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A radical plan to save financially ailing Odyssey Marine Exploration by surrendering control of the company to the Mexican owned mining conglomerate Minera del Norte (MINOSA) had not convinced the US NASDAQ by close of trading yesterday, Monday 16 March 2014, with shares in the beleaguered Florida based treasure hunting company ending the day at $0.56, just one cent above its fifty two week low.  The financial move, technically a dilutive distressed loan which would reduce the value of the holdings of existing shareholders, is controlled through a specially created entity, Penelope Mining LLC, which also offers MINOSA a series of exit routes if the Mexican company at any point deems Odyssey to be a lost cause.  The published terms of what is effectively a take over seem to offer Odyssey little, if any, leverage in return for surrendering control and accepting the reconstruction of Odyssey’s Board by MINOSA.  It also appears to be  heavily contingent on financial way points such as the go ahead  for the highly controversial “Don Diego” Submarine Massive Sulphides [SMS] project in Baja California which is currently held up in a process of seeking environmental approval in the face of powerful local opposition from fishermen and environmental groups and the renewed approval for the controversial HMS Victory 1744 recovery.

In a conference call following the release of Odyssey’s fourth quarter 10K filing for the US Securities and Exchange Commission Odyssey President and Chief Executive Officer Mark Gordon put a positive spin on the MINOSA deal stating
“The strategic financing agreement we announced on Friday has the potential to transform Odyssey and increase shareholder value dramatically, not only by providing the capital necessary to execute our current pipeline of offshore projects, but also by providing strategic support that we believe will be a crucial component of our future success.”

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However, detailed analysis of Odyssey’s filing and the conference call  begs more questions than are answered.


Odyssey Explorer as mentioned earlier in my prepared comments,…is an old ship and she needed a lot of repairs this year.

In particular the details of the SEC filing and further comments made in the course of the conference call by Mr Gordon and Chief Financial Officer Philip Devine pointed up the numerous problems facing the company and the HMS Victory 1744 project in particular.

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While Mr Gordon remained upbeat about the Ministry of Defence reinstating the permission to recover at risk surface objects which was rescinded in the face of a Judicial Review in March, he also revealed the problems Odyssey faces keeping it sole remaining seagoing search and recovery platform, the Odyssey Explorer, at sea and functioning [our italics].

“…the Odyssey Explorer as mentioned earlier in my prepared comments,…is an old ship and she needed a lot of repairs this year. For the past several months, we’ve maintained a full workgroup of our team aboard that ship to make sure she is ready to go. And we expect to be putting a full team aboard shortly once we go back out to work when the weather permits and repairs are completed.

The forty two year old, Bahamian flagged Odyssey Explorer, is the former trawler and Falklands War veteran Farnella.  Later also known as Northern Prince, Odyssey Explorer was purchased by Odyssey Retriever Inc, a wholly owned Odyssey Marine Exploration subsidiary in 2003 and is managed by Yorkshire based “Marr Vessel Management”.  Marine industry experts consulted by thePipeLine suggest she must now be coming to the end of her natural life, almost certainly becoming increasingly prone to potentially expensive and disruptive mechanical faults of the kind described by Mr Gordon and is in all probability relatively more expensive to crew and operate than a more modern vessel.  This at a time when the MINOSA deal requires Odyssey to bear down heavily on its monthly cash burn of at least $1.5 million.

Another vulnerability is found in the statement, repeated from previous SEC filings, that Odyssey’s reward from the recovery of silver bullion from the torpedoed World War Two steamer, SS Gairsoppa includedour reimbursement of search and recovery expenses…” Independent analysts believe this sum, which is estimated to be as much as $4.9 million, was incorrectly withheld by Odyssey because the terms of the contract with the UK Department of Transport, released under the Freedom of Information Act, did not allow for such expenses.  In January Labour MP Kevan Jones asked the Department and the National Audit Office to investigate the issue and Odyssey might yet be required to reimburse the sum.

In an development which raises serious issues for the Ministry of Defence, which controls all access to the HMS Victory shipwreck site under the Deed of Gift to the Maritime Heritage Foundation, the SEC filing also revealed the flotilla of subsidiary companies which sail under the Banner of the Tampa, Florida based parent company, best known from its high profile television documentaries on the Discovery Channel and Channel 5.  The Odyssey corporate fleet currently seems to comprise of at least ten “…direct and indirect wholly owned subsidiaries,”

Odyssey Marine Services, Inc.,

OVH, Inc.,

Odyssey Retriever, Inc.,

Odyssey Marine Entertainment, Inc.,

Odyssey Marine Enterprises, Ltd.,

Marine Exploration Holdings, LLC,

Odyssey Marine Management, Ltd.,

Oceanica Marine Operations, S.R.L.,

and majority interest in

Oceanica Resources, S.R.L. and

Exploraciones Oceanicas, S. De R.L. De C.V. ”

The inevitable question facing the Ministry of Defence the Marine Management Organisation and above all Defence Secretary Michael Fallon who is currently considering reinstating permission for the Maritime Heritage Foundation to recover artifacts from the HMS Victory site is which of these ten parts of Odyssey owns the salvage contract with the Maritime Heritage Foundation?  A salvage contract which many independent observers believe is predicated on the sale of artifacts from the wreck site of Admiral Sir John Balchen’s flagship contrary to stated British Government Policy under the Annex to the UNESCO Convention on the Protection of the Underwater Cultural Heritage.  Indeed, the MoD must investigate if the contract might even have been used as collateral for Odyssey’s various loans in the same way as practically everything of significance the company owns seems to have been, including the Odyssey Explorer and the ROV’s she deploys.  It may be that the real decisions about the future of the controversial and much delayed HMS Victory Project will now be made not in Whitehall, or Portsmouth, by the MoD and Lord Lingfield’s Maritime Heritage Foundation, let alone in Tampa by Odyssey’s CEO Mark Gordon and Chair of the Board Greg Stemm, but in Mexico, Headquarters of Odyssey’s would be white knight, or in the boardrooms of the companies which have rights to pieces of Odyssey if the company were to default on a loan, or file for bankruptcy, at any point.


HMS Victory 1744 is a sensitive archaeological site and the maritime military grave and memorial to 1100 Royal Navy officers and men, not an underwater mining concession.

This is an issue which will also be of interest to the Marine Management Organisation.  Odyssey disclosed that they had submitted a licence application to work the HMS Victory site on 19 December 2014.  However, thePipeLine understands that the MMO and Odyssey are still in negotiation over precisely how much of the HMS Victory Project Design is made public as is required by the licensing process.   A previous negotiation over a retrospective license for the unlicensed work in 2012 broke down over Odyssey’s insistence that certain material be redacted for security and commercial reasons and this failure to obtain a licence at that time led directly to the recent official warning to Odyssey over its conduct in relation to the Marine and Coastal Access Act.  However, even if the two parties do agree on the extent of publication required for the public consultation, there is still a statutory consultation period of 42 days, [or 28 days if it is deemed the project does not require a full Environmental Impact Assessment].  This in turn raises the issue of timing.

Odyssey/MHF is running out of time to set the HMS Victory 1744 project in motion before the UK General Election which takes place in just fifty two days time on 7 May.  In particular on Monday 30 March the Government enters a period termed “Purdah” with Parliament dissolved and where decision making is supposed to be limited to areas which would not compromise the manifesto commitments of any incoming Government.  In that context Defence Secretary Michael Fallon and the Civil Servants advising him must ask themselves if the Government dares to be seen to reinstate the Maritime Heritage Foundation’s permission to recover “at risk” material when an incoming Secretary of State, of any Party, might make a very different decision.  Particularly at a time when it is not even clear who the Maritime Heritage Foundation’s contractor is any more, whether that contractor will even exist by the end of the Summer, or even if it does still exist, how a company like Odyssey which is so dependent on contingent loans can afford to undertake the multi million pound HMS Victory project?  Secure and adequate funding is of course a requirement of the rules set out in the UNESCO Convention Annex and any failure to meet the terms of the Annex would almost certainly result in another Judicial Review.

It follows that if Mr Fallon does then choose reinstate permission before the General Election he can be sure that as well as further potential legal embarrassment, it will be pointed out rapidly and vociferously that such a decision might have something to do with Lord Lingfield’s links to the top of the Conservative Party, including as thePipeLine revealed, to Mr Fallon himself [http://thepipeline.info/blog/2015/02/14/revealed-fallon-links-to-mhf-chair-lord-lingfield/].  Most important of all the Government will also be reminded that HMS Victory 1744 is a sensitive archaeological site and the maritime military grave and memorial to 1100 Royal Navy officers and men, not an underwater mining concession.

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thePipeLine is an independent news publication that investigates the place that heritage, politics, and money meet.

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