Key points
- Nautilus ended the September quarter with a cash balance of $155.1-million (U.S.) after raising $70.5-million in the first tranche of a $98.1-million capital raising, with the final $27.6-million tranche received in October.
- The capital raising involved the issue of approximately 39 million shares at $2.52 per share, and the board formally sanctioned the Solwara 1 project as a result.
- Net cash invested in the project totalled $56.6-million (U.S.) for the nine months to September 30, 2011, while the quarterly loss was $11.4-million (U.S.).
- Nautilus’s Tongan subsidiary was granted about 75,000 square kilometres of exploration territory in the Clarion Clipperton Zone, and the company received 14 special prospecting licences covering roughly 60,000 square kilometres in Fiji.
Nautilus Minerals Inc. continued to make steady progress in the development of its pioneering sea-floor copper/gold project in the September quarter of 2011 and remains on track to commence production in the final quarter of 2013.
The company completed the quarter with a cash balance of $155.1-million (U.S.), after successfully raising $70.5-million in the first tranche of a $98.1-million capital raising. The final tranche of $27.6-million was received in October. The capital raising involved the issue of approximately 39 million shares at $2.52 per share.
The funds raised are being used for the construction of a sea-floor-resource-production system, which initially will be deployed at the Solwara 1 project in the Bismarck Sea of Papua New Guinea — the company’s first deepwater copper and gold project.
As a result of the successful financing, the board of Nautilus formally sanctioned the Solwara 1 project.
During the quarter, the company continued to work with the PNG government and Petromin to finalize contracts and financing arrangements for its 30-per-cent holding in the Solwara 1 project.
Project development gathered pace during the quarter, leading to an increase in investment. Net cash invested for the nine months to the end of September totalled $56.6-million (U.S.), compared with $36.4-million (U.S.) at the end of June, with the increase mainly due to purchase of plant and equipment. The loss for the period was $11.4-million (U.S.), reflecting the fact that the company remains in the development phase and has not yet commenced revenue-generating operations.
During the quarter, the following project milestones were achieved:
The company awarded a number of component procurement packages for the riser and associated
handling equipment, including the main riser system.
All major long-lead items for the vessel and the sea-floor production
tools are now being ordered by the company. Factory acceptance testing was undertaken for subsea motors and, since
September, factory acceptance testing of the main cutting drum for the
bulk cutter has been completed. The bulk cutter is one of three
production machines to be utilized on the sea floor.
Scale testing of various key components of the production system,
including the subsea slurry lift pump and the suction device to be used
on the sea-floor production machines, was successfully concluded by the company.
Design of the PSV continued in Germany, with model testing completed.
Nautilus has agreed to form a joint venture with Harren & Partner to own
and operate the PSV, which will serve as the operational base at Solwara
1. The laying of the keel for the vessel is scheduled for late December,
2011, with vessel delivery scheduled for the first quarter of 2013.
- The company awarded a number of component procurement packages for the riser and associated
handling equipment, including the main riser system.
- All major long-lead items for the vessel and the sea-floor production
tools are now being ordered by the company.
- Factory acceptance testing was undertaken for subsea motors and, since
September, factory acceptance testing of the main cutting drum for the
bulk cutter has been completed. The bulk cutter is one of three
production machines to be utilized on the sea floor.
- Scale testing of various key components of the production system,
including the subsea slurry lift pump and the suction device to be used
on the sea-floor production machines, was successfully concluded by the company.
- Design of the PSV continued in Germany, with model testing completed.
Nautilus has agreed to form a joint venture with Harren & Partner to own
and operate the PSV, which will serve as the operational base at Solwara
1. The laying of the keel for the vessel is scheduled for late December,
2011, with vessel delivery scheduled for the first quarter of 2013.
In exploration, Nautilus continued to analyze the results of its Bismarck Sea drilling campaign completed in May with a view to updating the company’s NI 43-101 resource through an independent report in preparation by Golder and Associates by year-end. The drill program is expected to lead to a significantly enhanced understanding of Solwara 1 geology.
During the quarter, the company also became one of the first private-sector organizations to be granted exploration licences in international waters. Nautilus’s Tongan subsidiary, Tonga Offshore Mining Ltd., was granted approximately 75,000 square kilometres of prime exploration territory in the Clarion Clipperton zone, which lies in international waters between Hawaii and Mexico. As a result of exploration conducted in the 1980s and 90s, the CCZ is known to host significant quantities of polymetallic nodules, containing copper, nickel, manganese and cobalt, lying on the sea floor in water depths starting at 4,500 metres.
In addition, in August, Nautilus was granted 14 special prospecting licences in Fijian territorial waters, covering approximately 60,000 square kilometres. Nautilus is the first private-sector organization to be granted offshore exploration permits for deep-sea minerals in Fiji.
“The September quarter saw further solid progress in the development of the world’s first sea-floor-resource-production project at Solwara 1,” said Nautilus chief executive officer Steve Rogers.
“Construction of key components is now advancing rapidly and our sea-floor production equipment is beginning to take shape. We are on track to meet our schedules and our financial position remains secure following the capital raising in the quarter.
“Our exploration team continues to gather important information to assist us in building our project pipeline,” he said.
Links
The financial statements and management’s discussion and analysis have been filed on SEDAR and are also available on the company’s website.
