TAMPA, Fla., Nov. 16, 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 third quarter ended September 30, 2020, and provided an update on current company operations and projects.
The key focus of Odyssey’s project operations team continues to be the Exploraciones Oceánicas (ExO) Phosphate Project in Mexico, which can provide access to a critical resource needed to produce fertilizer, help achieve food security in Mexico, and supply the phosphate needs of North America for at least 50 years.
Odyssey is pursuing a North American Free Trade Agreement (NAFTA) claim against Mexico for their arbitrary and unlawful denial of the environmental permit, which is the last major milestone before operations can begin. Odyssey, on behalf of its subsidiary ExO, is seeking damages of more than $2.3 billion as detailed in the First Memorial filed in September. This filing is supported by documentary evidence and 20 expert reports and witness statements. Once a redacted version of the Memorial is released by the NAFTA Tribunal, which is expected shortly, Odyssey will provide a link to the filing at www.odysseymarine.com/nafta.
In addition to the NAFTA claim, ExO continues to pursue the annulment of the second arbitrary denial in Mexico’s federal court (the Tribunal Federal de Justicia Administrativa or TFJA). This court ruled unanimously in 2018 that the first denial of the environmental permit was illegal under Mexican environmental law. ExO completed its latest filing in this case in August. A decision in this case is expected in the first half of next year.
A significant funding event was completed in August to ensure that Odyssey and ExO have sufficient cash to last through the outside dates associated with the expected NAFTA timeline. “Based on current budgets and forecasts, we expect this capital to provide Odyssey with the longest duration of operating capital in its 26-year history,” commented Mark Gordon, Odyssey Chairman and CEO.
“We remain extremely confident in the merits of our NAFTA and TFJA cases, and with this funding we are prepared to take both actions to their full and final conclusions, if necessary. It is unfortunate that we are being forced to fight these legal battles to counter the unlawful actions of Mexico’s previous political administration; actions that have deprived the citizens of Mexico from realizing the substantial societal and economic benefits that the ExO Phosphate Project will deliver. We continue to believe that operationalizing this project is in everyone’s best interests. Mexico imports almost 60% of its phosphate rock and produces domestic phosphate at a very high cost. As a result, a significant portion of Mexico’s arable land remains unfertilized leading to low crop yields, high food prices and a significant national hunger issue. Activation of our project will help President López Obrador realize his stated vision for fertilizer independence and food security for his nation through the creation of a huge domestic supply of very high grade and low-cost phosphate, the key ingredient for fertilizer production. Mexico has already made a very substantial investment in fertilizer production plants but unfortunately the country’s quickly dwindling supply of terrestrial available phosphate has rendered these investments ineffectual. Commencement of the ExO Phosphate Project would remedy this issue and would allow President López Obrador to deliver on his promise of providing low cost fertilizers to Mexico’s struggling farmers.
“Our successes in the third quarter have set us up for a strong finish to 2020 and productive 2021,” continued Gordon. “In addition to an expected positive outcome from our ExO Project, we expect to increase the value of our diversified mineral portfolio in 2021, both through the development of completely new assets and from advancing our existing mineral deposit projects up the value curve, from initial desk-based research and permit acquisition to offshore mineral validation, environmental research, engineering and licensing.”
Third Quarter 2020 Financial Results
The net loss for the quarter ending September 30, 2020 was $5.5 million or $0.51 per share. $4.2 of expenses were one-time NAFTA legal expenses that were funded through a specialized litigation funding agreement.
Total revenue in the current quarter was $0.2 million, a $0.6 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. The primary reason for this reduction was that the long-term project we were engaged on the last two years reached its life expectancy during this quarter.
Marketing, general and administrative expenses primarily include all costs within the following departments: Executive, Finance & Accounting, Legal, Information Technology, Human Resources, Marketing & Communications, Sales and Business Development. Marketing, general and administrative expenses decreased $2.1 million to $23,351 for the three-month period ended September 30, 2020 compared to the same period in the prior year. The primary contributor to this GAAP expense reduction was a reversal of an accrued liability into the income statement of $1.3 million related to employee incentives and compensation connected to our discretionary incentive reserve and a $0.6 million reduction in non-cash share-based compensation. In addition, during this period, management took several initiatives to reduce future potential cash expenses and gain operational efficiencies to achieve reduced overhead cash expenses resulting in an additional $0.2 million reduction of cash expenses.
Operations and research expenses are primarily focused around deep-sea mineral exploration which include minerals research, scientific services, marine operations and project management. Operations and research expenses increased by $2.7 million from 2019 to 2020 primarily as a result of the following items: (i) a $2.7 million increase in financed litigation costs directly associated with our NAFTA litigation pursuit, (ii) a $0.3 million decrease in our marine services project contract labor and (iii) a $0.1 million savings in operational overhead reductions.
Consolidated financial statements as well as Odyssey's Quarterly Report on Form 10-Q for the period ended September 30, 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.
