TAMPA, Fla., Nov. 14, 2019 (GLOBE NEWSWIRE) -- Odyssey Marine Exploration, Inc. (OMEX), a pioneer in the field of deep-ocean exploration, reported results for the third quarter ended September 30, 2019, and provided an update on current projects.
“This current quarter’s financial results were impacted by several non-recurring or extraordinary charges that did not adversely affect cash flow. As has often been the case over our 25-year history, Odyssey’s financial statements do not adequately convey the significant progress our team has made advancing several of our key projects that have the very real potential to build substantial asset values in the coming quarters,” said Mark Gordon, Odyssey Chief Executive Officer and Chairman of the Board.
“Odyssey has a long-proven history of successfully funding our business through various funding structures and we have various opportunities to fund additional development of our projects,” continued Gordon. “Our strategy includes monetizing small percentages of our project ownership at various stages of development and we are presently in late stage discussions to further monetize the value that we have already created in one or more of these assets. In addition, there is the potential in the first half of 2020 for a multi-million dollar payment to Odyssey relating to a previously completed shipwreck recovery.”
“I recently returned from the 48th Underwater Mining Conference presented by the International Marine Minerals Society in China, and I am even more confident in the ultimate success of our business plan,” added Gordon. “Our team met with government officials and top marine and terrestrial mining experts who now believe production from seafloor mining is more imminent than their initial projections and that Odyssey has the tools, team and technology to bring these projects to production.”
“Our team continues to execute on our business plan which focuses on acquiring or developing subsea mineral assets and advancing these projects along the development path to increase their near- and long-term value. Our current portfolio now includes the Exploraciones Oceanicas (ExO) Phosphate Deposit in Mexico, Lihir Subsea Gold (Bismarck) in Papua New Guinea, and a services contract that provides us with a meaningful equity component in the development of a polymetallic nodule project. Two additional projects are in the final stages of evaluation as potential additions to our portfolio.”
“The ExO resource, a strategically significant phosphate deposit off the Mexican coast, is furthest along the development path. Our team continues to work closely with our NAFTA counsel in vigorously pursuing our case against Mexico which will prove the project’s environmental permit application was denied in breach of the treaty by the former Mexican Administration. We expect the NAFTA tribunal will be constituted before the end of the year, allowing for the calendar for the proceedings to be defined shortly thereafter. In the meanwhile, discussions in pursuit of a mutually beneficial settlement continue. The specialized litigation funding agreement we executed several months ago provides sufficient capital to support robust and sustained pursuit of this action and allows us to continue to focus corporate funds on the development of additional subsea mineral projects.”
Odyssey President and COO, John Longley added, “We’re currently finalizing plans to advance the Lihir Subsea Gold project exploration program. We expect to begin operations on site in the first half of 2020. Geological and environmental surveys will be conducted to aid in the production of a 43-101/JORC compliant resource estimate and environmental impact assessment. We are looking forward to advancing the knowledge and confirming the extent of this highly prospective resource area within the remit of exploration license that was recently renewed with the Mineral Resource Authority.”
Odyssey is also continuing to provide a range of offshore services on several strategically significant deep-ocean projects.
“As we begin to finalize our 2020 business plan, we are extremely excited about the major events we expect in the year ahead, including further progress toward a final resolution of our ExO Phosphate project, new exploration results that will help to further quantify the value of our subsea gold project that is located in area of proven high grade gold resources, and the addition of at least one entirely new project to our growing portfolio of subsea mineral projects,” said Gordon.
Third Quarter 2019 Financial Results
Net loss for the current quarter was $4.2 million, or ($0.45) per share, compared to a loss of $1.3 million or ($0.15) per share in the same period a year ago. Our net loss for this current quarter contains approximately 78% of non-recurring or out of the ordinary charges. These items amount to $3.3 million and include equity compensation provided to the directors of a controlled subsidiary of ours, charges related to a debt modification that include an inducement, accelerated accretion and a loss on extinguishment and direct NAFTA financed litigation costs. After adjusting for these uncommon charges, our earnings per share would have been approximately ($0.10), a net loss of $0.9 million.
Total revenue in the current quarter was $0.8 million, a $0.1 million decrease compared to 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. We provided these services to our related party customer Magellan during both of these periods as well as providing mineral related services in 2019 to the deep-sea mineral exploration company, CIC, owned and controlled by our past Chairman of the Board.
Marketing, general and administrative increased $0.8 million to $2.1 million for the three-month period ended September 30, 2019 compared to $1.4 million from the same period in the prior year. There were several variances that resulted in this increase period over period. Personnel costs increased by a net of $0.6 million due to an increase of $0.7 million in subsidiary director fees which was the result of awarding the directors equity-based compensation in the subsidiary, in lieu of cash. These subsidiary directors did not receive any compensation in 2018. This amount was offset by a $0.1 million reduction in share-based compensation. Administrative professional fees increased $0.1 million which includes costs related to being a public company. Maritime legal increased $0.1 million related to support of an ongoing shipwreck project.
Operations and research expenses increased by $1.1 million from 2018 to 2019 primarily as a result of the following items: (i) the prior period contained a refund of $0.1 million related to our marine insurance, (ii) a $0.1 million increase in non-legal professional support of our NAFTA litigation related to our Mexican subsidiary as pursue securing the applied-for environmental permit and (iii) a $0.9 million increase of direct legal support related to our NAFTA litigation.
Total other income and expense was $2.4 and $0.8 million in net expenses for 2019 and 2018, respectively, resulting in a net expense increase of $1.6 million. This variance was primarily attributable to an increase in interest expense of $0.3 million from the beneficial conversion feature tied to a promissory note, a warrant inducement of $0.9 million and a debt extinguishment loss of $0.3 million from a debt modification and $0.1 of general other non-operating items.
Total other income and expense was $1.3 and $0.7 million in net expenses for 2019 and 2018, respectively, resulting in a net expense increase of $0.6 million. This variance was primarily attributable to an increase in interest expense of $0.5 million from recording the beneficial conversion feature tied to a promissory note.
Consolidated financial statements as well as Odyssey's Quarterly Report on Form 10-Q for the period ended September 30,2019, 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. (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.
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.