Chatham Rock and Wetstone Finalise $300K Financing Deal with 30% Equity Stake

Definitive Financing Secures Wetstone’s Stake in Chatham Rise

Chatham Rock Phosphate Limited (NZX:CRP) has taken a significant step forward in advancing its Chatham Rise Phosphate Project by entering into binding agreements with Wetstone Global to formalise a financing arrangement. This deal notably doubles an interim loan to USD 300,000 and converts it into a 30% equity stake in the project-holding subsidiary, Chatham Rock Phosphate (NZ) Limited (CRPNZ), subject to regulatory approval.

Wetstone’s increased involvement includes the right to appoint a majority of CRPNZ’s directors, effectively giving it control over the project’s strategic direction. This marks a material shift in governance, moving Wetstone from lender to influential equity partner.

Loan Novation and Extended Repayment Terms

The original USD 150,000 loan, provided by Wetstone Global in August 2025 with a stepped interest rate starting at 10%, has been novated to Wetstone’s New Zealand subsidiary, Wetstone NZ. The principal amount has been doubled and converted to New Zealand dollars, with the repayment date extended to 30 September 2026. This extension provides CRP with additional runway to secure necessary consents and progress the project.

Conditional Equity Conversion and Future Funding

Upon receiving consent from New Zealand Petroleum and Minerals (NZPAM), the full loan amount including accrued interest will convert into shares representing 30% ownership of CRPNZ. Beyond this, Wetstone commits to providing further funding through limited recourse loans, which will convert into additional equity upon reaching key project milestones. This mechanism could see Wetstone’s stake rise to as much as 70% by the time commercial production begins.

The limited recourse loans will accrue interest at a rate aligned with New Zealand’s fringe benefit tax standards, currently 5.77%, and are recoverable only through share conversion. This structure aligns Wetstone’s incentives with the project’s success but also exposes CRP to potential dilution.

Governance, Rights, and Royalty Provisions

Wetstone’s majority board appointment rights grant it substantial influence over project development and budgeting decisions. The agreement also includes pre-emptive rights over CRP’s shares in CRPNZ and a tag-along right protecting CRP’s interests in any significant share disposals by Wetstone.

CRP retains a 2% net smelter royalty on production returns, with Wetstone holding an option to acquire two-thirds of this royalty within the first three years of commercial production. This royalty arrangement provides CRP with ongoing revenue potential while allowing Wetstone to consolidate returns.

Risks and Regulatory Hurdles Ahead

Wetstone reserves the right to withdraw funding if it reasonably believes that regulatory consents or project viability are at risk, introducing a conditional element to the partnership. Both parties will need to collaborate closely to secure environmental and community approvals essential for mining operations.

This financing deal, while providing immediate capital and a clear path towards project advancement, shifts significant control to Wetstone and introduces dilution risks for CRP shareholders. The transaction remains subject to TSX Venture Exchange approval, adding another layer of regulatory scrutiny.