Nautilus Minerals Inc.
LSE : NUS

Nautilus Minerals Inc.

March 16, 2009 11:36 ET

Final Results

FOR: Nautilus Minerals Inc.

TSX: NUS
AIM: NUS

Nautilus Ends 2008 with $231 Million in Cash

TORONTO, ONTARIO--(Marketwire - March 16, 2009) - Nautilus Minerals Inc. (TSX:NUS)(AIM:NUS) (the "Company" 
or "Nautilus") announces the release of its audited consolidated financial results for the year ended December 31, 
2008, reported under Canadian GAAP, together with Management's Discussion and Analysis and Annual Information Form.

2008 Highlights

*	$231.2 million (equivalent) in cash and cash equivalents held on deposit with major banks as at December 31,
         2008

*	Completed metallurgical test work on our Solwara 1 deposit confirming a marketable copper concentrate can be
         produced from Solwara 1 ore using standard froth flotation techniques 

*	Seed capital investment in United Nickel Inc.

*	Appointed new CEO and President 

*	Discovered two new Solwara prospects in Papua New Guinea ("PNG")

*	Teck Cominco Limited discovered four new high-grade Seafloor Massive Sulphide ("SMS") systems on Nautilus'
         prospecting licences in Tonga and one in PNG

*	Submission of Mining Lease ("ML") Application to Government of PNG

*	Anglo American plc increased its stake in the Company

*	Submission of Environmental Impact Statement ("EIS") to Government of PNG 

*	Deferral of Solwara 1 mining system equipment build to take advantage of opportunities presented by the
         economic downturn

Stephen Rogers, Nautilus' CEO, commented: "A number of significant steps forward in the development of the Seafloor
Resource Production industry have been taken by Nautilus in 2008. Permitting for the world's first SMS project has
advanced with the submission of the EIS and an application for a ML. Seven new SMS deposits have been discovered in 
PNG and Tonga which continues the build of our project pipeline for the long term. Considerable progress was made in 
project definition and the selection and design of equipment. Engineering of the seafloor production equipment 
continues and the Company is actively pursuing the selection of a suitable vessel to support production at Solwara 1.
The change in market conditions at the end of 2008 presents a significant opportunity for the Company to capitalise on 
improvements in operating and capital costs."

Nautilus has filed its Annual Information Form for the year ending December 31, 2008. The Company's Financial 
Statements, Management's Discussion and Analysis, Annual Information Form and Technical Report are available from the 
Company's website, www.nautilusminerals.com and SEDAR, www.sedar.com.

About Nautilus Minerals Inc.

Nautilus is the first company to commercially explore the ocean floor for gold and copper seafloor massive sulphide 
deposits and is currently developing its first project. The Company's main focus is the Solwara 1 Project, which is 
located in the territorial waters of Papua New Guinea in the western Pacific Ocean. Nautilus is listed on the TSX and 
IM stock exchanges, and has among its largest shareholders two of the world's leading international resource 
companies, Teck (6.8%) and Anglo American (11.1%). Metalloinvest, one of the largest and fastest growing mining and 
metallurgical holding companies in Russia, beneficially owns 21.0% of its shares through Gazmetall Holding (Cypress) 
Limited.  

For more information please refer www.nautilusminerals.com or contact:

Investor Relations		                      Australian Project Office		
Nautilus Minerals Inc. (Toronto)                      Tel: +61 (7) 3318 5555
Email: investor@nautilusminerals.com 
Tel: +1 (416) 551 1100	

Numis Securities Limited
Nominated adviser: John Harrison
Corporate broking: James Black
Tel: + 44(0) 20 7260 1000	
			

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


NAUTILUS MINERALS INC. 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
(US dollars, in accordance with Canadian GAAP)

The following Management Discussion and Analysis ("MD&A") has been prepared as at March 16, 2009.  It includes 
references to United States dollars, Canadian dollars, Papua New Guinea Kina, United Kingdom pounds Sterling and
Euros.  All dollar amounts referenced, unless otherwise indicated, are expressed in United States dollars and the 
Canadian dollars are referred to as C$, Papua New Guinea Kina are referred to as PGK, United Kingdom pounds Sterling
are referred to as £ and Euros are referred to as €.

The MD&A of Nautilus Minerals Inc. (the "Company", "NMI" or "Nautilus") should be read in conjunction with the audited
consolidated financial statements and related for the year ended December 31, 2008.  This section contains forward-
looking statements that involve risks and uncertainties.  The Company's actual results may differ materially from
those discussed in forward-looking statements as a result of various factors, including, but not limited to those 
described under "Forward-Looking Information."

FORWARD-LOOKING INFORMATION

This MD&A contains certain forward-looking statements and information relating to the Company that are based on the 
beliefs of its management as well as assumptions made by management and information currently available to the 
Company.  When used in this document, the words "anticipate", "believe", "estimate", "expect" and similar expressions, 
as they relate to the Company or its management, are intended to identify forward-looking statements.  Such forward-
looking statements relate to, among other things, regulatory compliance, the sufficiency of current working capital,
the estimated cost and availability of funding for the continued exploration of the Company's exploration properties. 
Such statements reflect the current views of the Company with respect to future events and are subject to certain 
risks, uncertainties and assumptions.  Many factors could cause the actual results, performance or achievement of the
Company to be materially different from any future results, performance or achievements that may be expressed or
implied by such forward-looking statements.  

OUR BUSINESS

Overview

Nautilus is the first company to commercially explore the ocean floor for copper, gold, silver and zinc seafloor
massive sulphide ("SMS") deposits, and is well positioned to develop the world's first seafloor massive sulphide 
system. The Company's main focus for 2009 is the Solwara 1 Project which is located in the territorial waters of Papua 
New Guinea ("PNG") in the western Pacific Ocean. The proposed operations of the Company, subject to permitting and 
financing, will be the exploration for and the mining of SMS deposits for copper, zinc, gold and silver where there 
are economically viable discoveries. 

History and Corporate Structure 

The Company, as it is currently structured, was formed on May 8, 2006 when the Company acquired all of the issued and 
outstanding shares of Nautilus Minerals Niugini Limited ("NMN") (formerly Nautilus Minerals Corporation) and Nautilus
Minerals Oceania Limited ("NMO"), by issuing 30,519,541 common shares to the shareholders of NMN and NMO.  Since the 
shareholders of NMN and NMO acquired in excess of 90% of the outstanding common shares of Nautilus, the transaction 
was accounted for as a reverse take-over ("RTO").  

2008 HIGHLIGHTS

*	$231.2 million (equivalent) in cash and cash equivalents held on deposit with major banks as at December 31,
         2008

*	Completed metallurgical test work on our Solwara 1 deposit confirming that a marketable copper concentrate can
         be produced from Solwara 1 ore using standard froth flotation techniques 

*	Seed capital investment in United Nickel Inc.

*	New CEO and President appointed

*	Discovered two new Solwara prospects

*	Teck Cominco Limited discovered four new high-grade Seafloor Massive Sulphide systems on Nautilus' prospecting
         licences in Tonga and one in Papua New Guinea

*	Submission of Mining Lease Application

*	Anglo American increased its stake in the Company

*	Submission of Environmental Impact Statement to Papua New Guinean Government

*	Deferral of Solwara 1 Mining system equipment build to take advantage of opportunities presented by the
         economic downturn

$231.2 Million (equivalent) in Cash and Cash Equivalents Held on Deposit with Major Banks

Nautilus is in a strong financial position with $231.2 million (equivalent) in cash and cash equivalents held on 
deposit with banks holding an S&P rating of A+ or better, as at December 31, 2008.

Nautilus Confirms Marketable Copper Concentrate from Solwara 1 Ore

On May 23, 2008 Nautilus announced that results had been received for metallurgical test work completed on its Solwara 
1 deposit. The results confirmed that conventional flotation processing of Solwara 1 ore can produce a clean and high-
grade copper concentrate. The low Bond Ball Mill Work Index and simple flotation requirements also indicated the low
capital and operating cost potential of Solwara 1 ore treatment.

Nautilus was able to confirm that a high-quality copper concentrate with grades of better than 28% copper can be 
produced using standard flotation techniques with copper recoveries of more than 85%. The concentrates produced 
were "clean" with low levels of deleterious elements which demonstrate that the Company has a marketable concentrate 
product.

The metallurgical test work comprising mineragraphy, comminution and flotation was carried out by AMMTEC laboratories
in Perth, Western Australia. It was carried out on 10 composite samples recovered from 1.2 tonnes of Solwara 1 drill 
core collected during the 2007 drilling campaign at the Company's Solwara 1 Project, located in the territorial waters 
of PNG as documented in the Resource Report completed by Golder Associates Pty Ltd., released on February 1, 2008.

The metallurgical test program was developed to provide data to design a flotation process. The following key points 
were concluded from this metallurgical test work: 

*	Over 95% of the copper occurs as the mineral chalcopyrite; 
*	The gangue consists of pyrite, barite, anhydrite and minor silicate minerals, all of which are readily
         separated from chalcopyrite using standard flotation techniques; 
*	Grinding and flotation tests indicate effective liberation with a likely primary grind size of 80% - 55
         microns and regrind size of 80% -25 microns 
*	 Comminution data indicates that the ore has an average Bond Ball Mill Work Index of about 11 kWh/t; 
*	Flotation results obtained using standard conditions indicate that copper concentrate grades greater than 28%
         should be achieved at copper recoveries in excess of 85%; 
*	The impurity element arsenic is held predominantly in the mineral arsenopyrite. Test work indicates that the
         arsenopyrite is readily liberated from the chalcopyrite and pyrite and flotation produces marketable
         concentrates with arsenic contents below the penalty level 
*	The copper concentrates contain significant gold contents and in some cases payable levels of silver; and
*	Greater than 90% of the gold reports to sulphides either to a copper or a pyrite concentrate.  Further work
         defining gold and silver deportment will continue.

Seed Capital Investment in United Nickel Inc.

Also on May 23, 2008 Nautilus advised it has made a US$1.3 million seed capital investment for a 51% equity interest
in United Nickel Inc., a company associated with David Heydon, former director and CEO of Nautilus. The company will 
be involved in the exploration for ultra-deepwater (>4,000m) mineral resources.  The shareholder agreement for the new
subsidiary includes a mutual non-compete between the companies until the end of 2010.

New CEO and President Appointed

Stephen Rogers was appointed as the Company's new President and CEO effective from June 4, 2008.  Stephen Rogers
joined Nautilus in January 2007 as Chief Development Officer in charge of the engineering and delivery of the Solwara
1 project. Since joining Nautilus, Stephen built a strong engineering team and put into place the key engineering
contracts for the seafloor mining system.  

Nautilus' former CEO and President, David Heydon continued in the capacity as non-executive director until his
resignation from the Board of Directors on October 16, 2008.

Discovered Two new Solwara prospects

During the year the Company discovered two new seafloor massive sulphide systems, which were called Solwara 9 and 10.

On September 4, 2008 the Company announced the discovery of Solwara 10, located within a 100% owned Nautilus
exploration license (EL1383), about 24km SW of Nautilus' Solwara 2 Prospect, in the territorial waters of PNG.

Mapping along lines nominally 100m apart, using a T 200 Remotely Operated Vehicle ("ROV"), Nautilus outlined an
exposed SMS system, containing copper (up to 16.3%) and zinc (up to 41%) by mineralisation using a hand-held X-Ray
florescence ("XRF") instrument.

Sulphide mineralisation at Solwara 10 was mapped visually and confirmed by grab sampling. The SMS system outlined is
approximately 680m long, by an across strike outcrop width of 30 to 270m, averaging 110m. It lies on the seafloor
approximately 2,240m below sea level, on the south flank of a small rise. The SMS outcrop is surrounded by
unconsolidated sediment and volcanic outcrops.

Thirteen surface grab samples recovered from the prospect, averaged 5.3% copper and 11.5% zinc when analysed using a
hand-held XRF instrument (Niton XLT 592).

On September 11, 2008 the Company announced the discovery of Solwara 9a and Solwara 9b, located in the territorial
waters of PNG within EL1196 and MLA 154, both of which are wholly owned by Nautilus. MLA 154 contains other known SMS
occurrences, including Solwara 5, South and North Su, along with the Solwara 1 deposit, the SMS system that Nautilus
plans to be the world's first SMS resource project. Solwara 9 lies within 1.5km of Solwara 1.

Positive indications of mineralisation at Solwara 9 were observed during the sub-sea geophysical program, conducted
during the early part of the of the Nor Sky 2008 exploration campaign. Mapping and sampling using a T 200 ROV
identified two exposed SMS systems. Initial results obtained from Solwara 9 samples using a hand-held XRF instrument
indicate grades of up to 21.4% copper and 29.9% zinc. Processing of the geophysical data is ongoing and is expected to
highlight additional targets within the MLA area.

Sulphide mineralisation at Solwara 9a and 9b was mapped visually and confirmed by grab sampling. The SMS systems
outlined are approximately 220m and 180m long respectively, by an across strike width averaging 40m. The systems lie
on the seafloor approximately 1,680m below sea level, on the south-west flank the North Su knoll. The SMS outcrop is
surrounded by unconsolidated sediment and volcanic outcrops.

Teck Cominco Limited discovered four new high-grade Seafloor Massive Sulphide systems on Nautilus' prospecting
licences in Tonga and one in Papua New Guinea.

On September 17, 2008 the Company was advised by its exploration partner, Teck Cominco Limited ("Teck") that it had
discovered four new high-grade SMS systems on Nautilus' prospecting licences in the Exclusive Economic Zone of the
Kingdom of Tonga.  Laboratory testing of 17 seafloor massive sulphide samples, across the four newly discovered SMS
systems, returned an average grade of 16.4 g/t gold, 8.2% copper, 12.3% zinc and 184 g/t silver.

The Maka SMS system is located in a water depth of approximately 1,660m and lies on the crest of the North East Lau
Spreading Centre. Sulphide outcrops up to 4m high have been mapped, using video camera and sonar instruments from a
ROV, protruding from a base of predominantly pillow basalts. The strike length was estimated at 130m with a width of
100m.

The Tunu-Sosisi SMS system is comprised of three sub systems at a water depth of approximately 1,635m along a roughly
linear zone over 1.7 km that lies on a major structural zone cross cutting the southern rim of the North East Lau
Caldera. All three sub systems have sulphide outcrops protruding from a soft sedimentary base. Estimated size of each
of the sub systems are: Tunu (150 x 100m), Sosisi-1 (150 x 60m) and Sosisi-2 (105 x 70m).

The Pia SMS system is located at a water depth of approximately 1,470m and in close proximity to a major structural
zone that cross cuts the northern rim of the North East Lau Caldera. The approximate length of the system is 200m with
a width of 80m. All sulphide outcrops protrude from a soft sedimentary base.

The Niua SMS system is comprised of two sub systems that lie approximately 1,300m apart and within individual crater
like depressions. The first system, Niua-2 is at a water depth of 900m and has an estimated strike length of 230m and
width of 170m. The second system, Niua-3 is at a water depth of 1,180m with an estimated strike length of 270m and
width of 250m.

On December 12, 2008 the Company was advised by Teck of the discovery of a new SMS system - Solwara 11, on a Nautilus
Exploration License ("EL") in the territorial waters of PNG.

Teck, working under their earn-in option to certain Nautilus ELs, submitted a report detailing the discovery of
Solwara 11.  Work was completed from the DEA Surveyor, a 61m long vessel, on exploration license EL1647. Samples were
recovered from the seafloor of the Willaumez district at water depths ranging from 1300 - 1500m.

Teck reported that:
*	Sulphide outcrops up to 10m high were mapped using video camera and sonar instruments from a Remotely
         Operated Vehicle ("ROV") protruding from a base of predominantly pillow basalts. 
*	Solwara 11 comprises of at least three defined metal-bearing chimney fields plus other associated 
         iron/manganese oxide and/or silica-iron sulphide zones. These demonstrate a broad hydrothermal alteration
         system within an area of approximately 2.8km x 2km. 
*	Chimney fields are largely inactive except one where hot water was observed. 
*	This discovery resulted from multibeam, backscatter, and water-column physical and chemical data collected
         from Teck cruises in the Bismarck Sea during April and June 2008. 

Submission of Mining Lease Application

On October 3, 2008 the Company announced that the Government of PNG had registered the receipt of Nautilus' Mining
Lease ("ML") application over Solwara 1.  A Development Proposal, which details the planned development of the
Company's Solwara 1 Project, was lodged simultaneously with the Mining Lease application and accepted by Mr Kepis
Wali, Managing Director of the Minerals Resources Authority (MRA) on behalf of the Government of PNG on September 30,
2008.

The lodging of this ML application was a key milestone for the Solwara 1 Project and a historic event in the infancy
of the seafloor mining industry. The lodging of the ML application formally commenced the permitting process for the
development of the Solwara 1 Project as governed by PNG's Mining and Environment Acts, which clearly outlines
compliance standards and the review process that is required for the development to proceed. 

Anglo American Increases Stake in Nautilus 

On November 5, 2008 the Company announced that a wholly owned subsidiary of Anglo American plc ("Anglo American"),
subscribed for an additional 8,933,702 common shares in the Company to increase its equity stake in Nautilus to 11.1%,
as at October 31, 2008. Anglo American elected to exercise, in full, the anti-dilution right granted to it in its
original subscription agreement dated October 20, 2006 (the "Agreement") the terms of which were negotiated at the
time of the original subscription.
 
Under the Agreement, Anglo American received a one-off right to increase its holding to 11.1% of the Company's common
shares as at October 31, 2008.  The subscription took Anglo American's total shareholding to 17,267,036.  The agreed
price of the issue was based on a formula linked to the volume weighted average price of Nautilus' common shares over
the month of October 2008 and resulted in 5,177,066 shares being issued at C$1.33 (US$1.13) and 3,756,636 shares being
issued at C$1.46 (US$1.24). Total funds received were C$12.4 million (US$10.5 million), based on an exchange rate at
the time of C$1.00 = US$0.8468.

The proceeds of the subscription will be used to fund development of Nautilus' business.

Submission of Environmental Impact Statement to Papua New Guinean Government

On November 6, 2008 the Papua New Guinea government accepted the Solwara 1 Project Environmental Impact Statement
("EIS") for review. Acceptance of the EIS confirmed that the document complied with the submission requirements of the
Environment Act 2000. 

PNG has a well-established environmental permitting process for mineral projects. Review and public consultation of
the environmental assessment will now progress over the coming months. During this time, as part of the permitting
process, Nautilus will continue to conduct community outreach and consultation activities as it has done for the last
two years.

Nautilus Announced Deferral of Solwara 1 Mining System Equipment Build 

On December 17, 2008 the Company announced that it had decided to adopt a more cautious strategy and to preserve its
strong cash position by delaying the construction of the equipment for the Solwara 1 mining system. The decision was
driven both by the challenges and opportunities presented by the unprecedented speed and severity of the global
economic downturn and the uncertainty in the financial and commodity markets. The Company will continue to move
forward with permitting for its Solwara 1 Project, as well as with various engineering and testing activities. In
addition, the Company will continue with its focused exploration program to increase its resource base.
 
The Board of Directors and management undertook a thorough review of all operations. Directors and management required 
greater certainty that all elements needed to progress the project to completion are in place before making major
equipment expenditures. Deferring the equipment build for the mining system was deemed an appropriate decision to
preserve the strong cash position, whilst also providing an opportunity to realise cost savings and possible benefits
presented by the current market downturn. These may include reduced material and equipment costs, faster manufacturing
times and lower logistics costs given a less heated market. 

To preserve capital, contracts and purchase orders were suspended or terminated depending on their criticality to the
revised development program. All of the supplier agreements contained provisions for termination without penalty. The
Mining Support Vessel agreement announced on June 20, 2008 has been terminated. The Company will now revisit the
market to find alternative tonnage. 

As a result of this decision, the Company reduced its workforce by approximately 30% to a level that will allow it to
preserve cash while continuing to actively seek approval for its Solwara 1 Mining Licence application and for its
environmental permit. Ongoing consultation activities with stakeholders, including local communities relating to
permitting and the Solwara 1 Project will continue along with engineering work on the Solwara 1 mining system to
enable a prompt restart when conditions allow. Additionally the Company will further its exploration activities to
build on the pipeline of seafloor resources.

As a consequence, the Board believes that the previously announced timetable for first ore production at the Solwara 1
Project is likely to be delayed beyond December 2010. The Company will update the market on the new timeline
milestones for production at Solwara 1 once market conditions stabilise.


SELECTED ANNUAL INFORMATION

The following table sets out selected annual financial information of Nautilus Minerals Inc. and is derived from the
Company's audited consolidated financial statements per the periods ended December 31, 2008, 2007 and 2006.  The
information set out below should be read in conjunction with the MD&A and consolidated financial statements and
related Notes prepared as of March 28, 2008 for the year ended December 31, 2007.  Amounts are expressed in US dollars 
unless otherwise indicated.

                                  --------------------------------------------------------
	                                    2008                 2007                2006
                                  --------------------------------------------------------
Sales	                                    $Nil                 $Nil                $Nil
------------------------------------------------------------------------------------------
Loss for the year	                    $81,589,489          $31,258,557          $8,739,788
------------------------------------------------------------------------------------------
Loss per share (basic and diluted)          $0.55                $0.24               $0.16
------------------------------------------------------------------------------------------
Total assets	                   $269,983,346         $327,096,020        $125,169,648
------------------------------------------------------------------------------------------
Total long-term liabilities                  $Nil                 $Nil                $Nil
------------------------------------------------------------------------------------------
Dividends declared                           $Nil                 $Nil                $Nil
------------------------------------------------------------------------------------------

Loss for the year

The increase in the net loss for the year was primarily attributable to a substantial increase in the foreign exchange
loss.  The foreign exchange loss consists of realised and unrealised gains and losses on actual cash transactions
during the period and revaluations of both cash and intercompany loans denominated in different currencies at balance
date.  The net loss on cash transactions and balances for the period was $5.6 million.  A net unrealised loss of $33.6
million on the revaluation of intercompany balances at balance date was also recorded.

Total assets

The decrease in total assets for the year is primarily attributable to a decrease in cash and cash equivalents from
$310.0 million in 2007 to $231.1 million in 2008, offset by an increase in property, plant and equipment from $3.8
million in 2007 to $21.0 million in 2008.  

RESULTS OF OPERATIONS

The following discussion provides an analysis of the financial results of Nautilus: 

For the year ended December 31, 2008

Loss for the period

Net loss
For the year ended December 31, 2008, the Company recorded a loss of $81.6 million ($0.55 loss per share) as compared
to a loss of $31.3 million ($0.24 loss per share) for the same period in 2007.  

Exploration expense
Exploration expense decreased slightly to $38.7 million (2007 - $40.9 million).

Interest income
Interest income earned on cash and cash equivalents held during 2008 was $11.7 million (2007 - $12.5 million).  The
decrease was attributable to the reducing cash held during the year and a decrease in interest rates.  The Company
maintains its cash and cash equivalents with banks with an S&P rating of A+ or better.


Non-cash stock based compensation
A total of $6.7 million in non-cash stock based compensation was expensed during the period (2007 - $6.9 million).  

Foreign exchange gains and losses
A foreign exchange loss of $39.2 million was recorded during the period (2007 - gain of $10.3 million).  The foreign
exchange loss consists of realised and unrealised gains and losses on actual cash transactions during the period and
revaluations of both cash and intercompany loans denominated in different currencies at balance date.  The net loss on
cash transactions and balances for the period was $5.6 million.  A net unrealised loss of $33.6 million on the
revaluation of intercompany balances at balance date was also recorded.

Depreciation expense
Depreciation expense increased to $0.7 million (2007 - $0.2 million) due to an increase in property, plant and
equipment acquired. 

Other general and administrative costs
Other general and administrative expenses consist of:

*	management fees and salaries of $2.3 million (2007 - $1.4 million), an increase of $0.9 million as a result
        of higher activity at a corporate and project level over the last 12 months; 
*	wages and salaries of $2.3 million (2007 - $1.1 million), an increase of $1.2 million as a result of increased
        employee numbers over the last 12 months;
*	general administrative expenses of $2.1 million (2007 - $1.2 million), an increase of $0.9 million is
        attributable to an increase in lease and other related office costs due to the increase in employee numbers
        and activity; 
*	shareholder information expenses of $0.6 million (2007 - $0.7 million), in line with the previous year;
*	travel expenses of $0.7 million (2007 - $0.6 million), in line with the previous year; 
*	professional fees of $0.9 million (2007 - $0.6 million), an increase of $0.3 million; and
*	listing and filing fees of $0.2 million (2007 - $0.5 million).  2007 listing fees included additional costs
        associated with the AIM listing.

Overall, Nautilus' expenses increased to $94.8 million for the year ended December 31, 2008, up from $43.8 million for
the same period in 2007 which is predominantly attributable to the movement in foreign exchange gains and losses. 
Engineering work directly related to the purchase of equipment has been included as assets under construction and is
detailed below under Investing activities. 

Cash flows

Operating activities
Cash used in operating activities for the year ended December 31, 2008 was $72.3 million as compared to cash flows
from operating activities of $20.6 million for the year ended December 31, 2007.  The increase in cash used in
operating activities is primarily attributable to the income and expenditures described above less an increase in
accounts payable and accrued liabilities of $2.0 million. 

Investing activities
Cash used in investing activities for the year ended December 31, 2008 was $18.0 million as compared to $1.3 million
in the year ended December 31, 2007.  The increase in cash used in investing activities is attributable to the
acquisition of mining equipment of $13.8 million (2007 - $1.1 million), and an increase in restricted cash of $4.2
million compared to $0.1 million in the year ended December 31, 2007.
 

Financing activities
Cash from financing activities for the year ended December 31, 2008 was $11.5 million as compared to $219.5 million in
the year ended December 31, 2007.  The cash from financing activities in 2008 resulted primarily from Anglo exercising
its anti-dilution right.  The cash from financing activities in 2007 resulted from private placements and warrants. 

SUMMARY OF QUARTERLY RESULTS (unaudited)

The following table sets out selected unaudited quarterly financial information of Nautilus and is derived from
unaudited quarterly consolidated financial statements prepared by management.  The Company's interim consolidated
financial statements are prepared in accordance with Canadian generally accepted accounting principles and expressed
in US dollars.


                                                                                        
                                       Income (Loss) and                                
                                    Comprehensive Income   Basic Income   Diluted Income
                        Revenues   (Loss) for the Period     (Loss) per       (Loss) per
Period              (in millions)           (in millions)         Share            Share
-----------------------------------------------------------------------------------------
4th Quarter 2008             Nil        $          (35.2) $       (0.24) $         (0.24)
3rd Quarter 2008             Nil        $          (38.4) $       (0.26) $         (0.26)
2nd Quarter 2008             Nil        $           (8.8) $       (0.06) $         (0.06)
1st Quarter 2008             Nil        $            0.8  $        0.01  $          0.01
4th Quarter 2007             Nil        $           (7.5) $       (0.06) $         (0.06)
3rd Quarter 2007             Nil        $          (12.4) $       (0.10) $         (0.10)
2nd Quarter 2007             Nil        $           (6.2) $       (0.05) $         (0.05)
1st Quarter 2007             Nil        $           (5.1) $       (0.05) $         (0.05)



LIQUIDITY AND CAPITAL RESOURCES 

The Company's financial objective is to ensure that it has sufficient liquidity in the form of cash and/or debt
capacity.  Nautilus' goal is to finance its ongoing requirements to support the Company's strategy the first company
to commercially extract gold, copper, silver and zinc from the seafloor.  On December 17, 2008, the Company announced
it had decided to take a more cautious strategy and to preserve its strong cash position by delaying the construction
of the equipment for the Solwara 1 mining system.  The decision was driven by both the challenges and opportunities
presented by the unprecedented speed and severity of the global economic downturn and the uncertainty in the financial
and commodity markets.  The Company will continue to move forward with permitting of its Solwara 1 project, as well as
with various engineering and testing activities.  In addition, the Company will continue with its focussed exploration
program to increase its resource base. 

To preserve capital, contracts have been suspended or terminated depending on their criticality to the revised
development program.  All of the supplier agreements contain provisions for termination without penalty.  The Mining
support vessel agreement has also been terminated. 
 

Key financial measures

The Company uses the following key financial measures to assess its financial condition and liquidity:

                                            2008                2007
Debt to Equity                               Nil                 Nil
Current Ratio                          16.7 to 1           39.8 to 1
Working Capital                   $218.5 million      $302.1 million
Cash and Cash Equivalents         $231.1 million      $310.0 million

Under the Company's Investment Policy, cash cannot be invested for more than 90 days and must be held on deposit with
banks with an S&P credit rating of A+ or better.

Outlook and capital requirements 

The Company's known contractual obligations at December 31, 2008, are quantified in the table below:

                                                                          
                                                 September 30 September 30
                                                         2008         2007
                                                            $            $
a) Non-cancellable operating leases                                       
   Not later than 1 year                              290,158      418,909
   Later than 1 year and not later than 2 years        87,752      245,610
   Later than 2 years and not later than 3 years       54,034        8,100
   Later than 3 years and not later than 4 years        5,471        6,894
   Later than 4 years and not later than 5 years          522        3,484
   Later than 5 years                                       -            -
                                                 --------------------------
                                                      437,937      682,997
                                                 --------------------------

b) Non-cancellable consulting agreements                                  
   Not later than 1 year                               84,947      370,320
   Later than 1 year and not later than 2 years             -            -
   Later than 2 years and not later than 3 years            -            -
   Later than 3 years and not later than 4 years            -            -
   Later than 4 years and not later than 5 years            -            -
   Later than 5 years                                       -            -
                                                 --------------------------
                                                       84,947      370,320
                                                 --------------------------
   Total Commitments                                  522,884    1,053,317
                                                 --------------------------
                                                 --------------------------

The Company is involved in mineral exploration which is a high risk activity and relies on results from each
exploration program to determine if areas justify any further exploration and the extent and method of appropriate
exploration to be conducted.

The Company has budgeted to spend approximately $13 million for exploration work in 2009 on the Solwara 1 Project and
other regional exploration programs. If exploration results and engineering studies are positive, the Company may
consider committing additional funds to finance further engineering and exploration studies. In addition, the Company
may consider further increases in staffing levels.

In order to maintain the exploration leases, licenses and permits in which the Company is involved, the Company is
expected to fulfill the minimum annual expenditure conditions under which the tenements are granted.  These
obligations may be varied from time to time, subject to approval, and are expected to be fulfilled in the normal
course of operations of the Company.  The exploration commitments are based on those exploration tenements that have
been granted and may increase or decrease depending on whether additional applications are granted, relinquished or
form joint ventures in the future.

On December 17, 2008 the Company announced it had decided to adopt a more cautious strategy and to preserve its cash
position by delaying the construction of the equipment for the Solwara 1 mining system.  As a result all contracts
relating to the Solwara 1 mining system have been terminated or suspended, depending on their criticality to the
revised development program.  All of the supplier agreements contained provisions for termination without penalty.  

The contracts that have been suspended will not incur any additional costs, unless instructed by the Company to
continue with engineering studies, until those contracts are reactivated.  The value of the suspended contracts is
$81.6 million.  The suspended contracts also contain provisions allowing the Company to cancel at any time.  The
vessel agreements with North Sea Shipping Holding AS ("North Sea Shipping") to provide a mining services vessel was
also terminated.

A letter of credit of $1.5 million is held by Australia and New Zealand Banking Group in favour of Technip Inc.
("Technip").  Technip is only entitled to have recourse to the Nautilus issued letter of credit if Nautilus does not
pay an amount due and owing under the contract and subject to receiving written notice from Technip.

A letter of credit of $2.55 million is held by Australia and New Zealand Banking Group in favour of North Sea
Shipping.  North Sea Shipping is only entitled to have recourse to the Nautilus issued letter of credit if Nautilus
does not pay an amount due and owing under the contract and subject to receiving written notice from North Sea
Shipping.  The Letter of Credit expires on June 30, 2010.

The Company will need to obtain significant additional capital to develop any of its exploration properties, including
Solwara 1, and debt financing may not be obtainable for a project such as that contemplated. The Company may need to
rely on the equity markets for future financing of the Company's development of Solwara 1 in the form of joint
ventures, leasing options and offtake agreements which may not be obtainable for the project as contemplated.

Nautilus expects that the cash and cash equivalents will be sufficient to pay for the continued budgeted exploration,
capital expenditure and general and administrative costs of the Solwara 1 Project for the next 12 months.  Depending
upon future events, the rate of expenditures and other general and administrative costs could increase or decrease. 
Other than as disclosed above, the Company has not formally sought to secure sources of additional financing to fund
future expenditures.
 
Nautilus' opinion concerning liquidity and its ability to avail itself in the future of the financing options
mentioned in the above forward-looking statements are based on currently available information. To the extent that
this information proves to be inaccurate, future availability of financing may be adversely affected. Factors that
could affect the availability of financing include Nautilus' performance (as measured by various factors including the
progress and results of its exploration work), the state of international debt and equity markets, investor
perceptions and expectations of past and future performance, the global financial climate, metal and commodity prices
political events in the south Pacific, obtaining approvals from the PNG government for the Solwara 1 Project, drilling
and metallurgical testing results, results from environmental studies, engineering studies and detailed design of
equipment.

Foreign currency exchange rate risk

The Company's operations are located in several different countries, including Canada, Australia, PNG, Tonga, Solomon
Islands, Fiji and New Zealand and require equipment to be purchased from several different countries. Nautilus has
entered into key contracts in United States dollars, British Pounds sterling and Euros.  Nautilus' future
profitability could be affected by fluctuations in foreign currencies relative to these countries' currencies. The
Company has not entered into any foreign currency contracts or other derivatives to establish a foreign currency
protection program but may consider such transactions in the future.

Foreign exchange risk is mitigated by the Company maintaining its cash in a "basket" of currencies that reflect its
current and expected cash outflows to take advantage of natural hedges.  

As at December 31, 2008 the Company held its cash in the following currencies:

Currency      % of total cash in 
Denomination      US$ terms held 
USD                           47 
Euro                          14 
CAD                            3 
GBP                           29 
AUD                            7 
              ------------------
                             100
              ------------------
              ------------------

Interest rate risk

The Company holds cash and cash equivalents which earn interest at variable rates as determined by financial
institutions.

For the year ending December 31, 2008, with other variables unchanged, a 1% increase (decrease) in the interest rate
would have increased (decreased) our net earnings by $2,844,246.  There would be no significant effect on other
comprehensive income.

Credit risk

The Company places its cash only with banks with an S&P credit rating of A+ or better. 

Our maximum exposure to credit risk at the reporting date is the carrying value of cash and cash equivalents and other
receivables.

Liquidity risk

The Company manages liquidity by maintaining adequate cash and short-term investment balances. 

In addition, the Company regularly monitors and reviews both actual and forecasted cash flows.

The exposure of the Company to liquidity risk is considered to be minimal.


TRANSACTIONS WITH RELATED PARTIES

Included in management fees is $46,350 (2007 - $51,578) for management fees paid to a company controlled by a
director. 

Included in accounts payable and accrued liabilities is $15,094 (2007 - $21,781) for amounts owed to a company
controlled by a director of the Company for management and consulting fees.

 
CRITICAL ACCOUNTING POLICIES 

The details of the Company's accounting policies are presented in Note 2 of the audited consolidated financial
statements for the year ended December 31, 2008.  The following policies are considered by management to be essential
to understanding the processes and reasoning that go into the preparation of the Company's financial statements and
the uncertainties that could have a bearing on its financial results:

Resource properties

Acquisition and exploration costs are expensed as incurred since the Company is in the process of exploring its
mineral tenements and has not yet determined whether these properties contain ore reserves that are economically
recoverable.  If and when the Company's management determines that economically extractable resource have been
established, the subsequent costs incurred to develop such property, including costs to further delineate the ore body
will be capitalised. 

Adoption of new accounting standards

The Canadian Institute of Chartered Accountants ("CICA") has issued three new standards which affect the financial
disclosures and results of operations of the Company for interim and annual periods beginning January 1, 2008. The
Company adopted the requirements commencing in the three month period ended March 31, 2008.  The adoption of these new
standards has not had any material impact on the Company's financial results.

Section 1535 - Capital disclosures

This section establishes standards for disclosing information about an entity's capital and how it is managed.  Under
this standard the Company is required to disclose the following, based on the information provided internally to the
entity's key management personnel:

(i)	qualitative information about its objectives, policies and processes for managing capital; 
(ii)	summary quantitative data about what it manages as capital;
(iii)	whether during the period it complied with any externally imposed capital requirements to which it is subject;
         and
(iv)	when the Company has not complied with such externally imposed capital requirements, the consequences of such
         non-compliance.

Section 3031 - Inventories

This section prescribes the accounting treatment for inventories and provides guidance on the determination of costs
and its subsequent recognition as an expense, including any write-down to net realisable value. It also provides
guidance on the cost formulas that are used to assign costs to inventories.

Section 3862 - Financial Instruments - Disclosures and Section 3863 - Financial Instruments - Presentation

Section 3862 requires the Company to provide disclosure of quantitative and qualitative information in their financial
statements that enable users to evaluate (a) the significance of financial instruments for the entity's financial
position and performance; and (b) the nature and extent of risks arising from financial instruments to which the
entity is exposed during the period and at the balance sheet date, and management's objectives, policies and
procedures for managing such risks. The Company is required to disclose the measurement basis or bases used, and the
criteria used to determine classification for different types of instruments. 

Section 3863 replaces the existing requirements on presentation of financial instruments in Section 3861.

Section 1400 - Going Concern

This amendment to CICA Handbook Section 1400, "General Standards of Financial Statement Presentation" in relation to
going requires management to assess an entity's ability to continue as a going concern.  When management is aware of
material uncertainties related to events or conditions that may cast doubt on an entity's ability to continue as a
going concern, those uncertainties must be disclosed.  In assessing the appropriateness of the going concern
assumption, the standard requires management to consider all available information about the future, which is at
least, but not limited to, twelve months from the balance sheet date.

Future Accounting Pronouncements

Section 3064 - Goodwill and Intangible Assets

This Section establishes revised standards for the recognition, measurement, presentation and disclosure of goodwill
and intangible assets. The adoption of this standard is not expected to have any material impact on the Company's
financial results.

International Financial Reporting Standards ("IFRS")

In February, 2008 the Canadian Accounting Standards Board confirmed that International Financial Reporting Standards
will replace Canada's current generally accepted accounting principles for publicly accountable profit oriented
enterprises effective January 1, 2011. The transition date of January 1, 2011 will require the restatement, for
comparative purposes, of amounts reported for the year ended December 31, 2010. The Company is presently evaluating
the effect these standards will have on its consolidated financial statements.


OUTSTANDING SHARE DATA

The following is a summary of the Company's outstanding share data as of March 16, 2009.

Common shares

A total of 155,558,884 common shares are outstanding.

Convertible securities

The Company now has 14,462,306 options and 3,257,907 warrants outstanding. 

Stock Options
A total of 14,462,306 stock options are issued and outstanding, with expiry dates ranging from May 8, 2009 through to
November 30, 2012.  The weighted average exercise price for all stock options is C$3.80.  All stock options entitle
the holders to purchase common shares of the Company.

Warrants
A total of 3,257,907 warrants are issued and outstanding, with each warrant entitling the holder to purchase one
common share of the Company with an expiry date of November 26, 2009 at a price of C$3.80. 
 

INTERNAL CONTROLS

Internal control over financial reporting

The Company's management is responsible for establishing and maintaining adequate internal control over financial
reporting.  Any system of internal control over financial reporting, no matter how well designed, has inherent
limitations.  Therefore, even those systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.

There have been no changes in the Company's internal control over financial reporting during the year ended December
31, 2008 that have materially affected, or are reasonably likely to materially affect, internal control over financial
reporting.

In accordance with the requirements of National Instrument 52-109 Certification of Disclosure in Issuers' Annual and
Interim Filings, the Company's management, including the Chief Executive Officer and Chief Financial Officer,
acknowledges responsibility for the design and operation of disclosure controls and procedures and internal controls
over financial reporting, and the requirement to evaluate the effectiveness of these controls on an annual basis.

Management evaluated the effectiveness of these controls at the end of the reporting period and based on this
evaluation concluded that the Company's internal controls over financial reporting and the disclosure controls and
procedures were effective as at December 31, 2008. 

During the year an independent review was undertaken incorporating disclosure controls and procedures (DC&P) and
internal controls over financial reporting (ICFR).  The review determined that no material weaknesses or limitations
of scope of design of ICFR and DC&P are apparent.

ADDITIONAL SOURCES OF INFORMATION

Additional sources of information regarding Nautilus Minerals Inc. are on SEDAR at www.sedar.com and is on the
Company's website www.nautilusminerals.com.
 

                                                                        
                                                                        PricewaterhouseCoopers LLP
                                                                        Chartered Accountants
                                                                        PricewaterhouseCoopers Place
                                                                        250 Howe Street, Suite 700
                                                                        Vancouver, British Columbia
                                                                        Canada V6C 3S7
                                                                        Telephone +1 604 806 7000
                                                                        Facsimile +1 604 806 7806


                        AUDITORS' REPORT

To the Shareholders of Nautilus Minerals Inc.

We have audited the consolidated balance sheets of Nautilus Minerals Inc. (the "Company") as at December 31, 2008 and
2007 and the consolidated statements of loss, comprehensive loss and deficit and cash flows for each of the years in
the two year period ended December 31, 2008. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require
that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial
position of the Company as at December 31, 2008 and 2007 and the results of its operations and its cash flows for each
of the years in the two year period ended December 31, 2008 in accordance with Canadian generally accepted accounting
principles.


"Signed"  PricewaterhouseCoopers LLP
Chartered Accountants
Vancouver, BC
March 16, 2009
 
"PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, or, as the
context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a
separate and independent legal entity. 


Nautilus Minerals Inc.                                               
(an exploration stage company)                                       
                                                                     
Consolidated Balance Sheets                                          
(expressed in U.S. dollars)
--------------------------------------------------------------------------------------------------------------------
                                                                
                                                                     
                                           December 31  December 31  
                                                  2008         2007  
                                                     $            $
                                         -------------------------- 
Assets
                                                               
Current assets                                                       
Cash and cash equivalents                  231,143,802  309,969,145  
Prepaid expenses and advances                1,230,705      874,313 
                                         --------------------------
                                           232,374,507  310,843,458 
 
Restricted cash (note 7)                     4,398,936      201,436  
Property, plant and equipment (note 8)      20,996,536    3,837,759  
Mineral properties (note 9)                 12,213,367   12,213,367 
                                         --------------------------
 
                                           269,983,346  327,096,020 
                                         --------------------------
                                         --------------------------
Liabilities                                                        
  
Current liabilities                                                  
Accounts payable and accrued liabilities    13,891,578    7,819,826  
                                         --------------------------

Non-controlling interest (note 12)             243,134            - 
                                         --------------------------

Shareholders' Equity                                                 
Share capital (note 11a)                   343,598,701  331,406,593  
Contributed surplus (note 11b)              36,144,187   30,174,366  
Deficit                                   (123,894,254) (42,304,765)  
                                         --------------------------
                                           255,848,634  319,276,194
                                         --------------------------
                                           269,983,346  327,096,020
                                         --------------------------
                                         --------------------------
  
Commitments and contingencies (note 14)                              
Subsequent events (note 15)                                          
                                                             
                                                                     
On behalf of the Board:                                              
                                                                     
Signed: "Russell Debney"                                             
                                                                     
Signed: "Stephen Rogers"                                             


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS

 
Nautilus Minerals Inc.                                                
(an exploration stage company)                                        
                                                                      
Consolidated Statements of Loss and Comprehensive Loss and Deficit    
(expressed in U.S. dollars)                                           
--------------------------------------------------------------------------------------------------------------------
                                                                      
                                                                 
                                                                      
                                                     Year         Year
                                                    ended        ended
                                              December 31  December 31
                                                     2008         2007
                                                        $            $
                                           ----------------------------

Expenses                                                              
Exploration costs (note 9)                     38,712,903   40,876,742
Stock-based compensation                        6,659,210    6,897,376
Wages and salaries                              2,322,492    1,140,248
Management fees and salaries                    2,250,067    1,414,540
General administrative                          2,092,266    1,150,238
Professional fees                                 900,523      580,781
Depreciation                                      725,363      238,714
Travel                                            659,659      606,800
Shareholder information                           550,557      677,996
Listing and filing fees                           172,549      496,633
Foreign exchange loss (gain)                   39,240,192  (10,292,810)
                                           ----------------------------
                                               94,285,781   43,787,258
                                           ----------------------------

Other Income (Loss)                                                   
Interest income                                11,725,514   12,528,701
Recovery of exploration costs                     571,894            -
Loss on sale of fixed assets                      (22,846)           -
Rent and other income                              27,129            -
                                           ----------------------------
                                               12,301,691   12,528,701
                                           ----------------------------

Income (Loss) and comprehensive income                                
(loss) before non-controlling interest        (81,984,090) (31,258,557)

Non-controlling interest                          394,601            -
                                           ----------------------------
Income (Loss) and comprehensive income                                
 (loss)                                       (81,589,489) (31,258,557)

Deficit - Beginning of period                  42,304,765   11,046,208
                                           ----------------------------


Deficit - End of period                       123,894,254   42,304,765
                                           ----------------------------
                                           ----------------------------


Income (Loss) per share -- basic
 and diluted                                        (0.55)       (0.24)
                                           ----------------------------
                                           ----------------------------

Weighted average number of shares                                     
outstanding -- basic and diluted              147,555,319  127,892,271
                                           ----------------------------
                                           ----------------------------

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS

			
Nautilus Minerals Inc. 
(an exploration stage company) 

Consolidated Statements of Cash Flows 
(expressed in U.S. dollars)
-------------------------------------------------------------------------------------------------------------------- 


                                                    Year         Year
                                                   ended        ended
                                             December 31  December 31
                                                    2008         2007
                                                       $            $
                                           ---------------------------
Cash flows used in operating activities                  
Income (Loss) for the period                 (81,589,489) (31,258,557)
 Items not affecting cash                                 
  Stock-based compensation                     6,659,210    6,897,376
  Non-controlling interest                       241,634            -
  Depreciation                                   725,363      238,714

Change in non-cash working capital items                 
  Prepaid expenses and advances                 (356,392)    (589,135)
  Accounts payable and accrued liabilities     2,017,419    4,111,308
                                           ---------------------------
                                             (72,302,255) (20,600,294)
                                           ---------------------------
Cash flows from financing activities                     
Share capital issued, net of share issuance              
 costs                                        11,504,219  219,465,934
                                           ---------------------------

Cash flows used in investing activities                  
Restricted cash                               (4,197,500)     (99,762)
Purchase of equipment                        (13,829,807)  (1,153,598)
                                           ---------------------------
                                             (18,027,307)  (1,253,360)
                                           ---------------------------

Increase (decrease) in cash and cash                     
 equivalents                                 (78,825,343) 197,612,280

Cash and cash equivalents - Beginning of                 
 period                                      309,969,145  112,356,865
                                           ---------------------------

Cash and cash equivalents - End of period    231,143,802  309,969,145
                                           ---------------------------
                                           ---------------------------

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS


Nautilus Minerals Inc.
(an exploration stage company)

Notes to Consolidated Financial Statements
December 31, 2008 and 2007
(expressed in U.S. dollars)
--------------------------------------------------------------------------------------------------------------------
				
 
1. Basis of Presentation, Operations and Subsidiaries

Basis of Presentation

These consolidated financial statements have been prepared in accordance with Canadian Generally Accepted Accounting
Principles ("Canadian GAAP").

These consolidated financial statements are presented in United States Dollars ("USD"), the functional and
presentational currency of the Company.

Nature of Operations
Nautilus Minerals Inc. (the "Company", "Nautilus" or "NMI") is engaged in the exploration of the ocean floor for gold
and copper seafloor massive sulphide deposits.   The Company is an enterprise in the exploration stage.  The
exploration activity involves exploration of underwater gold and copper seafloor massive sulphide deposits in the
western Pacific Ocean. The Company's main focus for 2009 is the Solwara 1 Project in Papua New Guinea in the western
Pacific Ocean.  The proposed principal operations of the Company subject to permitting will be the mining of copper,
zinc, gold and silver deposits where there are economically viable discoveries.

Subsidiaries
Subsidiaries, which are those entities in which the Company has an interest of more than one half of the voting rights
or otherwise has power to govern the financial and operating policies, are consolidated.  The existence and effect of
potential voting rights that are presently exercisable or presently convertible are considered when assessing whether
the Company controls another entity.

Intercompany transactions, balances, income and expenses are eliminated on consolidation.

These consolidated financial statements include the accounts of the Company (Canada) and all of its subsidiaries.  The
significant subsidiaries include Nautilus Minerals Niugini Limited (Papua New Guinea), Nautilus Minerals Oceania
Limited (Vanuatu), Nautilus Minerals Pacific Proprietary Limited (Australia), Nautilus Minerals (Tonga) #1 Limited
(Tonga), Nautilus Minerals Solomon Islands Limited (Solomon Islands), Nautilus Minerals Singapore Limited (Singapore)
and United Nickel Inc. (Canada).

2. Significant Accounting Policies

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out
below.  These policies have been consistently applied to prior periods, unless otherwise stated.

Cash and Cash Equivalents
For purposes of reporting cash flows, the Company considers cash and cash equivalents to include amounts held in banks
and highly liquid investments with maturities at time of purchase of 90 days or less.

Mineral Properties

The Company expenses all exploration and evaluation expenditures until management conclude that a future economic
benefit is more likely than not of being realised.  In evaluating if expenditures meet this criterion to be
capitalised, management utilise several different sources of information depending on the level of exploration.  While
the criteria for concluding that an expenditure should be capitalised is always probable, the information that
management use to make that determination depends on the level of exploration.

Costs relating to property acquisitions are capitalised as mineral properties.

Costs for a producing prospect are amortised on a unit-of-production method based on the estimated life of the ore
reserves, while those costs for the prospects abandoned are written off.

The recoverability of the amounts capitalised for the undeveloped mineral properties is dependent upon the
determination of economically recoverable ore reserves, confirmation of the Company's interest in the underlying
mineral claims, the ability to obtain the necessary financing to complete their development, and future profitable
production or proceeds from the disposition thereof.

The Company assesses its capitalised resource property costs when events or changes in circumstances suggest they are
potentially impaired.  Estimated undiscounted future net cash flows for properties are calculated using estimates by
reference to the timing of exploration and development work, work programs proposed, the explorations results achieved
to date and the likely proceeds receivable if the Company sold the properties to third parties.  If the estimated
undiscounted future net cash flows are less than the carrying value, the estimated fair value is calculated using the
discounted future net cash flows and the asset is written down to the fair value with an impairment charge to
operations.  For the purposes of assessing impairment, assets are grouped at the lowest level for which there are
separately identifiable cash flows.

Property, Plant and Equipment

Equipment is carried at cost less accumulated depreciation.  Depreciation is calculated over the estimated useful life
of the assets on a straight-line basis as follows:

                                                          
                                      Estimated useful life
                                                  (in years)
                                      ----------------------
Leasehold improvements                                    3
Plant and equipment                                3  -  15
Office equipment                                   1  -  20
Computer hardware                                         3
Computer software                                       2.5
Tradeshow display equipment (Canada)                      4
Motor vehicles                                      6  -  8
                                      ----------------------


An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.  Gains and losses on disposals are determined by comparing the
proceeds received with the carrying amount of the asset and are included in the income statement.

Repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic
benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Company. 
Major renovations are depreciated over the remaining useful life of the related asset.

Impairment of Non-current Assets Other than Mineral Properties

Property, plant and equipment and intangible assets (excluding goodwill), are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be recoverable.

If the estimated undiscounted future net cash flows relating to an asset is less than the carrying value, the
estimated fair value of the asset is calculated using the discounted future net cash flows and the asset is written
down to the fair value with an impairment charge to operations.  For the purposes of assessing impairment, assets are
grouped at the lowest level for which there are separately identifiable cash flows.

Management's Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of accrued liabilities, share capital,
contributed surplus, share issuance costs and disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of stock-based compensation during the reported periods.  Actual results
could differ from those estimates.

Foreign Currency Translation

Functional and presentational currency

The consolidated financial statements are presented in United States Dollars, which is the functional and
presentational currency of Nautilus Minerals Inc.

Transactions and balances

Foreign currency transactions are accounted for at the rates of exchange ruling at the date of the transaction. 
Monetary assets and liabilities are translated at year-end exchange rates.  Gains and losses arising on settlement of
such transactions and from the translation of foreign currency monetary assets and liabilities are recognized in the
income statement.

Income Taxes

Future income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements.  Future income tax is measured
at tax rates that are expected to apply in periods in which the temporary differences reverse based on tax rates and
law enacted or substantively enacted at the balance sheet date.

Future tax assets are recognised to the extent that it is more likely than not that future taxable profit will be
available against which the temporary differences can be utilised.

Future income tax is provided on temporary differences arising on investments in subsidiaries, associates and joint
ventures, except where the timing of the reversal of the temporary difference can be controlled and it is probable
that the temporary difference will not reverse in the foreseeable future.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing income (or loss) attributable to common shareholders by the
weighted average number of common shares outstanding during the period.  The computation of diluted earnings per share
assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance
would have a dilutive effect on earnings per share.  The dilutive effect of outstanding stock options and warrants and
their equivalents is reflected in diluted earnings per share by application of the treasury stock method which assumes
that any proceeds from the exercise of share options or warrants would be used to purchase common shares at the
average market price during the period.  During years when the Company has generated a loss, the potential shares to
be issued from the assumed exercise of options and warrants are not included in the computation of diluted per share
amounts since the result would be anti-dilutive.

Share Capital

Ordinary shares are classified as equity.

Incremental external costs directly attributable to the issue of new ordinary shares, other than in connection with
business combinations, are shown in equity as a deduction, net of tax, in share capital.

Stock Based Compensation

Equity-settled transactions

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which
they are granted and is recognised as an expense over the vesting period.

None of the Company's equity-settled transactions have any market based performance conditions.

Fair value for equity-settled share based payments is estimated by use of the Black-Scholes pricing model.

At each balance sheet date, before vesting, the cumulative expense is calculated based on management's best estimate
of the number of equity instruments that will ultimately vest.  The movement in this cumulative expense is recognised
in the income statement, with a corresponding entry in equity.

Where an equity-settled award is cancelled by the Company, it is treated as if it had vested on the date of
cancellation and any cost not yet recognised in the income statement for the award is expensed immediately.  Any
compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from equity,
with any excess over fair value being treated as an expense in the income statement.

The proceeds from the exercise of stock options and warrants, in addition to the estimated fair value attributable to
those options and warrants exercised, are recorded as share capital in the amount for which the options or warrants
were exercised.

Segment Reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to
risks and returns that are different from those of other business segments.

A geographical segment is engaged in providing products or services within a particular economic environment that are
subject to risks and returns which are different from those of segments operating in other economic environments.

Due to the nature of the Company's operations, the Company has one business segment, which operates in two different
geographic locations, being Australasia and North America.
 
Financial Instruments

Financial assets are classified, as appropriate, as financial assets at fair value through profit or loss; loans and
receivables; held to maturity investments or as available for sale.  The Company's financial instruments consist of
cash and cash equivalents, accounts receivable and accounts payable.  Unless otherwise noted, it is management's
opinion that the Company is not exposed to significant interest or credit risks arising from the financial
instruments.  The fair value of these financial instruments approximates their carrying value due to their short-term
maturity or capacity of prompt liquidation.

The Company determines the classification of its financial assets at initial recognition.  When financial assets are
recognised initially, they are measured at fair value, normally being the transaction price plus, in the case of
financial assets not at fair value through profit or loss, directly attributable transaction costs.  The subsequent
measurement of financial assets depends on their classification, as follows:

Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market, do not qualify as trading assets and have not been designated as either fair value through profit or
loss or available-for-sale.  Such assets are initially measured at fair value and subsequently carried at amortised
cost using the effective interest method.  Gains and losses are recognised in the income statement when the loans and
receivables are derecognised or impaired, as well as through the amortisation process.

Financial liabilities
When a financial liability is recognised initially, the Company measures it at its fair value plus, in the case of a
financial liability not measured at fair value with changes in value through profit or loss, transaction costs that
are directly attributable to the issue of the financial liability.  Financial liabilities include trade payables,
other payables and accrued liabilities

Fair values
The fair value of quoted investments is determined by reference to appropriate market prices at the close of business
on the balance sheet date.  Where there is no active market, fair value is determined using valuation techniques. 
These include using pricing models and discounted cash flow analyses.  Otherwise assets are carried at cost.

3. New Accounting Pronouncements

The CICA has issued new standards which are effective for the Company for interim and annual periods beginning January
1, 2008. The adoption of these new standards has not had any material impact on the Company's financial results.

Section 1535 - Capital Disclosures

This Section establishes standards for disclosing information about the Company's capital and how it is managed.
Under this standard the Company is required to disclose the following, based on the information provided internally
to the entity's key management personnel:
(i)	qualitative information about its objectives, policies and processes for managing capital;
(ii)	summary quantitative data about what it manages as capital;
(iii)	whether during the period it complied with any externally imposed capital requirements to which it is subject;
         and
(iv)	when the company has not complied with such externally imposed capital requirements, the consequences of such
         non-compliance.

Disclosures required by this standard are included in note 4.


Section 3031 - Inventories

This Section prescribes the accounting treatment for inventories and provides guidance on the determination of costs
and its subsequent recognition as an expense, including any write-down to net realizable value. It also provides
guidance on the cost formulas that are used to assign costs to inventories.  The Company does not currently hold any
inventories.

Section 3862 - Financial Instruments - Disclosures and Section 3863 - Financial Instruments - Presentation

Section 3862 requires the Company to provide disclosure of quantitative and qualitative information in their financial
statements that enable users to evaluate (a) the significance of financial instruments for the entity's financial
position and performance; and (b) the nature and extent of risks arising from financial instruments to which the
entity is exposed during the period and at the balance sheet date, and management's objectives, policies and
procedures for managing such risks. The Company is required to disclose the measurement basis or bases used, and the
criteria used to determine classification for different types of instruments.

Section 3863 replaces the existing requirements on presentation of financial instruments in Section 3861.

Disclosures required by this standard are included in note 5.


Section 1400 - Going Concern

This amendment to CICA Handbook Section 1400, "General Standards of Financial Statement Presentation" in relation to
going concern requires management to assess an entity's ability to continue as a going concern.  When management is
aware of material uncertainties related to events or conditions that may cast significant doubt on an entity's ability
to continue as a going concern, those uncertainties must be disclosed.  In assessing the appropriateness of the going
concern assumption, the standard requires management to consider all available information about the future, which is
at least, but not limited to, twelve months from the balance sheet date.
 
Future Accounting Pronouncements

Section 3064 - Goodwill and Intangible Assets

This Section establishes revised standards for the recognition, measurement, presentation and disclosure of goodwill
and intangible assets. The adoption of this standard is not expected to have any material impact on the Company's
financial results.

This standard is effective for the financial statements beginning January 1, 2009.

International Financial Reporting Standards ("IFRS")

In February, 2008 the Canadian Accounting Standards Board confirmed that International Financial Reporting
Standards will replace Canada's current generally accepted accounting principles for publicly accountable profit
oriented enterprises effective January 1, 2011. The transition date of January 1, 2011 will require the restatement,
for comparative purposes, of amounts reported for the year ended December 31, 2010. The Company is presently
evaluating the effect these standards will have on its consolidated financial statements.

4. Capital Disclosures

The Company is involved in mineral exploration which is a high risk activity.  The Company's financial objective is to
ensure that it has sufficient liquidity in the form of cash and/or debt capacity.  This policy is unchanged from 2007.

Currently the Company has no external debt, and under the Company's Investment Policy, cash cannot be invested for
more than 90 days and must be held on deposit with banks with an S&P credit rating of A+ or better.

The Company is listed on the Toronto and London AIM stock exchanges, and must comply with their listing rules.  There
has been no non-compliance during the period.

5. Financial Instruments - Disclosures

The Company's financial instruments consist of cash and cash equivalents, accounts receivable and accounts payable.
Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest or credit
risks arising from the financial instruments.  The fair value of these financial instruments approximates their
carrying value due to their short-term maturity or capacity of prompt liquidation.

For the years ended December 31, 2008 and 2007, the Company:

         - did not hold financial instruments or liabilities for trading except for cash and cash equivalents;
         - has not reclassified a financial asset;
         - has not transferred financial assets;
         - has not pledged collateral for a liability or contingent liability;
         - has no financial assets impaired by credit losses;
         - has not issued an instrument that contains both a liability and an equity component;
         - has no items of expense, gains or losses, total interest expense, fee income or expense on financial assets 
           or liabilities;
              i)   available-for-sale financial assets;
             ii)   held to maturity investments;
            iii)   loans & receivables; or
             iv)   financial liabilities measured at amortized cost.
         - had total interest income on financial assets of $11,725,514 (2007: $12,528,701); and
         - incurred no defaults or breaches on loans.

The nature and extent of risks arising from financial instruments to which the entity is exposed at the balance sheet
date are detailed below:  

Interest rate risk
The Company holds cash and cash equivalents which earn interest at variable rates as determined by financial
institutions.

For the year ending December 31, 2008, with other variables unchanged, a 1% increase (decrease) in the interest rate
would have increased (decreased) our net earnings by $2,844,246.  There would be no significant effect on other
comprehensive income.

Credit risk
The Company places its cash only with banks with an S&P credit rating of A+ or better. 

Our maximum exposure to credit risk at the reporting date is the carrying value of cash and cash equivalents and other
receivables.

Liquidity risk
The Company manages liquidity by maintaining adequate cash and short-term investment balances.
In addition, the Company regularly monitors and reviews both actual and forecasted cash flows.

The exposure of the Company to liquidity risk is considered to be minimal.

Foreign exchange risk
All of the Company's activities are located in several different countries, including Canada, Australia, Papua New
Guinea, Tonga and Singapore and requires equipment to be purchased from several different countries and currencies. 
Nautilus has entered into key contracts in United States dollars, British Pounds sterling and Euros.  Nautilus' future
profitability could be affected by fluctuations in foreign currencies.  The Company has not entered into any foreign
currency contracts or other derivatives to establish a foreign currency protection program. 
 
Foreign exchange risk is mitigated by the Company maintaining its cash in a "basket" of currencies that reflect its
current and expected cash outflows.  As at December 31, 2008 the Company held its cash in the following currencies:

                               
Currency     % of total cash in
Denomination     US$ terms held
USD                          47
Euro                         14
CAD                           3
GBP                          29
AUD                           7
             ------------------
                            100
             ------------------
             ------------------


6. Income Tax

a. A reconciliation of income taxes at statutory rates with the reported taxes is as follows:

                                                                              2008           2007
Loss before income taxes                                             $ (81,589,489) $ (31,258,557)
Canadian statutory tax rate                                                 31.00%         34.12%

                                                                                 $              $
Expected income tax (recovery)                                         (25,292,742)   (10,665,420)
Difference in foreign tax rates                                            804,787      1,398,681
Items (deductible)/not deductible for income tax purposes                1,212,505     (6,761,175)
Change in combined statutory tax rate                                      315,707       (765,149)
Non-deductible expenses                                                  4,214,576              -
Non-deductible foreign exchange losses                                  13,152,480              -
Change in valuation due to foreign exchange on reporting currencies        964,382     (4,645,831)
Change in valuation allowance                                            4,628,305     21,438,894
                                                                    ------------------------------
                                                                                 -              -
                                                                    ------------------------------
                                                                    ------------------------------

Represented by:                                                                                  

Current income tax                                                               -              -
Future income tax (recovery)                                                     -              -
                                                                    ------------------------------
                                                                                 -              -
                                                                    ------------------------------
                                                                    ------------------------------

 
b. The significant components of the Company's future income tax assets and liabilities are as follows:
 
                                                                         2008         2007
                                                                            $            $
Future income tax assets                                                    
  Non-capital losses                                                7,141,995    7,485,164
  Capital losses                                                      195,353    2,875,227
  Unamortized share issue costs                                     2,329,057    3,650,912
 Unrealized foreign exchange losses and other                      16,254,516            -
 Tax value of resource properties and plant and equipment costs              
  in excess of net book value of resource property and plant and              
  equipment                                                        19,240,514   10,488,188
                                                                 --------------------------

Total future income tax assets                                     45,161,435   24,499,491

Less: Valuation allowances                                        (29,127,796) (24,499,491)
                                                                 --------------------------
Net future income tax assets                                       16,033,639            -
                                                                 --------------------------

Future income tax liabilities                                               
  Unrealised foreign exchange gains and other                      16,033,639            -
                                                                 --------------------------
  Future income tax liabilities                                    16,033,639            -
                                                                 --------------------------
  Future income tax liability, net                                          -            -
                                                                 --------------------------
                                                                 --------------------------



c. The Company has non-capital loss carry forwards of $18,064,660 that may be available for tax purposes. The loss
carry forwards expire as follows:

                                                         Papua New   
                                       Canada  Australia    Guinea   
                                            $          $         $   
2019                                        -          -    23,375   
2020                                        -          -     7,751   
2021                                        -          -    10,042   
2022                                        -          -    56,347   
2023                                        -          -    43,979   
2024                                        -          -    12,667   
2025                                   96,294          -   194,528   
2026                                2,926,296          -         -   
2027                                3,565,383          -         -   
2028                                        -          -         -   
Not limited                                 - 11,127,998         -
                            --------------------------------------   
Total non-capital losses            6,587,973 11,127,998   348,689
                            --------------------------------------
                            --------------------------------------


Future income tax assets are recognized to the extent that they are considered more likely than not to be realized. 
The tax losses may be subject to audit and adjustment by local tax authorities as well as other local regulations.

7. Restricted Cash 

$4,398,936 (2007 - $201,436) has been provided as security for four leases, 78 tenements held in Papua New Guinea,
letters of credit, superannuation bank accounts held on behalf of employees, and electricity and information
technology deposits. 

8. Property, Plant and Equipment

    Details are as follows:


                                       December 31, 2008                      December 31, 2007 
                                             Accumulated   Net Book                 Accumulated  Net Book
                                  Cost      Amortization      Value      Cost      Amortization     Value
                                     $                 $          $         $                 $         $
Leasehold improvements         595,649           331,946    263,703   296,611            84,868   211,743
Plant and equipment            651,428            60,209    591,219   285,345            14,690   270,655
Office equipment               259,466            31,038    228,428   151,128             8,533   142,595
Computer hardware              665,269           264,088    401,181   352,843            87,808   265,035
Computer software              887,418           296,087    591,331   303,926            66,914   237,012
Tradeshow display equipment      3,876             3,590        286     3,876             3,468       408
Motor vehicle                   69,017             4,686     64,331         -                 -         -
Land                            30,101                 -     30,101         -                 -         -
Subsea equipment under                                                                          
 construction               18,825,956                 - 18,825,956 2,710,311                 - 2,710,311
                            -----------------------------------------------------------------------------
                            21,988,180           991,644 20,996,536 4,104,040           266,281 3,837,759
                            -----------------------------------------------------------------------------
                            -----------------------------------------------------------------------------

 

9. Mineral Properties

The Company has titles granted and applications lodged that provide the Company with rights to explore for minerals in
offshore Papua New Guinea, Tonga and Solomon Islands.   In addition, the Company has lodged exploration or prospecting
applications in the exclusive economic zones of Fiji and New Zealand.

Acquisition of Mineral Properties

In 2006, the Company entered into an agreement with Barrick Gold Inc., following its acquisition of Placer Dome, to
terminate the farm-in agreement and convert its joint venture interest into an equity interest in the Company. 
Pursuant to the terms of this termination agreement, Nautilus Minerals Niugini Ltd. acquired the remaining interest
which Barrick held in the PNG Licences in return for Barrick being issued with Common Shares in the Company.  The
Company thereby secured a 100% interest in all the PNG Licences.  In addition, pursuant to the terms of the
termination arrangements, Barrick transferred all of Placer Dome's expertise, intellectual property and know-how in
relation to the farm-in, together with, access to key consultants and relevant business relationships to the Company,
allowing the Company to itself thereafter manage and operate the Solwara Projects.  The value of the shares issued to
Barrick was $12,213,367, which was capitalized as mineral property acquisition costs in 2006.

    Exploration Expenditures
	
                                     Year        Year
                                    ended       ended
                              December 31 December 31
                                     2008        2007
                                        $           $
                             ------------------------

Assaying and sampling             377,924     178,303
Boat charters and fuel         16,104,637  13,367,234
Drilling                                -     497,812
Engineering services            4,616,500   8,560,942
Environmental consulting        1,968,951     800,283
General                         3,384,447   3,361,713
Geological and field expenses     975,002   7,005,377
Maps, reports and data             23,605   2,098,204
Mineral property fees           2,188,328     838,928
Supplies                          605,402     286,636
Travel                          1,968,507   1,182,826
Wages and salaries              6,499,600   2,698,484
                             ------------------------
                               38,712,903  40,876,742
                             ------------------------
                             ------------------------


In order to maintain the exploration leases, licenses and permits in which the Company is involved, the Company is
expected to fulfil the minimum annual expenditure conditions under which the tenements are granted.  These obligations
may be varied from time to time, subject to approval, and are expected to be fulfilled in the normal course of
operations of the Company.  The exploration commitments are based on those exploration tenements that have been
granted and may increase or decrease depending on whether additional applications are granted, relinquished or form
joint ventures in the future.  Based on tenements granted at December 31, 2008, total rental commitments are
$3,868,779 and total expenditure commitments are $23.1 million over the life of the licenses which extend to a maximum
of two years.

10. Related Party Transactions

Related party transactions for the year ended December 31, 2008 are as follows:

a) Included in management fees is $46,350 (2007 - $51,578) for management fees paid to a company controlled by a
director. 

b) Included in accounts payable and accrued liabilities is $15,094 (2007 - $21,781) for amounts owed to a company
controlled by a director of the Company for management and consulting.

These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount
of consideration established and agreed between the related parties.

11.	Share Capital

	  a)  Details of share capital

Authorized:                                                                    
 Unlimited common shares without par value                                     
                                                                           Shares       Amount
                                                                                             $
Issued and allotted                                                              
 Balance -- December 31, 2006                                          82,355,913  126,257,367
  Shares issued for cash -- private placement                          58,643,146  214,905,189
  Proportional allocation of warrants attached to private placements            -  (15,817,775)
  Shares issued on exercise of warrants                                 4,557,830   19,456,304
  Shares issued on exercise of options                                    366,582      679,584
  Fair market value of options exercised                                        -      376,376
  Fair market value of warrants exercised                                       -    4,572,030
  Share issuance costs                                                          -  (15,575,143)
  Agent's warrants issued as share issuance costs                               -   (3,447,339)
                                                                     --------------------------
 Balance -- December 31, 2007                                         145,923,471  331,406,593
  Shares issued for cash -- private placement                           8,933,702   10,475,460
  Shares issued on exercise of options                                    653,100      945,934
  Shares issued on exercise of warrants                                    48,611       72,644
  Fair market value of options exercised                                        -      698,070
                                                                     --------------------------
 Balance -- December 31, 2008                                         155,558,884  343,598,701
                                                                     --------------------------
                                                                     --------------------------

Private placements

On November 14, 2008, the Company completed a private placement to a wholly owned subsidiary of Anglo American plc
("Anglo") of 5,177,066 shares at C$1.33 for gross proceeds of C$6,885,498 ($5,830,855 on date of transaction) and
3,756,636 shares at C$1.46 for gross proceeds of C$5,484,689 ($4,644,605 on date of transaction) pursuant to an anti
dilution right granted to it in its original subscription agreement dated October 20, 2006.  The agreed price of the
issue was based on a formula linked to the volume weighted average price of the Company's common shares over the month
of October 2008.
 
b) Details of contributed surplus

                                                                         Amount
                                                                              $

Balance - December 31, 2006                                           8,960,282
 Proportional allocation of warrants attached to private placements  15,817,775
 Agent's warrants issued as share issuance costs                      3,447,339
 Fair value of stock-based compensation                               6,897,376
 Fair market value of options exercised                                (376,376)
 Fair market value of warrants exercised                             (4,572,030)
                                                                    ------------
Balance - December 31, 2007                                          30,174,366
 Fair value of stock-based compensation                               6,659,210
 Fair market value of options exercised                                (689,389)
                                                                    ------------
Balance - December 31, 2008                                          36,144,187
                                                                    ------------
                                                                    ------------


c) Share purchase options 

The Company has established a share purchase option plan whereby the board of directors may, from time to time, grant
options to directors, officers, employees or consultants. Options granted must be exercised no later than five years
from the date of grant or such lesser period as determined by the Company's board of directors. The exercise price of
an option must be determined in accordance with the share purchase option plan. The board of directors must determine
the vesting period in accordance with the share purchase option plan. 

The changes in share purchase options outstanding are as follows:


                                                               Contractual
                                                                  weighted
                                                      Weighted     average
                                                       average   remaining
                              Number of options exercise price        life
                                                            C$      (years)

Balance -- December 31, 2006          7,328,214           2.76         2.0
 Granted                              7,433,639           5.18 
 Exercised                             (366,583)          1.90 
 Expired/cancelled                     (645,000)          6.14
                            -----------------------------------
Balance -- December 31, 2007         13,750,270           3.93         2.9
 Granted                              1,820,000           2.41 
 Exercised                             (653,100)          1.47 
 Expired/cancelled                     (904,864)          2.83
                            -----------------------------------
 Balance -- December 31, 2008        14,012,306           3.92         2.2
                            -----------------------------------------------
                            -----------------------------------------------


The following table summarizes information about stock options as at December 31, 2008:

             Total options outstanding             Exercisable options
-------------------------------------------------- -------------------
-------------------------------------------------- -------------------

                              Weighted                       
                               average    Weighted            Weighted
Range of                     remaining     average             average
exercise                   contractual exercisable            exercise
price            Shares           life       price    Shares     price
C$                              (years)         C$                  C$
-------------------------------------------------- -------------------
1.00 -- 1.99    626,667            2.6        1.61   116,667      1.61
2.00 -- 2.99  3,887,000            0.9        2.39 2,768,000      2.27
3.00 -- 3.99  2,345,000            1.2        3.20 1,950,500      3.20
4.00 -- 4.99  2,283,639            1.2        4.68 1,245,179      4.72
5.00 -- 5.99  4,480,000            3.3        5.33 1,624,000      5.33
6.00 -- 6.99    390,000            1.1        6.38   234,000      6.38
             ----------                            ---------
             14,012,306            1.8        3.92 7,938,346      3.67
             ----------                            ---------
             ----------                            ---------

The fair value of the options granted is estimated on the date of grant using the Black-Scholes option pricing model
with the following weighted average assumptions:

                                        Options Issued
                                   -------------------
                                               In 2008
Expected dividend yield                            Nil
Expected stock price volatility                 77.25%
Risk-free interest rate                          2.92%
Expected life of options in years                    3
                                   -------------------

The weighted average fair value of the options granted was C$2.41.

Option pricing models require the input of highly subjective assumptions including the estimate of the share price
volatility.  Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore,
the existing models do not necessarily provide a reliable single measure of the fair value of the Company's stock
options.
 
d) Warrants

As at December 31, 2008, the following share purchase warrants were outstanding:


                                                          
Number             Price per Share                 Expiry Date 
--------------------------------------------------------------
549,395                   GBP₤2.31            February 2, 2009 
549,910                   GBP₤2.15            February 2, 2009 
10,540,874                 C$5.655           February 21, 2009 
3,257,907                   C$3.80           November 26, 2009 
------------
14,898,086                                                
------------
------------


The changes in share purchase warrants outstanding are as follows:


                                                        Contractual
                                                           weighted
                                               Weighted     average
                               Number of        average   remaining
                                warrants exercise price        life
                                                 (in C$)  (in years)
                            ----------------------------------------
Balance --December 31, 2006    5,531,639           4.94         1.8
 Granted                      14,898,086           5.21 
 Exercised                    (4,548,028)          4.90
                             --------------------------
Balance -- December 31, 2007  15,881,697           5.21         1.3
 Exercised                       (48,611)          1.10 
 Expired/cancelled              (935,000)          5.63
                             --------------------------
Balance -- December 31, 2008  14,898,086           5.12         0.3
                            ----------------------------------------
                            ----------------------------------------

12. Non-controlling interest	

On May 18, 2008 the Company acquired a 51% equity interest in United Nickel Inc. (UNI), a company associated with
David Heydon, formerly director and CEO of the Company, with a $1.3 million seed capital investment.


13. Segmented Information

The Company has one operating segment, being exploration.  Details on a geographical basis are as follows:


                                                   Australasia North America       Total
                                                             $             $           $
                                                  --------------------------------------
December 31, 2008                                                            
Total assets                                       170,888,847    99,094,499 269,983,346
(Income) Loss for the year ended December 31, 2008  13,506,670    68,082,819  81,589,489

December 31, 2007                                                            
Total assets                                       161,978,986   165,117,034 327,096,020
(Income) Loss for the year ended December 31, 2007  33,667,596    (2,409,039) 31,258,557

 
14. Commitments and Contingencies


                                                 December 31 December 31 
                                                        2008        2007 
                                                           $           $ 
a) Non-cancellable operating leases                                      
   Not later than 1 year                             290,158     418,909 
   Later than 1 year and not later than 2 years       87,752     245,610 
   Later than 2 years and not later than 3 years      54,034       8,100 
   Later than 3 years and not later than 4 years       5,471       6,894 
   Later than 4 years and not later than 5 years         522       3,484 
   Later than 5 years                                      -           - 
                                                 -----------------------
                                                     437,937     682,997 
                                                 -----------------------
b) Non-cancellable consulting agreements                                 
   Not later than 1 year                              84,947     370,320 
   Later than 1 year and not later than 2 years            -           - 
   Later than 2 years and not later than 3 years           -           - 
   Later than 3 years and not later than 4 years           -           - 
   Later than 4 years and not later than 5 years           -           - 
   Later than 5 years                                      -           -
                                                 ----------------------- 
                                                      84,947     370,320
                                                 ----------------------- 
  Total Commitments                                  522,884   1,053,317
                                                 -----------------------
                                                 ----------------------- 


In order to maintain the exploration leases, licenses and permits in which the Company is involved, the Company is
committed to fulfil the minimum annual expenditure conditions under which the tenements are granted.  These
obligations may be varied from time to time, subject to approval, and are expected to be fulfilled in the normal
course of operations of the Company.  The exploration commitments are based on those exploration tenements that have
been granted and may increase if applications are granted in the future.

On December 17, 2008 the Company announced it had decided to adopt a more cautious strategy and to preserve its cash
position by delaying the construction of the equipment for the Solwara 1 mining system.  As a result all contracts
relating to the Solwara 1 mining system have been terminated or suspended, depending on their criticality to the
revised development program.  All of the supplier agreements contained provisions for termination without penalty.

The contracts that have been suspended will not incur any additional costs, unless instructed by the Company to
continue with engineering studies, until those contracts are reactivated.  The value of the suspended contracts is US
$81.6 million.  The suspended contracts also contain provisions allowing the Company to cancel at any time.  The
vessel agreements with North Sea Shipping to provide a mining services vessel were also terminated.

The occurrence of settlement amounts in relation to these contracts is not yet determinable and an amount cannot be
reasonably estimated at this time.

Contingencies

CSIRO

In addition to the above, the Company is a party to a contract with the Commonwealth Scientific and Industrial
Research Organisation ("CSIRO") whereby the Company would pay A$500,000 when its Net Income first exceeds A$10
million; and a further A$500,000 when Net Income first exceeds A$20 million.

Milestone based shares

Nautilus has entered into an agreement with a consulting group, who are providing services to the Solwara 1 Project,
where part of the consideration for services, are the issue of up to 300,000 fully paid common shares in the Company
in stages subject to the achievement of each of the following project milestones:

i)	Signing of a project development agreement between Nautilus and the Government of PNG - 60,000 common shares;

ii)	Obtaining unencumbered title to the area of land where Nautilus decides to locate the processing plant -
         60,000 common shares;

iii)	The required agencies of the government of PNG approve the Environmental Impact Statement for the Solwara 1
         Project - 60,000 common shares;

iv)	The grant of a mining lease over the Solwara 1 resource within E1196 on terms acceptable to Nautilus Minerals
         - 60,000 common shares; and

v)	Commercial Completion of the Solwara 1 Project which is defined as being the point at which commissioning is
         complete and the operation has been producing concentrate at a rate of at least 70% scheduled rate for a
         period of 3 months - 60,000 common shares.

Letter of Credit 

A letter of credit of $1.5 million is held by Australia and New Zealand Banking Group in favour of Technip Inc.
("Technip").  Technip is only entitled to have recourse to the Nautilus issued letter of credit if Nautilus does not
pay an amount due and owing under the contract and subject to receiving written notice from Technip.

A letter of credit of $2.55 million is held by Australia and New Zealand Banking Group in favour of NSS.  NSS is only
entitled to have recourse to the Nautilus issued letter of credit if Nautilus does not pay an amount due and owing
under the contract and subject to receiving written notice from NSS.  The Letter of Credit expires on June 30, 2010.

15. Subsequent Events

Issue of Options to Directors

On January 29, 2009 the Company granted options over 550,000 common shares to its non-executive directors at an
exercise price of C$0.99 that vest at 20% every 6 months from the issue and expiring on January 7, 2012.  The options
granted to the non-executive directors are received in lieu of payment for their services as a director of the Company.

Expiration of Warrants

On February 2, 2009, 549,395 warrants over common shares at a price of GBP £2.31 per share expired and a further
549,910 warrants over common shares at a price of GBP £2.15 per share expired. 

On February 21, 2009, 10,540,874 warrants over common shares at a price of C$5.655 per share expired.

Teck Election

On February 17, 2009 Teck Cominco Limited ("Teck") confirmed its exploration expenditure in Papua New Guinea ("PNG")
and Tonga during 2008 to be US$14.8 million. This exceeded the minimum expenditure required for Teck to earn the right
to form a joint venture with Nautilus in the countries of PNG and Tonga which was set at US$12 million. Despite this
expenditure in 2008, Teck elected not to participate further in PNG and Tonga where it would have been required to
meet a US$25 million expenditure commitment in each country over the next two years. 

Teck advised that it wishes to retain the right to joint venture with Nautilus in Fiji, New Zealand, Japan and
Northern Marianas, subject to grant of significant title in those countries.

Contact Information

  • Nautilus Minerals Inc.