations in 2019 on mineral deposits controlled by Odyssey and under contract on deposits controlled by others. Concurrently, Odyssey continues to research and develop new mineral project opportunities exploring different asset types in various regions around the world. Two additional strategic mineral deposits are currently under development. One is an Odyssey mineral project and the other is being conducted under contract with Odyssey receiving cash and equity in the new venture.
Odyssey holds a controlling interest in Oceanica Resources, S. de R.L., and Exploraciones Oceanicas, S. De R.L. De C.V. (ExO), a subsidiary of Oceanica. ExO controls exclusive 50-year mining permits in an area in Mexican waters that contains a large amount of phosphate mineralized material. To move to the next phase of this project in Mexico, Odyssey and its subsidiaries are awaiting the issuance of an environmental permit that is being actively pursued as described above.
2018 Financial Results
Total revenues increased by $2.0 million in 2018 as compared to 2017. The $2.0 million increase is comprised of a $1.0 million increase in continuation marine recovery work for Magellan and $1.0 million of new revenue with CIC LLC related to mineral services.
Marketing, general and administrative expenses decreased from $6.2 million in 2017 to $5.7 million in 2018. The decrease of $0.5 million was primarily due to (a) a net decrease of $0.4 million in personnel expenses resulting from regular, incentive and share-based compensation, (b) a decrease of $0.4 million in admiralty legal support and (c) a $0.1 million increase in our management related insurance policy.
For 2018, Operations and research expenses were $3.7 million compared to $3.4 million for the same period in 2017. The variance of $0.3 million was primarily due to (a) a $1.0 million increase, which is offset by the additional revenue, in marine services costs which include technical crew costs as well as other marine operational costs such as equipment rental, fuel, port fees and consumables, (b) a decrease of $0.2 million in general operations support services overhead which includes insurances, depreciation, travel and professional services, (c) a net gain of $0.7 million on the sale of certain marine assets and (iv) a $0.2 million increase attributable to mineral support services for a client which is offset by the additional revenue.
The net loss for 2018 was $5.2 million or $(0.60) per share, as compared to a net loss of $7.8 million or $(0.95) per share in 2017.
Consolidated financial statements as well as Odyssey's Annual Report on Form 10-K for the year ended December 31, 2018, 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, 2018, which was filed with the Securities and Exchange Commission on April 1, 2019. 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.
Odyssey Marine Exploration, Inc.
(813) 876-1776 x 2562