Key points
- The company’s cash position stood at $266.6-million (U.S.) as at Sept. 30, 2008.
- Nautilus will reduce its work force by approximately 30 per cent effective the announcement date.
- The mining support vessel agreement reported in Stockwatch news on June 20, 2008, is being terminated.
- The board believes first ore production at Solwara 1 is likely to be delayed beyond December, 2010.
Nautilus Minerals Inc. has 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. This decision is 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.
Nautilus’s chief executive officer, Stephen Rogers, commented: “Given market conditions, the board of directors and management have undertaken a thorough review of all operations. Directors and management require 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 is a difficult yet appropriate decision to preserve our strong cash position, which stood at $266.6-million (U.S.) as at Sept. 30, 2008. It also provides an opportunity to realize 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. The company remains committed to its objective of developing the world’s first sea floor massive sulphide recovery operation. We will be positioned to promptly restart the equipment build as soon as the board of directors and management consider market and contract conditions are suitable.”
To preserve capital, contracts and purchase orders will be suspended or terminated depending on their criticalness to the revised development program. All of the supplier agreements contain provisions for termination without penalty. The mining support vessel agreement reported in Stockwatch news on June 20, 2008, is in the process of being terminated. The company will now revisit the market to find alternative tonnage.
As a result of this decision, the company will today reduce its work force by approximately 30 per cent 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. Consultation activities with the company’s stakeholders, including local communities, relating to permitting and the Solwara 1 project will continue. The company will also continue 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 its pipeline of sea floor 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 stabilize.
The measures announced today are to ensure that Nautilus is well positioned to benefit from current opportunities as the global economy recovers. With its strong balance sheet, Nautilus will be able to resume its equipment construction programs with renewed momentum.
Conference call details
A conference call and webcast will be held on Thursday, Dec. 18, 2008, at 9 a.m. EST (Toronto), 2 p.m. GMT (London).
Dial-in numbers
International dial-in: 61-2-8524-6650
International dial-in: 61-2-8524-6650
Australia: 1-800-148-258
Australia: 1-800-148-258
Canada:
1-866-837-4489
Canada:
1-866-837-4489
Hong Kong:
800-965-808
Hong Kong:
800-965-808
Singapore: 800-616-2170
Singapore: 800-616-2170
United Kingdom:
0800-0569-662
United Kingdom:
0800-0569-662
United States: 1-866-586-2813
United States: 1-866-586-2813
If your country dial-in number is not included here please e-mail
the company.
A presentation to support the conference call will be posted on the company’s website for download by 8:30 a.m. EST (Toronto) on Dec. 18, 2008.
