Nautilus Minerals Inc.
TSX VENTURE : NUS
AIM : NUS
AIM : NUSR

Nautilus Minerals Inc.

February 02, 2007 02:00 ET

Nautilus Minerals Inc.: Pounds Sterling 50.8 Million Placing and Admission to AIM

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Feb. 2, 2007) - Nautilus Minerals Inc. ("Nautilus" or the "Company") (TSX VENTURE:NUS)(AIM:NUS)(AIM:NUSR) today announces its admission to AIM, following the successful placing of 27,438,606 new Common Shares at a price of 185 pence per share to raise gross proceeds of Pounds Sterling 50.8 million (equal to US$100 million) for the Company. The market capitalisation of the Company on Admission at the Placing Price will be Pounds Sterling 203.1 million.

Nautilus is a Canadian incorporated and TSXV quoted company involved in the acquisition and exploration of mineral properties in the western Pacific Ocean.

The New Common Shares represent approximately 25 per cent. of the issued share capital of the Company following the placing of the New Common Shares. Numis Securities Limited is the nominated adviser and broker to the Company. In light of the fully subscribed Placing, Numis has also placed 908,117 existing Common Shares of the Company on behalf of two Directors and a person connected with one Director. The Placing has been underwritten by Numis.

Company highlights:

- The first company to commercially explore the ocean floor for copper, zinc, silver and gold seafloor massive sulphide deposits.

- Alliances formed with major mining groups, specialist engineering and service companies and experienced sub sea equipment suppliers.

- Partners and/or shareholders include Anglo American, Teck Cominco, Barrick and Jan De Nul.

- Heads of agreement with Jan De Nul (one of the largest dredging companies in the world) to construct, at their own cost, a 191 metre specialised deep-sea mining vessel (estimated cost US$120m (equal to Pounds Sterling 61 million)) and contract mine on behalf of Nautilus.

- The Placing of the New Common Shares is an important element in the Group's funding to enable it, subject to the grant on a timely basis of all necessary licences and permits, to bring its primary project, Solwara 1, into production by the end of 2009.

- Balance sheet cash of US$111 million (equal to Pounds Sterling 56 million) before the proceeds of the Placing.

David Heydon, Chief Executive of the Company, commented: "Since taking Nautilus public nine months ago, this is the next key step in our business plan to enable us to develop a low cost base metal mine based on seafloor massive sulphide copper-zinc-gold silver deposits. This financing from institutional investors compliments the US$99.6 million financings late last year by Anglo American, Teck Cominco and Epion."

Heydon added: "The net proceeds of the placing of the New Common Shares, when taken alongside our existing cash resources of approximately US$111 million and other sources of capital, are expected, subject to timely permitting, to be sufficient to fund the Company into production at its primary project, Solwara 1, in the territorial waters of Papua New Guinea. The funds are planned to be deployed by the Company in the detailed design and construction of specialist sub sea mining equipment, including two mechanical miners, power umbilicals, pumps, a 1,800 metre riser pipe and related handling equipment, as well as subject to permitting, the construction of an on-shore concentrator plant and the acquisition of the necessary land on which to build the plant and port."



PLACING STATISTICS

Total number of New Common Shares
being issued in the Placing 27,438,606
Total number of Sale Shares being
sold in the Placing 908,117
Placing Price 185p
Number of Common Shares in issue
immediately following Admission 109,794,518
Percentage of Enlarged Share Capital
represented by New Common Shares 25 per cent.
Market capitalisation of the Company
following Admission
at the Placing Price Pounds Sterling 203.1 million
Gross proceeds of the Placing
receivable by the Company Pounds Sterling 50.8 million
Estimated proceeds of the Placing
receivable by the Company after expenses Pounds Sterling 46.7 million
Gross proceeds of the Placing
receivable by the Selling Shareholders Pounds Sterling 1.7 million


KEY INFORMATION

INTRODUCTION

Nautilus is the first company to commercially explore the ocean floor for copper, zinc, silver and gold seafloor massive sulphide deposits. SMS deposits are considered modern day analogues of volcanogenic massive sulphide deposits which historically have been a major source of the world's copper, zinc, silver and gold. The Group's main geographic focus is the territorial waters and exclusive economic zone of Papua New Guinea in the western Pacific Ocean where it currently has seven granted exploration tenements and 70 exploration tenement applications totalling an area of approximately 185,500 km2.

As set forth in the SRK Technical Report discussed below, recent dredge and grab sampling at Solwara 1, the Group's most advanced project in PNG, has returned encouraging results. The 45 dredge samples averaged 10.8% Cu, 3.7% Zn, 224 g/t Ag and 13.7 g/t Au. The 51 grab samples averaged 9.3% Cu, 4.9% Zn, 136 g/t Ag and 14.7 g/t Au.

The Company has an experienced board of directors and a strong management team. Geoff Loudon, the Chairman, was founder and chairman of Niugini Mining, discoverer of the 42 million ounce Lihir gold deposit in PNG, which was developed by Rio Tinto in 1995. David Heydon, as a Director of Nautilus since 2002 and the Chief Executive Officer since 2003, has been responsible for building the Nautilus technical alliance from amongst some of the world's leading service contractors as well as targeting and negotiating the respective agreements with Barrick, Anglo American, Jan De Nul and Teck Cominco. Anthony O'Sullivan, the Chief Operating Officer, previously managed BHP Billiton's worldwide base metal exploration effort.

STRATEGY AND NEAR-TERM OBJECTIVES

The Group's strategy is to become a major base and precious metal producer by exploiting the Company's first mover advantage of being the first company to commercially explore for copper-zinc-silver-gold SMS deposits. The Group's strategy and near-term objectives are to:

- bring Solwara 1 into production by the end of 2009;

- accelerate the exploration and development of Solwara 2, Solwara 3 and Solwara 4 and, subject to the granting of the necessary exploration licenses, the other tenements in the Group's portfolio with a view to establishing a pipeline of development options by the end of 2009; and

- secure further exploration rights to additional areas of prospective seafloor in the western Pacific Ocean.

In order to achieve the objectives referred to above, the Group will need to:

- enter into detailed contractual arrangements with Jan De Nul in connection with the building of the 191 metre purpose-built deep-sea mining vessel, the Jules Verne (to be funded by Jan De Nul), as well as contractual arrangements for the contract mining services to be provided to Nautilus in relation to the mining of the SMS deposits;

- design, engineer and construct two sub-sea miners, power umbilicals, pumps, a 1,800 metre riser pipe and related handling equipment;

- acquire the land, most likely in PNG, on which a concentrator can be built, as well as obtain the necessary permits and carry out an environmental impact assessment as well as other related studies;

- construct the concentrator plant, associated port facility and related infrastructure;

- obtain all necessary permits and licences (including a mining lease) in relation to the mining of the SMS deposits and the concentrator plant; and

- undertake further exploration work to define resources in the PNG Tenements.

To assist the Company in meeting its strategy and the near-term objectives set out above, the Company has formed alliances with, and entered into agreements and proposed arrangements with major mining groups, specialist engineering and service companies and equipment suppliers with attributes relevant to the exploration and potential development of SMS deposits.

Companies with which Nautilus has formed alliances include Anglo American, Teck Cominco and Jan De Nul. These companies may provide technical expertise, capital and, in some cases may provide, staff under secondment to Nautilus. This may allow the Group to expand and deliver on its strategy more quickly than if it were to rely wholly on its internal resources. The Board may further reduce the Group's exploration risks and manage its cash flow by examining opportunities to joint venture certain of its projects, thereby allowing the Company to concentrate its initial efforts on developing Solwara 1 and bringing it into production by the end of 2009.

EXPLORATION RESULTS

SRK, an independent consulting firm, has been engaged by the Company to appraise the PNG Tenements, and a copy of its Technical Report, dated 30 January 2007, is contained in the Company's Admission Document. Set out below is a summary of the exploration results from the Group's most advanced projects, as set forth in more detail in the SRK Technical Report.

Solwara 1

Placer Dome, in joint venture with Nautilus, completed two exploration cruises to Solwara 1 in February-March 2005 and January-February 2006, where geophysical surveying, dredge sampling, ROV grab sampling, biological baseline sampling, core drilling and rock cutting test work was completed. The dredge and grab sampling confirmed, inter alia, the grade tenor of earlier sampling by scientific research programmes. The 45 dredge samples averaged 10.8% Cu, 3.7% Zn, 224 g/t Ag and 13.7 g/t Au; the 51 grab samples averaged 9.3% Cu, 4.9% Zn, 136 g/t Ag and 14.7 g/t Au.

Nautilus completed a further exploration cruise to Solwara 1 in August 2006 where a further 11 grab samples confirmed the grade tenor of the grab, dredge and drill core sampling referred to above.

Solwara 2, 3 and 4

Nautilus completed an exploration cruise in July and August 2006 to the Solwara 2, 3 and 4 Projects. Geophysical surveying and ROV grab sampling were completed. The results of this work were:

- At Solwara 2, grab sampling confirmed the grade tenor of earlier sampling by scientific research. 37 grab samples averaged 1.3% Cu, 22.8% Zn, 226 g/t Ag and 6.2 g/t Au.

- At Solwara 3, grab sampling confirmed the grade tenor of earlier sampling by scientific research. 26 grab samples averaged 1.3% Cu, 22.4% Zn, 488 g/t Ag and 15.4 g/t Au.

- At Solwara 4, grab sampling confirmed the grade tenor of earlier sampling by scientific research. 28 grab samples (excluding duplicates) averaged 11.3% Cu, 23.2% Zn, 263 g/t Ag and 13.5 g/t Au.

MINING AND PROCESSING

Offshore mining

Nautilus has entered into a heads of terms with Belgium-based Jan De Nul, one of the largest dredging companies in the world, in relation to contract mining at the Solwara 1 Project. Under these heads of terms, it is proposed that Jan De Nul will construct, at its own cost, a specialised deep-sea mining vessel. The 191 metre vessel, to be named the Jules Verne, is expected to be completed by the end of 2008 to meet, subject to obtaining the requisite permits, Nautilus' target to commence mining operations at Solwara 1 by the end of 2009.

The Jules Verne is planned to have the capability of deploying mining equipment, pumps and riser pumps for the operation at the Solwara 1 Project. The mining plan calls for the high grade copper - gold material to be disaggregated and dredged from the seafloor and pumped to the mining vessel where it would be transferred to barges for transport to a land-based concentrator which would produce a gold rich copper concentrate for despatch to smelters. Nautilus will provide the capital (budget estimate US$120 million (equal to Pounds Sterling 61 million)) for two sub-sea miners, power umbilicals, pumps and 1,800 metre riser pipe and related handling equipment.

The Directors believe that offshore mining for SMS deposits will have certain significant advantages over land-based mining for base and precious metals including:

- no disturbance of land owners at the mine site;

- minimal overburden or stripping to gain access to the ore;

- no waste rock dumping or drill blasting;

- no shaft or decline to sink to access the ore;

- ease of access to a port infrastructure;

- in view of the above, a shorter time to production; and

- once the mining ship is built the ability to aggregate resources and move from SMS deposit to SMS deposit as opposed to having to build a new mine for each land based deposit.

EXPLORATION PROGRAMME 2007

On 18 January 2007, Nautilus announced that it had contracted Canyon Offshore International Corporation, a member of the Helix Group and a leading service provider to the offshore oil and gas and telecommunications industries, to provide the requisite vessel, ROV, and drilling equipment for a major exploration, evaluation drilling and environmental base-line study programme, which is due to commence in March 2007, over the Company's Solwara Projects in Papua New Guinea.

The programme is expected to last between 160 and 210 days and will commence with environmental base-line studies at the Solwara 1 Project before moving to geophysical target generation throughout certain of the Company's tenements in the Bismarck and Solomon Sea where the Company will target further mineralised systems.

Following this work, drilling is expected to commence on the Solwara 1 Project in early June 2007 to generate information for mine planning purposes. This drilling will utilise two ROV drill units currently being built by Perry Slingsby Systems Inc (one of the world's leading providers of ROVs) under contract to Canyon.

REASONS FOR THE PLACING AND USE OF PROCEEDS

The Placing of the New Common Shares is an important element in the Group's funding to enable it, subject to the grant on a timely basis of all necessary licences and permits, to bring Solwara 1 into production by the end of 2009.

The Board anticipates that the remainder of the estimated funds to bring Solwara 1 into production may be provided from a combination of some or all of the following:

- interest income on the Group's cash resources;

- funding from the existing corporate Shareholders, either through the exercise of their existing anti-dilution rights, the exercise of Warrants, or through additional share subscriptions;

- pre-payments for off-take agreements in relation to production from the proposed concentrator; and/or

- infrastructure or concentrator debt financing.

RESALE RESTRICTIONS

The New Common Shares have been issued by the Company pursuant to an exemption from the Canadian prospectus requirements. The New Common Shares are subject to a four-month restriction on resale in or into Canada or through the TSX Venture Exchange. This restriction does not prevent the Placing Shares from being traded at any time after Admission on AIM, or outside of Canada provided that such trade is not to or for the benefit of a Canadian resident.

Numis Securities Limited, which is authorised and regulated by the Financial Services Authority in the United Kingdom, is the Company's nominated adviser and broker and, in each case, is acting exclusively for the Company in connection with the proposed Placing and Admission. Its responsibilities as the Company's nominated adviser under the AIM Rules are owed solely to the London Stock Exchange and are not owed to the Company or to any Director or any other person in respect of his decision to acquire Common Shares. Numis Securities Limited is not acting for any other person as its client and will not be offering advice and will not otherwise be responsible for providing customer protections to recipients of this document in respect of the Placing or any acquisition of shares in the Company.

No offer or invitation to acquire shares in the Company is being made by or in connection with this announcement. Any such offer will be made solely by means of an admission document published on 30 January 2007 and any acquisition of shares should be made solely on the basis of the information contained in such document and any supplements thereto. The value of shares can go down as well as up. Past performance is not a guide to future performance. Persons needing advice should consult a professional adviser.

The requirements for disclosure by significant Shareholders of their interest in shares in the Company under the applicable securities laws of Canada are different to, and may not ensure compliance with, the requirements for disclosure of interests in shares pursuant to rule 17 of the AIM Rules. Therefore, the Company requests that in addition to the disclosure requirements set down by applicable securities laws and regulations, any Shareholder holding three per cent. or more of the Common Shares of the Company (a "Significant Shareholder" as defined by the AIM Rules) disclose this fact to the Company. In addition, the Company requires that a Significant Shareholder discloses to the Company any "relevant change" to their shareholding, which is defined by the AIM Rules as any increase or decrease though a single percentage of a significant shareholding. Such notices to the Company should be made without delay and should include: the identity of the Shareholder; the date on which the relevant change to the shareholding was effected; the price and amount of the Common Shares concerned; the nature of the transaction and the extent of the Significant Shareholder's interest in the transaction. The Company will then notify the appropriate service for the distribution of this information to the public.

The following definitions apply throughout this press release:



"Admission" admission of the entire issued (and to be
issued) common share capital of the Company
(including the New Common Shares) to trading on
AIM becoming effective in accordance with the
AIM Rules
"Admission Document" the Company's admission document, drawn up in
accordance with the AIM Rules and published on
30 January 2007
"Ag" silver
"AIM" AIM a market regulated by the London Stock
Exchange plc
"AIM Rules" the rules of the London Stock Exchange plc
governing admission to and the operation of AIM
as amended from time to time
"Anglo American" Anglo American plc
"Au" gold
"Barrick" Barrick Gold Corporation
"Board" or "Directors" the directors of the Company
"Canyon" Canyon Offshore International Corporation
"Common Shares" the common shares without par value in the
capital of Nautilus
"Cu" copper
"Enlarged Share Capital" the issued share capital of the Company
following the issue of the New Common Shares
"Epion" Epion Holdings Limited
"g/t" grams per metric tonne
"Group" the Company and its subsidiaries as constituted
from time to time
"Jan De Nul" Jan De Nul NV
"Lodge" Lodge Partners Pty Ltd
"New Common Shares" 27,438,606 new Common Shares issued by the
Company pursuant to the Placing
"Numis" Numis Securities Limited
"Placer Dome" Placer Dome Exploration Inc. and Placer Dome
Oceania Limited (each being subsidiaries of
Barrick), as the context may require
"Placing" the placing of the Placing Shares at the
Placing Price by Numis pursuant to the Placing
Agreement and the Selling Shareholders'
Agreement
"Placing Agreement" the placing agreement dated 30 January 2007
between the Company and Numis relating to the
Placing of the New Common Shares
"Placing Price" 185p per Placing Share
"Placing Shares" the 27,438,606 New Common Shares and 908,117
Sale Shares
"PNG" Papua New Guinea
"PNG Tenements" the seven exploration licences granted to
Nautilus (one of which has expired and is the
subject of a renewal application) in the PNG
Territory and (as the context may require) the
further exploration licences applied for in the
PNG Territory
"PNG Territory" means sub-sea, seafloor and sub-seafloor within
the coastal waters, territorial waters,
exclusive economic zone and continental shelf of
PNG
"ROV" remotely operated vehicle - a robotic underwater
vehicle that is tethered to a ship and
controlled remotely
"Sale Shares" the 908,117 Existing Common Shares sold by the
Selling Shareholders pursuant to the Placing
"Selling Shareholders" David Heydon (the Chief Executive Officer of the
Company), Janis Heydon (David Heydon's wife) and
Russell Debney (a Non-Executive Director of the
Company)
"Selling Shareholders' the placing agreement dated 30 January 2007
Agreement" between the Selling Shareholders, the Company
and Numis relating to the Placing of the Sale
Shares
"Shareholders" registered holders of Common Shares
"SMS" seafloor massive sulphides
"SMS deposits" seafloor massive sulphide deposits
"Solwara 1" or "Solwara a prospect within the exploration licence
1 Project" (EL1196) granted to Nautilus in the PNG
Territory
"Solwara 2" or "Solwara a prospect within the exploration licence
2 Project" (EL1383) granted to Nautilus in the PNG
Territory (which also includes Solwara 3)
"Solwara 3" or "Solwara a prospect within the exploration licence
3 Project" (EL1383) granted to Nautilus in the PNG
Territory (which also includes Solwara 2)
"Solwara 4" or "Solwara a prospect within the exploration licence
4 Project" (EL1196) granted to Nautilus in the PNG
Territory
"Solwara Projects" collectively the Solwara 1 Project, Solwara 2
Project, Solwara 3 Project and Solwara 4 Project
"SRK" Steffen Robertson & Kirsten (Australasia) Pty
Ltd trading as SRK Consulting of Perth,
Australia
"Technical Report" the independent technical assessment of seafloor
massive sulphide exploration tenements in Papua
New Guinea, Fiji and Tonga by SRK set out in
part 3 of the Admission Document
"Teck Cominco" Teck Cominco Limited
"TSX Venture Exchange" or TSX Venture Exchange Inc.
"TSXV"
"Warrants" warrants to purchase Common Shares
"Zn" zinc


The rates of exchange used for the purposes of this announcement are: Pounds Sterling 1:CDN$2.32; Pounds Sterling 1:EUR 1.52; Pounds Sterling 1:A$2.53; and Pounds Sterling 1:US$1.97.

Neither the TSXV nor the London Stock Exchange accept responsibility for the adequacy or accuracy of this press release.

Contact Information

  • Nautilus Minerals Inc.
    David Heydon
    Chief Executive
    (778) 785-7591
    Email: ceo@nautilusminerals.com
    Website: www.nautilusminerals.com
    or
    Numis Securities Limited
    John Harrison
    +44 (0) 20 7776 1500
    or
    Numis Securities Limited
    James Black
    +44 (0) 20 7776 1500
    or
    Parkgreen Communications
    Justine Howarth
    +44 (0) 20 7851 7480
    or
    Parkgreen Communications
    Clare Irvine
    +44 (0) 20 7851 7480