Key points
- Teck Cominco will acquire 7,575,758 common shares for $25-million (U.S.) at $3.30 (U.S.) per share, giving it a 9.2-per-cent stake in Nautilus.
- The placement will leave Nautilus with $113.5-million (U.S.) in cash seven months after its TSX Venture Exchange listing.
- Teck Cominco also receives three million warrants exercisable at $5.00 (U.S.) per share until June 1, 2008, and has committed $12-million (U.S.) toward an option to joint-venture new tenements.
- Under the option, Teck Cominco can earn up to a 40-per-cent interest in tenements in the Bismark Sea, Solomon Sea, Fiji and Tonga by spending up to $100-million (U.S.) within two years.
Teck Cominco Ltd. has agreed to participate in Nautilus Minerals Inc.’s non-brokered private placement of 9,425,758 common shares, at a price of $3.30 (U.S.) ($3.76 (Canadian)) per common share, for gross proceeds of $31.1-million (U.S.) ($35.45-million (Canadian)). This placement price is 10 per cent higher than the Anglo American PLC placement of Nov. 2, 2006, and will result, upon closing, in the company having $113.5-million (U.S.) ($129.4-million (Canadian)) in cash just seven months after listing on the TSX Venture Exchange.
David Heydon, Nautilus’s chief executive officer, comments, “Teck Cominco (9.2 per cent) joins Epion (19.9 per cent), Anglo American (10.1 per cent) and Barrick Gold (5.8 per cent) as shareholders of the company.”
Commenting on this interest from major mining companies, Mr. 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 counterbid.”
Teck Cominco will acquire 7,575,758 common shares for $25-million (U.S.) 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 per cent of the issued shares of Nautilus. Teck Cominco will also be issued three million share purchase warrants to acquire additional common shares at a price of $5.00 (U.S.) ($5.70 (Canadian)) per share until June 1, 2008.
In addition to the private placement, Teck Cominco has also committed to pay $12-million (U.S.) as part of an option to form joint ventures with Nautilus. A total of $2-million (U.S.) of this will be used to finance acquisition and maintenance of tenements. A total of $10-million (U.S.) 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 $15-million (U.S.) of shares by, at its election, either exercising all of its $5.00 (U.S.) warrants or subscribing for a private placement of $15-million (U.S.) 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 Oct. 20, 2006 (new tenements). Teck Cominco can earn a 40-per-cent 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 $25-million (U.S.) in each selected area within two years of such election. To earn a 40-per-cent interest in all four areas, $100-million (U.S.) is required to be spent within two years. For each area selected, Teck Cominco must spend a minimum of $12.5-million (U.S.) before it can withdraw with no residual interest. Upon earning a 40-per-cent interest in an area, Teck Cominco may earn an additional 10.1 per cent in each selected project area (defined as an area 100 square kilometres to 200 square kilometres) within the new tenements by spending $10-million (U.S.) on each project area.
Teck Cominco may also earn a 50.1-per-cent interest in new tenements in certain other countries and an additional 9.9 per cent 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-square-kilometre tenement package in Papua New Guinea remain 100 per cent 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 Oct. 20, 2006.
Mr. Heydon comments, “The option and joint venture arrangement with Teck Cominco on new tenements allows the company to focus on permitting and developing its 100-per-cent-owned Solwara 1 gold-copper project in Papua New Guinea, whilst Teck Cominco’s expenditure potentially develops a pipeline of new projects.”
Epion Holdings Ltd., under its anti-dilution rights, has agreed to acquire 1.85 million shares for $6,105,000 (U.S.) and 750,000 share purchase warrants to acquire additional common shares at a price of $5.00 (U.S.) ($5.70 (Canadian)) per share until June 1, 2008.
Nautilus announced in Stockwatch on Oct. 30, 2006, that it has agreed to pay a finder’s fee to M&A Advisors Ltd., in relation to any placement to Epion under its anti-dilution rights. In accordance, Nautilus will upon closing pay M&A $610,500 (U.S.) and issue 185,000 share purchase warrants, entitling the holder to acquire 185,000 common shares at a price of $3.00 (U.S.) ($3.42 (Canadian)) per share for a period of two years.
The proceeds of the private placement will be used to finance 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.
About Anglo American (10.1 per cent)
Anglo American is one of the world’s largest mining and natural resource groups with a market capitalization of around $66-billion (U.S.). 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 (9.2 per cent)
Teck Cominco is a diversified mining company, headquartered in Vancouver, B.C., 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.
About Barrick Gold (5.8 per cent)
Barrick’s website 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 Dec. 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 (19.9 per cent)
Epion is wholly owned by 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 per cent of Russia’s total annual production) and Russia’s fifth-largest steel producer, and currently has consolidated revenues of more than $5.0-billion (U.S.).
