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Chatham Rock Phosphate Closing Date For Private Placement

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Written by Chris Castle, CEO at Chatham Rock Phosphate Limited:

As previously advised our current capital raise will close on 7 June with application forms required to be received on Friday 4 June.

The offer (at 11 cents CAD and 12 cents NZD) is for a unit comprising a share and a June 2026 45 cent warrant.

For most of the last three months our shares have traded in both markets (TSX.V and NZX) above the issue price of the shares, reflecting investor confidence in Chatham since we announced the proposed merger with French Polynesia based Avenir Makatea (AM).

This merger has already been provisionally approved by the TSXV, we believe that a final approval is imminent, and that the merger will proceed in the very near future.

Game Changer

As already advised this merger is a game changer for both companies and their shareholders, for a number of reasons including:

1. It broadens our portfolio as neither party will no longer be reliant on a single, partially permitted phosphate deposit requiring a major cash injection to complete the final step

2. AM has made significant progress since getting started in 2011 and particularly so since we first considered investing in them back in 2015

3. AM rock phosphate comes in two blended forms. Both are very high grade, low cadmium reactive phosphates, one type already certified in the Canada and USA markets as organic and which will attract a pricing premium

4. The AM mining costs will be lower when in full production and rock prices are expected to be higher than for our project and hence the project economics are even more attractive

5. AM is well advanced in project finance discussions and expects multiple parties to be competing for phosphate rock offtake agreements

6. It’s onshore so technology risks are reduced and environmental impacts will be small scale, very easily monitored and controlled

7. It’s a very simple, open cut mining operation which will also mine valuable dolomite rock (used for construction and roading) and food grade limestone as by products.

8. The project is based in a friendly jurisdiction where the permitting process will result in a single permit including environmental operating conditions

9. Extensive consultation during the last nine years has resulted in local support from the landowners, the residents of Rangiora (the local Commune), and the French Polynesian administration

10. There are major community benefits as the mining process will rehabilitate a high proportion of the unusable land resulting from historic mining

11. The island of Makatea will also benefit from the construction of a new port , roads, housing, schools and other infrastructure

We consider this merger with Avenir Makatea to be the most significant milestone achieved by Chatham Rock Phosphate since we were granted our Chatham Rise Mining permit in December 2013. At that time our market capitalisation was over CAD 40 million dollars, the present private placement values the company at CAD 4.7 million dollars.

Avenir Makatea Update

At Avenir Makatea a number of initiatives relating to the application for a mining concession have already been kicked off and these will be full speed ahead post-merger.

The application is now being processed under the terms of a new Mining Code for French Polynesia which is currently being harmonized with the existing environmental Code.

The Project will be the subject of a Public Enquiry process that leads to recommendations to the Council of Ministers for the grant of the Mining Concession. The Public Enquiry, which will be based on the presentation of an updated Environmental Impact Assessment and an Economic Benefit Analysis, is expected to be announced in Third Quarter of 2021.

Nominated consultants in French Polynesia, in association with the staff of SAS Avenir Makatea, will prepare the two reports and present these to the public in advance of /and during the one-month public enquiry period. Following the enquiry, the process for determining the application is set out by the Mining Code including presentations to the nominated Mining Committee. The Committee makes its recommendations to the Council of Ministers. Following the past four years of intensive consultation with landowners of Makatea and the continuing consultation with Government since 2011, Avenir looks forward to the granting of the Mining Concession in early 2022.

AM is also progressing a number of discussions relating to the project development including:

1. Project finance
2. Offtake agreements for the sale of bulk phosphate rock
3. Marketing agreements relating to the sale of phosphate rock (and other by-products) into niche markets in Europe, Canada and the USA
4. Construction of the mine, transportation and port facilities

It is expected that the project will move rapidly into a development phase after being granted the mining concession and would hope to be in production before the Chatham warrants expire.

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