Treasure Hunter Odyssey Marine Jumps on Gold Ship Recovery Agreement

Small cap stock Odyssey Marine Exploration rose over 15% Monday after the company announced a diplomatic agreement allowing it to recover the shipwreck of HMS Sussex, an 80-gun English warship lost in 1694 believed to have been carrying about 10 tons of gold and 100 tons of silver worth between $500 million and $4 billion. If correct, that would make the Sussex the most valuable treasure trove ever salvaged. Spain and the UK agreed that both countries would cooperate to ensure that the recovery of the wreck believed to be HMS Sussex is conducted in a way that preserves any archeological findings. At the same time, Spain recognized that under international law the Sussex wreck belongs to the UK. The agreement resolved a stand-off that had prevented Odyssey Marine from excavating the wreck it believes to be the Sussex. The company, which utilizes innovative methods and state-of-the-art technology to conduct deep ocean search and recovery operations, has signed an exclusive partnership agreement with the UK Government for the recovery of the shipwreck and will split the bounty with the UK Government. Odyssey Marine hasn't recovered any significant wrecks since its recovery of the SS Republic in mid 2004. The company stated in a recent operational update that it has has three projects in the Mediterranean, one of which has located 161 shipwrecks, of which 25 are 19th Century and 12 17th-18th Century. According to Spanish archaeology professor Manuel Martín Bueno, "There is more gold in the Gulf of Cándiz than in the vaults of the Spanish national bank".

Sources: Company press release, Spiegel news coverage, Mail & Guardian news coverage, eitb news coverage, Odyssey Marine Exploration Inc company profile, Odyssey Marine Exploration November 30th Operational Update, Odyssey Marine Exploration Announces 2006 Financial Results.
Stocks/ETFs to watch: Odyssey Marine Exploration Inc (OMR). Competitors: Deep Blue Marine (DPBM).

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Comments

[Frank Li:]

Full disclosure before you read this comment: (1) I'm long OMR, and (2) Frank Li is a pen-name (frankly, get it?), not my real name, as I'd like to remain anonymous.

According to the WSJ, yesterday OMR announced that:
<blockquote>Deep... explorers said Friday they have mined what could be the richest shipwreck treasure in history, bringing home 17 tons of colonial-era silver and gold coins from an undisclosed site in the Atlantic Ocean. Estimated value: $500 million.

A jet chartered by Tampa-based Odyssey Marine Exploration landed in the U.S. recently with hundreds of plastic containers brimming with coins raised from the ocean floor, Odyssey co-Chairman Greg Stemm said. The more than 500,000 pieces are expected to fetch an average of $1,000 each from collectors and investors.</blockqu...

The stock rose 80%. However, it seems that the market cap of the company is still only $380MM, despite the fact that this find is worth $500MM, that it has a bunch of other wrecks it's working on (for example, the Sussex wreck which it will have to share with the UK), and that it has the best technology for finding and retrieving shipwrecks.

Can anyone explain why the valuation shouldn't be higher?

2007 May 19 04:58 PM

[Frank Li:]

BTW, Deep Blue Marine -- another exploration company without OMR's technology or track record and traded on the pink sheets -- put out a press release titled "Deep Blue Marine Inc. Congratulates Odyssey Marine". The text of the press release is:

<blockquote>SALT LAKE CITY, UT -- (MARKET WIRE) -- May 18, 2007 -- The staff and crew of DEEP BLUE MARINE (PINKSHEETS: DPBM) are excited and pleased to offer its most sincere congratulations to ODYSSEY MARINE EXPLORATION on their announcement this morning of the recovery of hundreds of thousands of silver and gold coins as well as other significant artifacts from their Black Swan site in the Atlantic Ocean. John Morris and all the staff and crew of ODYSSEY MARINE should be congratulated as again they have demonstrated the high degree of professionalism required to successfully survey and salvage a most important archaeological site. DEEP BLUE MARINE applauds their diligence and their discovery shows the importance of continuing support for those involved in the recovery and restoration of important archaeological sites. As we have always said, "There's gold in them there hauls!" For more information contact [e-mail]....

This sort of press release strikes me as blatant publicity grabbing -- an attempt to get noticed by people interested in OMR's stock after the news story with zero justification or news to report. I'm VERY careful of stocks of companies that do that sort of thing.

2007 May 19 05:28 PM

[Goldenrod:]

It is common for companies to jump on the "Look at me - I am here too" bandwagon and sneak as much limelite as they can from the fortune of others (OMR) so do not be too disappointed in DBM for doing so. A number of small cap corporations involved in similar fields routinely make such congratulatory comments in the hope they too will be noticed. Some even go so far as to slam their competitors (Ford & GMC for example). As far as DBM waving their flag - it is a common thing to see although it may be regarded as a cheap way of getting some advertising, it is not necessarily as effective as one may think most of the time. The main story usually takes most of the limelite.

2008 Mar 09 04:44 PM