The Board of BGL is very aware of the recent lack of information regarding its current status and salvage plans. The purpose of this note is ideally to allay any concerns shareholders might have and to indicate the current operational thinking. I go into some detail as it is possible the logistics of mounting a salvage operation are not fully understood or appreciated.

Significant detail has been provided about the extensive survey carried out in April where the original intention was to survey 5 wrecks, but which resulted in 9 wrecks being surveyed – a very satisfying return on a survey investment of some £700,000. This led the company to successfully place a further 950 authorised ordinary shares boosting the company’s capital reserves.

As stated at the time, the intention was to ideally commence salvage operations during June. However, initial enquiries re salvage vessel availability emphasised that we had not fully appreciated the extent to which the 2018 rise in the oil price had resulted in a significant increase in industry activity, resulting in dramatically increased costs of charter and scarcity of vessel supply. Clearly the summer months are the prime season for North Atlantic activity with an expected rise in charter costs, but we had not envisaged a doubling of rates since our 2017 activities.

Given the challenges of mounting a salvage programme, together with the prohibitive costs of mobilisation and demobilisation, it was imperative this time we had an uninterrupted salvage charter of circa 45-60 days. One of the features of the current market is not only that our favoured vessel was on charter to the end of August, but other comparative and acceptable vessels were being taken for varying periods on the spot market which meant we could not secure the length of charter required.

The below will illustrate, that notwithstanding the number of vessels in service, our searches, led by James Fisher whose reputation is without peer in the market, could only identify 4 ships that might have been applicable and, as above, our choice was not immediately available. Leaving aside the increased, and both unnecessary and uneconomic logistic costs, there was the danger of our starting a salvage programme and having to leave the target unfinished and unprotected. Given that our efforts are being closely monitored, this was and remains a very real risk.

Vessel Option 1:

Option 1 is a very competent vessel, having great capability for station keeping as well as sufficient crane working limits required for BGL’s new heavy-duty grab system. However, the vessel is currently set up for survey operations and carries just a single ROV which was not suitable for the salvage operations BGL wish to undertake.

Vessel Option 2:

The smallest and most expensive vessel that was offered to BGL. Although having some good capabilities, the vessel was just too small to ergonomically position the array of salvage equipment required to undertake the project efficiently. Furthermore, the vessel was only supplied with a single ROV system which is far from ideal.

Vessel Option 3:

A very highly capable vessel with everything required for BGL to undertake operations confidently. However, as the vessel was offered to us, another client stepped in and snapped the vessel up for a 2- BRITANNIA’S GOLD LTD month charter. The vessel in question here currently has a sister ship that has just been newly released for the construction yard in China; it was offered to BGL for the project but would take 2 months before being in a state of readiness. BGL have not discounted this class of vessel for future operations due to the outstanding capabilities they have.

Vessel Option 4:

The final vessel on offer was singled out as the best option for BGL to utilise for the salvage programme. It had superior deck space and ROV capabilities over the other available vessels with twin subsea cranes which would allow for far greater efficiency in the deployment and recovery of salvage tooling. A vessel of such high stature and dexterity is in high demand by all major oil and gas operators and service companies wishing to charter. Her availability window was too small on this occasion for BGL to mobilise, salvage and demobilise within the given timeframe.

What was also highlighted was that by slightly delaying the programme, BGL could probably save as much as £1m on the overall costs with no adverse effect whatsoever on the expected or likely success of the exercise. More importantly, we could be assured of the requisite charter period being available without interruption. We appreciate that there is impatience for results and prospective dividends, but proper and optimum use of shareholder funds remains our prime objective.

To that end, and again advised and led by James Fisher, BGL is about to recommence its searches to identify the most economic charter programme available. Ideally this will see us leaving port in late August to have as a minimum three clear months of potential salvage operations. All our weather forecast investigations confirm this is entirely practical.

Philip Reid Chairman Britannia’s Gold Limited