Corporate Presentation - March 2014

Transcription

1 Corporate Presentation - March 2014

2 Important Cautions Regarding Forward Looking Statements Odyssey Marine Exploration believes the information set forth in this presentation 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 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, 2012, which was filed with the Securities and Exchange Commission on March 12, The financial and operating projections are based solely on the assumptions developed by Odyssey that it believes are reasonable. The financial and operating projections are based upon information available to Odyssey as of the date of this presentation, 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, that its projected results will be achieved, or that variations between the projections and actual future results will not be material. Estimates of mining assets are based primarily on publicly available comparable project information, expected quality resources, and preliminary input from independent consultants. Variables include but are not limited to product processing costs and future market prices. Estimates are subject to modification and updating as new data is obtained and considered. Cautionary note to US 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 presentation, such as measured, indicated, and inferred 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 urged to consider closely the disclosures in our Form 10-K, which may be secured from us or from the SEC s website at Additionally, the information contained in this presentation was prepared to assist interested parties in making their own evaluation of Odyssey and does not purport to contain all the information that a prospective investor may desire. The information in the presentation is for background purposes only and is subject to change. In all cases, interested parties should conduct their own investigation, analysis and evaluation of Odyssey and the information set forth in this presentation Odyssey Marine Exploration, Inc. All Rights Reserved 2

3 Key Stats: OMEX (NASDAQ) Stock Price (3/6/14) $ Week Low-High $ $3.70 Founded 1994 IPO 1997 Market Cap $205.5M Total Cash Balance 1 $32M Shares Outstanding 83.9M Employees 43 Avg. Daily Vol. (3 mo.) 806,057 Float % (est.) 94.1% Insider Holdings ~5.9% Institutional Holdings ~52.5% Data source: S&P Capital IQ 1) Cash on hand as of Dec. 31,

4 Who We Are Global leader in the discovery, development and recovery of valuable undersea assets and resources We possess an expanding project portfolio, from cargo shipwrecks to seabed minerals, potentially worth billions of dollars Proprietary data, unique know-how and cutting-edge technology allow us to succeed in an industry with extraordinary opportunities and high barriers to entry Odyssey is at the forefront of a growing industry made possible by new technology 4

5 Odyssey Has Expanded from One to Three Core Businesses, Strengthening Outlook Three Core Businesses: Added Commodity Shipwreck Recovery business improves cash flow predictability Added Seabed Mineral Exploration business generates both early monetization opportunities and large upside potential Improved approach to Historical Shipwreck Recovery business maintains large upside potential while reducing risk Financial position has improved Large cash inflows in last 18 months from two new businesses + large upside potential not yet reflected in financials Strong growth opportunities Strong pipeline in all three core activities with technology, economic, and geo-political trends favoring their growth 5

6 Odyssey Provides Access to Seabed Assets Odyssey Marine Exploration Expertise Unique Deep-Ocean Equipment Experienced Marine Personnel Databases On-Shore Research & Support Track record Shipwreck Recovery Commodities: silver, gold, nickel, etc. Historical: coins, jewels, artifacts Contracting: helping governments recover shipwrecks and cultural heritage Seabed Mineral Exploration Discover & validate deposits Secure legal rights & permits Develop partners for mineral extraction and monetization World-class Expertise at Finding and Recovering Ocean Resources 6

7 Expert Teams and State-of-the-Art Technology 7

8 Multi-billion Dollar Opportunity in Shipwrecks Commodity Shipwrecks 20 th -century wrecks containing large commodity metal cargos (silver, gold. nickel, zinc, copper etc.) Target ships with cargo value >$50M (or geographical cluster of wrecks) Odyssey s current target list represents >$800M in total potential recovery value Negotiate rights with insurers/owners (~80-90% of value retained by Odyssey) Rapid and efficient cargo monetization via metals exchanges 1-2 projects completed each year Historical Shipwrecks Pre-20 th century wrecks containing various cargoes Target ships with cargo value >$100M Investigate any claims/rights, locate ship, study ship condition, and negotiate access to site if necessary Carry-out recovery under strict archaeological standards Monetize or receive compensation for trade goods (coins) and preserve/exhibit artifacts % of value retained by Odyssey 1 project every few years 8

9 Market Opportunity for Shipwreck Search and Recovery Over 3 million shipwrecks around the world Odyssey has a proprietary database with thousands of shipwrecks Top 100 ships in Odyssey database have individual potential cargos of >$50 million and collective potential of >$5 billion Odyssey s Strategy Target ships where we can identify and secure rights (6 Commodity wrecks already secured with potential >$200M) Recover 1-2 new Commodity shipwrecks per year (>$50M/yr in revenues) Identify Historical shipwrecks with individual potential >$100M and seek to recover one every few years 9

10 Case Study: SS Gairsoppa (Commodity Shipwreck) Shipwreck Strategy that Produced a Record-Breaking Recovery 1941: German U-boat sinks the SS Gairsoppa cargo ship in the North Atlantic. Exact location unknown 2010: Odyssey on-shore research indicated potential high-value cargo was on ship. Odyssey negotiated rights to recover cargo with UK government 2011: Odyssey found Gairsoppa in a few weeks using specialized technology : During a total of five months at sea, Odyssey recovered 110+ tons of silver by searching through a fully-loaded cargo ship lying at a record depth of 3 miles, and where the silver represented less than 5% of the total cargo. Value of the record-breaking recovery: $80 million in silver bullion Yields a project margin to Odyssey in excess of 50% 10

11 SS Central America Shipwreck: Gold Recovery Contract March 2014: awarded the exclusive contract to conduct an archaeological excavation and recover the remaining valuable cargo from the SS Central America shipwreck The SS Central America is less than half the 4,700 meter (15,000 feet) depth of the SS Gairsoppa The extensive collection of records and contemporary accounts of the shipwreck places the most likely 1857 estimated face value of the total remaining passenger and commercial gold at $760,000* SS Central America went down in a massive storm 160 miles off the coast of South Carolina Odyssey will receive 80% of recovery proceeds until a fixed mobilization fee and a negotiated day rate are paid. Thereafter, Odyssey will receive 45% of the recovery proceeds Main cargo targeted for recovery is gold, which can be quickly monetized Odyssey to begin work on the site in April 2014 *External estimate obtained by the court appointed Receiver representing Recovery Limited Partnership and Columbus Exploration LLC The initial recovery included an extensive collection of gold coins, ingots and raw gold 11

12 Proven Experience More artifacts and valuable cargo recovered from shipwrecks than any other company Records set for deepest and largest recoveries of precious metals New advanced technology and equipment designed, developed, and tested Experience operating up to three vessels simultaneously Lessons of securing cargo rights and enriched database for future pipeline Shipwreck Location Average Depth (Meters) Status SS Gairsoppa N. Atlantic 4,700 ~110 Tons of Silver recovered to-date SS Mantola N. Atlantic 2,500 Cut through multiple decks reach target storeroom; HMS Victory English Channel 100 Recovered cannons from a 100-Cannon warship SS Republic Offshore Georgia K+ Gold/Silver coins, ~14K Artifacts Black Swan Atlantic Ocean off Portugal 800 ~600K Silver & several 100 Gold Coins + Artifacts. Largest collection ever excavated from a deep-ocean site. Blue China Offshore Florida Artifacts ET409 (Plane) Mediterranean Sea 50 Commissioned for a photomosaic of wreckage Hundreds of other Wrecks Worldwide 900 Important historical discoveries. Summary Ocean/Sea/Strait 1,100 Avg. ~110 Tons of Silver, ~650K Silver/Gold Coins, and Artifacts 12

13 New Leadership Opportunity in the Emerging Multi-Billion Dollar Offshore Minerals Business Offshore Minerals 70% of the world s surface is covered by water Valuable seafloor minerals have long been inaccessible or too costly to recover. Existing technology now makes recovery possible Land-based mineral deposits are being exhausted and are increasingly more costly and complicated to mine Ocean mining more environmentally friendly with lower carbon footprint than most mines on land These factors are making offshore minerals accessible (growth potential like the offshore oil rush in the 1960s but with better equipment and better environmental protections) What s Down There: - Seafloor Massive Sulfides (SMS) contain high concentrations of gold, copper, zinc and silver - Phosphorites for fertilizer are strategically and economically valuable, and are easily recoverable - Polymetallic nodules harvest gaining significant interest 13

14 Our Strategy for Offshore Mineral Deposits Offshore Minerals Apply our marine expertise and technology to discover, validate and secure rights and stakes in various mineral deposits Pursue mineral deposits that can be accessed with existing industry equipment under safe working and environmentally friendly conditions Rights to mineral deposits controlled in separate legal entities that can be monetized at optimal time and used to bring in specialized mining partners Establish leadership position in this emerging field: Be the one who finds, validates, and has a stake in the key seabed mineral deposits world-wide 14

15 Seabed Mineral Deposit Case Example: Oceanica Majority interest in Oceanica Resources, which controls a mining concession and permits in an offshore area where Odyssey's extensive coring program and assay results demonstrate a high value, world-class mineral deposit: Potential: Drilling results suggest extremely large and economically significant deposit Mining Costs Low: Tests and engineering studies show existing industry dredging ships can be used to collect minerals from the seabed in environmentally friendly manner Long-Life: 50-year exclusive concession + 50-year renewal option Validation progressing: Extensive set of seabed cores have been taken and were analyzed by an independent lab results to date continue to suggest world-class deposit Monetization: Odyssey contributed approx. $10M as an initial investment in this project and sold a minority stake in the deposit for $27.5M and still retains majority control. J.P. Morgan Chase assisting with additional monetization opportunities as project progresses. 15

16 Phosphate (P 2 O 5 ) A Critical Dwindling Strategic Resource Vital resource necessary to feed the world, plants need phosphate as much as water Phosphate is a key ingredient of fertilizer, and cannot be made by man Demand increasing steadily, 2-3% per year 80% of world s P 2 O 5 reserves are in Morocco and North Africa In 2008, when Morocco slowed production for a short period, prices spiked 800% Global peak phosphates estimated early as 2030, US reserves dwindling rapidly USA, Mexico, Canada, and others are seeking to secure alternative strategically located supply of phosphates as North American mines are exhausted, requiring massive future trans-oceanic imports 80% of the World s Phosphate Reserves are found in North Africa 16

17 Benefits of Ocean Extraction vs. Land Mining Infrastructure Expense/Flexibility: No site-specific infrastructure. Mining ships can move to different types of deposits/minerals/sites to suit market conditions without infrastructure loss or additional capital costs Overburden: Little over-burden to be removed in most ocean mining projects Flexibility: Social Displacement: No people to displace, no disruption of society/property Environmental Impact: Ocean mining has less biological impact and smaller carbon footprint than on land. Ocean dredging, aggregate and diamond mining underway and widely accepted in many countries Logistics: Water is most efficient, lowest friction medium for mining and shipping ore 17

18 Oceanica Highlights Phosphate is a critical resource for the Americas: The Oceanica deposit is likely the biggest deposit in the region and is critical to agriculture and food supplies Oceanica exploration and validation are still ongoing: The Oceanica deposit measures are likely to increase with further testing Oceanica ore extraction is straight-forward: The deposit is in shallow water and can use readilyavailable dredge vessels with minimal impact to the environment Odyssey is the controlling shareholder: Odyssey owns 54% of Oceanica 18

19 Oceanica Resources Mineral Deposit: Potential World-Class Resource Received an NI Compliant Technical Report/Preliminary Assessment from an independent Qualified Person that provides an extensive evaluation of the mineral deposit of the company s subsidiary, Oceanica Resources, S. de. R.L Report concludes the areas tested to-date total 505 million+ (including inferred) ore tonnes. This number will be updated as results are received from additional testing still in process and if additional areas are tested.* An updated report is expected within 60 days. Oceanica Resources mineral deposit is located in the Mexico Exclusive Economic Zone (EEZ), beyond 12 miles offshore and in waters meters deep. Geological Confidence Selective Summary of NI Technical Report Area (km 2 ) Grade (P 2 O 5 ) Ore Tonnes (Millions) Measured % 92.4M Mexico Exclusive Economic Zone Indicated % 181.1M In Total 65.9 km2 18.7% 273.5M Inferred % 231.9M *Terms such as resource, mineral resources, inferred, indicated, and measured that the SEC guidelines strictly prohibit us from including in our filings may not be consistent with the definitions established by 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. 19

20 Recent Progress and Upcoming Catalysts: Oceanica Seabed Minerals - Oceanica Assay results continue to suggest a world-class deposit Continued progress is being made on permits to initiate mineral recovery Negotiating with specialized partners to unlock value of the deposit (extraction, sales, etc.) Have engaged in an exclusive advisory relationship with J.P. Morgan Chase to assist with monetizing the asset Pursuing multiple paths for near term monetization Additional information on the seabed mineral deposit is expected to be released in Q

21 2013 Financial Results and Position Fourth Quarter Income Statement $ millions, except EPS Q Q Comment Total Revenues %, Gairsoppa monetization Net Income (Loss) 10.8 (0.9) Record quarterly result Earnings Per Share 0.13 (0.01) Record quarterly result 2013 Financial Highlights $ millions, except EPS Comment Total Revenues %, Gairsoppa monetization Net Result (Loss) (10.7) (18.2) 41% improvement Total Cash % Earnings Per Share (0.13) (0.25) 48% improvement 21

22 Next Steps Execute on New Strategy Pursue more Commodity Shipwreck Recovery projects Seek $50M+ in revenues a year from such projects Expand Mineral Exploration business Advance existing deposits, seek/validate new ones, continued monetization of mineral properties in 2014 Continue Historical Shipwreck Recovery projects Expand portfolio & prepare to start projects upon government go-ahead Continue to enhance financial results and position Execute strategy around core competency and also develop specialized partners for certain aspects of new business opportunities Maintain leadership position in Mineral Exploration & Shipwreck fields 22

23 Key Take-Aways Leveraging years of proven deep-sea exploration experience to develop a diverse portfolio of seafloor business opportunities Normal business activities are increasingly funding the cash needs of Odyssey, while a part of the project pipeline continues to offer the potential for large one-time pay-outs Value of industry expertise, proprietary data, and equity stakes in mineral deposits is not reflected in the financial statements Financial situation and outlook are best in company s history as a result of the implementation of new strategic initiatives 23