Nautilus Minerals Inc.
TSX VENTURE : NUS

Nautilus Minerals Inc.

December 07, 2006 09:43 ET

Teck Cominco Invests in Nautilus

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Dec. 7, 2006) - Nautilus Minerals Inc. (TSX VENTURE:NUS) (the "Company" or "Nautilus") is pleased to announce that Teck Cominco Limited ("Teck Cominco") agreed to participate in a non-brokered private placement of 9,425,758 common shares at a price of US$3.30 (C$3.76(1)) per common share, for gross proceeds of US$31.1 million (C$35.45m(1)). This placement price is 10% higher than the Anglo American placement of November 2, 2006 and will result, upon closing, in the Company having US$113.5 million (C$129.4m(1)) in cash just seven months after listing on the TSX Venture Exchange.

David Heydon Nautilus CEO comments: "Teck Cominco (9.2%) joins Epion (19.9%), Anglo American (10.1%), and Barrick Gold (5.8%) as shareholders of the Company."

Commenting on this interest from major mining companies Heydon added: "That three major mining and resource companies have now invested in Nautilus, two in the last two months, may seem remarkable. However, it only confirms what I have always believed, that this project is of great importance to the future of the mining industry. The fact that these companies have chosen to invest directly in Nautilus rather than developing their own offshore interests is a recognition of how thoroughly and successfully Nautilus has advanced its business plan of becoming the first company to commercially explore the ocean floor for gold-copper-zinc-silver seafloor massive sulphide deposits. Significantly, Anglo, Barrick and Teck Cominco have agreed not to compete with Nautilus for periods up to five years in the offshore areas of many western Pacific countries including Papua New Guinea, Tonga and Fiji. In addition, these companies have agreed that if a takeover bid is made for Nautilus and recommended by the Board they will accept the bid or make a counter bid."

Teck Cominco will acquire 7,575,758 common shares for US$25 million and has been granted anti-dilution rights that will enable it to maintain its percentage ownership in the shares of the Company until it owns less than 5% of the issued shares of Nautilus. Teck Cominco will also be issued 3,000,000 share purchase warrants to acquire additional common shares at a price of US$5.00 (C$5.70(1)) per share until June 1, 2008.

In addition to the private placement, Teck Cominco has also committed to pay US$12 million as part of an option to form joint ventures with Nautilus. US$2 million of this will be used to fund acquisition and maintenance of tenements. US$10 million is for research and development of exploration techniques and tools as well as exploration on Teck Cominco approved tenements. To exercise the option Teck Cominco must before June 1, 2008 purchase an additional US$15 million of shares by, at its election, either exercising all of its US$5.00 warrants or subscribing for a private placement of US$15 million at market. Upon exercise, Teck Cominco will have the exclusive right for a term of five years, to form joint ventures on tenements acquired by Nautilus in certain countries since October 20, 2006 ("New Tenements"). Teck Cominco can earn a 40% interest in New Tenements in each of the following four areas: Bismark Sea Papua New Guinea, Solomon Sea Papua New Guinea, Fiji and Tonga, by spending US$25million in each selected area within two years of such election. To earn a 40% interest in all four areas, US$100 million is required to be spent within two years. For each area selected Teck Cominco must spend a minimum of US$12.5million before it can withdraw with no residual interest. Upon earning a 40% interest in an area, Teck Cominco may earn an additional 10.1% in each selected Project Area (defined as an area 100sq km to 200sq km) within the New Tenements by spending US$10 million on each Project Area.

Teck Cominco may also earn a 50.1% interest in New Tenements in certain other countries and an additional 9.9% in selected Project Areas in these countries for the same expenditures as above.

The Solwara 1, 2, 3 and 4 projects and a 17,500 sq km tenement package in Papua New Guinea remain 100% owned by Nautilus and are excluded from this arrangement with Teck Cominco, as are certain exploration licence applications in Tonga and Fiji applied for before October 20, 2006.

David Heydon Nautilus CEO comments: "The option and joint venture arrangement with Teck Cominco on New Tenements allows the Company to focus on permitting and developing its 100% owned Solwara 1 gold-copper project in Papua New Guinea whilst Teck Cominco's expenditure potentially develops a pipeline of new projects."

Epion Holdings Limited ("Epion") under its antidilution rights has agreed to acquire 1,850,000 shares for US$6,105,000 and 750,000 share purchase warrants to acquire additional common shares at a price of US $5.00 (C$5.70(1)) per share until June 1, 2008.

Nautilus announced on October 30, 2006 that it has agreed to pay a finder's fee to M&A Advisors Ltd. ("M&A") in relation to any placement to Epion under its antidilution rights. In accordance Nautilus will upon closing pay M&A US$610,500 and issue 185,000 share purchase warrants entitling the holder to acquire an aggregate of 185,000 common shares at a price of US$3.00 (C$3.42(1)) per share for a period of two years.

The proceeds of the private placement will be used to fund the development of the Company's business. The private placement and payment of the finder's fee are subject to regulatory approval. All securities will be subject to a four-month hold period in Canada.

(1) Exchange rate US$1.00 = C$1.14

About Anglo American PLC. (10.1%)

Anglo American is one of the world's largest mining and natural resource groups with a market capitalization of around US$66 billion. It is a global leader in platinum group metals, gold and diamonds, with significant interests in coal, base and ferrous metals, industrial minerals and paper and packaging. The group is geographically diverse, with operations in Africa, Europe, South and North America, Australia and Asia.

About Teck Cominco Limited. (9.2%)

Teck Cominco is a diversified mining company, headquartered in Vancouver, Canada. Its shares are listed on the Toronto Stock Exchange under the symbols TCK.A and TCK.B and on the New York Stock Exchange under the symbol TCK. The company is a world leader in the production of zinc and metallurgical coal and is also a significant producer of copper, gold, indium and other specialty metals. Further information can be found at www.teckcominco.com.

About Barrick Gold Corporation. (5.8%)

Barrick's web site says: "Barrick is a leading international gold mining company. The Company also has the largest reserves in the industry, with pro forma gold mineral reserves of 139 million ounces as at December 31, 2005. For 2006, the Company is targeting gold production of 8.6 million ounces and copper production of approximately 370 million pounds."

About Epion Holding Limited. (19.9%)

Epion is wholly owned by Mr. Alisher Usmanov who is a prominent Russian investor in the Russian mining and metal industries. Mr. Usmanov is the principal shareholder of the Metalloinvest Group, which owns and operates large iron ore and steel producers in Russia. The Group is the biggest Russian iron ore producer (40% of Russia's total annual production) and Russia's 5th largest steel producer and currently has consolidated revenues of more than US$5.0 billion.

About Nautilus Minerals Inc.

Nautilus is the first company to commercially explore the ocean floor for gold-copper-zinc-silver seafloor massive sulphide deposits and is positioned to become a world leader in underwater mineral exploration. The Company's main focus for 2006 is the Solwara Project, which is located in the territorial waters of Papua New Guinea in the western Pacific Ocean.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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