Chatham Rock Phosphate says it will need to seek additional working capital to maintain "operating momentum" while it advances its proposed merger with Capital Trust Group.
The company said the prerequisites for the transaction – which would involve a US$10 million injection into Chatham and Chatham's purchase of Capital Trust – are taking longer than both parties had expected.
"Consequently, it's looking likely that, in order to retain operating momentum, CRP will soon approach the market and eligible existing shareholders to raise further working capital," chief executive Chris Castle said in a statement to NZX. "We expect to be in touch in the near future detailing the terms of the investment opportunity."
It didn't indicate the sum likely to be raised.
Chatham Rock shares last traded at 18 cents and have fallen about 52 per cent in the past year.
The company has spent more than a decade advancing a project to mine phosphate from the seafloor of the Chatham Rise, about 450 kilometres east of Christchurch.
It is aiming to submit a new marine consent application in early 2020 after its first was rejected by an Environmental Protection Authority-appointed panel in 2015. It is also investigating other low-cadmium phosphate resources, such as in Namibia, and has also formed a subsidiary to investigate the potential of seafloor rare earth metals.
In November it said it had agreed to investigate merging with Capital Trust, a crypto-currency and asset digitisation business interested in using blockchain technologies to help finance and develop mining projects.
The transaction envisaged raising US$10 million for the merged business, US$5 million of which would be dedicated to the Chatham Rise application.
Subject to initial investor support, the parties were to complete due diligence on each other and negotiate binding agreements.
Today Chatham Rock said Capital Trust Group – a New Zealand registered company with Asian, UK and local shareholders – is seeking to raise the required capital for the transaction.
That firm has just appointed a new chief executive and its process is taking longer than expected, in part due to the holiday season, Castle said.