Odyssey Hunts Nazi-Torpedoed Ship’s $260 Million of Silver

Odyssey Marine Exploration Inc. (OMEX), the ocean salvager featured in the Discovery Channel series “Treasure Quest,” is trying to recover silver valued at as much as $260 million by October from a ship torpedoed by a Nazi submarine in 1941.

The Tampa, Florida-based company was awarded a contract by the U.K. government last year that would allow it to keep about 80 percent of the bullion treasure of the S.S. Gairsoppa, a cargo steamer sunk by a German U-boat off the Irish coast. There’s an estimated 4 million to 7 million ounces at the shipwreck site, according to Odyssey President and Chief Operating Officer Mark Gordon.

“This is the year we’re going to go out and find it,” Gordon said in an interview. He said the cost of the search would be less than $10 million. “The total survey and recovery costs will be a fraction of the value,” Gordon said.

Odyssey aims to salvage Gairsoppa’s cargo from beneath as much as 14,000 feet (4,270 meters) of water amid surging prices for silver, which has more than doubled in the past year, and gold, which rose to a record last week. The company recovered 17 tons of gold and silver coins in 2007 in an Atlantic Ocean operation it codenamed Black Swan. It also plans to hoist treasure from at least five other ships, including HMS Sussex, which sank in 1694 near Gibraltar and may hold gold that the New York Times has estimated is valued at as much as $4 billion.

‘Big Idea’

“We’ve got a buy rating on the stock; it’s what we call a big idea,” Mark Argento, a Minneapolis-based analyst at Craig- Hallum Capital Group LLC, said in a telephone interview. “It’s got biotech-type returns without the massive upfront capital. The next few months should prove interesting.”

Odyssey climbed 32 cents, or 12 percent, to $3.06 at 4:30 p.m. in Nasdaq Stock Market composite trading. The shares have more than doubled in the past 12 months.

Odyssey’s other salvaging targets include HMS Victory, which sank off England in 1744 carrying 100,000 ounces of gold, and the Enigma, Shantaram and Firebrand, three merchant ships estimated to have cargoes worth at least $50 million each, Gordon said.

“We’re probably the most excited we have ever been,” Gordon said of the 17-year-old salvaging company that was featured in the Discovery series in 2009. “We have more projects at relatively late stages than we’ve ever had in the history of the company.”

Wreck Hunters

Depending on the weather, hunting for the Gairsoppa may start as early as May using sonar, metal detectors and undersea robots, Gordon said. The wreck’s condition will help determine how quickly the cargo can be extracted, he said.

Odyssey has also signed deals to mine the South Pacific sea floor. Companies such as Nautilus Minerals Inc. (NUS), Neptune Minerals Plc and an AngloGold Ashanti Ltd. joint venture are seeking gold, copper and silver deposits with technology adapted from deep-water oil exploration.

Odyssey has agreed with closely held Neptune to mine gold, silver, zinc and lead off New Zealand for $3 million in cash and as much as 15 percent of the London-based company’s equity, Gordon said. Odyssey also owns 41 percent of closely held Dorado Ocean Resources, which plans to drill near the Solomon Islands in the next few months, he said.

Odyssey returns to the U.S. appeals court in May, Gordon said, to fight a Spanish government claim for about $500 million in coins the salvager found and hauled from the bottom of the Atlantic off Portugal in 2007. The company dubbed the site where the treasure was found the Black Swan, a reference to Nassim Taleb’s book on improbable and transformational financial events.

To contact the reporter on this story: Colin McClelland in Toronto at cmcclelland1@bloomberg.net.

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net.

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