Meson Capital Partners LLC, led by Ryan Morris, is continuing its short campaign against Odyssey Marine Exploration Inc (NASDAQ:OMEX), this time arguing that the environmental report (EIA) for its Oceanica project has been intentionally delayed to give the company more time to raise capital.

Odyssey Marine Exploration OMEX

“We believe OMEX has chosen not to file the EIA because they know it will expose the project as environmentally and economically unviable: most mining projects die in this phase,” Meson Capital writes.

Oceanica EIA delayed by more than a month

The Oceanica project is a phosphate mining operation off the shore of Mexico that Meson Capital says is similar to a failed project by the now defunct Phosmex in 2007 and a much earlier project in the mid 1970s by Rofomex that also ended in big losses. The presence of phosphate off the coast of Mexico is apparently well known in the industry, so the lack of interest from the majors also suggests that the project isn’t economically viable.

Anyone who has been following Odyssey Marine Exploration Inc (NASDAQ:OMEX) knows that management allowed its cash balance to become shockingly low by the end of last quarter, and Meson Capital is anticipating some sort of financing activity in the near future. The new addition to its short thesis is that if OMEX starts another round of fund raising before it releases the EIA, then Oceanica is a bust because if the EIA was full of good news then they would want to publicize the results ahead of time. It is troubling that the EIA was apparently completed on June 4 and still hasn’t been filed.

SS CA salvage operation could make OMEX’s additional financing unnecessary

One thing that’s interesting about this short thesis is that it might simply time out if Odyssey Marine Exploration Inc (NASDAQ:OMEX) doesn’t issue new stocks or otherwise start raising capital. OMEX longs including Green River Asset will acknowledge that investors have a right to be worried about the company’s cash balance, but they point to the company’s credit facility with Fifth Thirds and the ongoing SS CA salvage operation as making new financing unnecessary.

Aside from a passing mention that monetizing the salvage will be difficult before 2015 (at which point OMEX would have run out of cash), Meson Capital doesn’t acknowledge the importance of the salvage operation to Odyssey Marine Exploration Inc (NASDAQ:OMEX)’s business plans. The Oceanica EIA delay is worrying, but the SS CA salvage is more immediately important.