Nautilus Minerals
Nautilus Minerals Inc. was the first company anywhere to be granted a lease to mine the deep seabed. Papua New Guinea issued it in January 2011 over Solwara 1, a copper and gold deposit in 1,600 metres of water in the Bismarck Sea. The company built three seafloor mining machines, commissioned a production ship, and ran out of money before it could put them to work.
It entered creditor protection in February 2019, was delisted in April, and its assets passed to its two largest shareholders that November. Shareholders received nothing. The releases below are its own, from flotation to collapse.
News and articles
Overview
- The corporate shell dates to 26 January 1987 and passed through four names before a Bolivian oil and gas shell completed a reverse takeover on 27 April 2006 and became Nautilus Minerals.
- It moved to the main Toronto board on 24 August 2007 under the symbol NUS, ran a London AIM listing from 2007 to 2013 and a US over-the-counter line from 2012 to 2016. The corporate office was in Vancouver and operations were run from Queensland.
- The majors came in early. Anglo American took 11.46% in 2006, and Teck Cominco, Barrick and Alisher Usmanov’s vehicle all invested in the same period.
- Mining lease ML154 was granted in January 2011 over ~59 km² for a twenty-year term, the first deep sea mining lease ever issued.
- The company and Papua New Guinea then fell out over the state’s participation. Nautilus won the arbitration on 3 October 2013 and settled on 24 April 2014, the state taking 15% of the project through a subsidiary and paying US$113 million into escrow, released that December.
- Soil Machine Dynamics of Newcastle built three seafloor production tools: a bulk cutter of 310 tonnes, an auxiliary cutter of 250 tonnes and a collecting machine of 200 tonnes. All three were delivered in February 2016 and shipped to Duqm in Oman.
- The production support vessel was ordered from a Chinese yard and chartered from Marine Assets Corporation at US$199,910 a day. The yard rescinded the contract on 4 July 2018 after a missed instalment of ~US$18 million.
- Cash fell to US$240,636 at the end of 2017. After US$18.25 million of loans from a vehicle owned by its two largest shareholders, the company filed for creditor protection on 21 February 2019 in the Supreme Court of British Columbia.
- The sale process was terminated on 17 June 2019 and the assets went to that same vehicle under an agreement sanctioned on 13 August and closed on 12 November 2019. The company was then assigned into bankruptcy.
Solwara 1 and the other ground
| Project | Location | Water depth | Tenure | Resource |
|---|---|---|---|---|
| Solwara 1 | Bismarck Sea, 50 km north of Rabaul, Papua New Guinea | ~1,600 m | Mining lease ML154, granted January 2011, ~59 km², twenty-year term | Indicated 1,030 kt at 7.2% copper, 5.0 g/t gold, 23 g/t silver. Inferred 1,540 kt at 8.1% copper, 6.4 g/t gold, 34 g/t silver. Effective 25 November 2011. |
| Solwara 12 | Bismarck Sea, 25 km northwest of Solwara 1 | n/a | Mining lease application, discovered 2009 | Inferred 230 kt at 7.3% copper, 3.6 g/t gold, 56 g/t silver, 3.6% zinc |
| Other Bismarck Sea prospects | Papua New Guinea | ~1,630 to 2,590 m | Exploration licences | Sixteen further sulphide prospects identified. No resources declared. |
| Clarion-Clipperton Zone | International waters, central Pacific, six blocks | Abyssal plain | Held through Tonga Offshore Mining, sponsored by Tonga, granted 22 July 2011 | Indicated 68.1 Mt wet at 30.32% manganese, 1.35% nickel, 1.18% copper. Inferred 685.3 Mt wet. Effective 30 March 2016. |
| Tonga, Fiji, Solomon Islands, Vanuatu and New Zealand | Various Pacific waters | n/a | Prospecting and exploration licences and applications | Exploration only. Samples off Tonga returned up to 16.4 g/t gold and 12.6% copper. |
The machines
The three seafloor production tools were the most advanced deep sea mining equipment ever built at the time, and none of them ever mined.
| Machine | Weight | What it was for | Fate |
|---|---|---|---|
| Auxiliary cutter | 250 t | The pioneering machine, cutting benches on tracks with spud assistance to prepare ground for the bulk cutter | Completed 2015, delivered February 2016, shipped to Duqm in Oman |
| Bulk cutter | 310 t | The main cutting machine | Completed 2015, delivered February 2016, shipped to Duqm |
| Collecting machine | 200 t | Gathering the cut material and pumping it as a slurry to the riser | Completed 2015, delivered February 2016, shipped to Duqm |
| Production support vessel | 227 m as designed | The surface ship, ordered from a Chinese yard and chartered at US$199,910 a day | The yard rescinded the charter on 4 July 2018 over a missed instalment. Never delivered to the company. |
How it ended
| Date | What happened |
|---|---|
| 4 July 2018 | The shipyard rescinded the production support vessel contract after an instalment of ~US$18 million was missed. |
| Through 2018 | The company was kept alive by loans from Deep Sea Mining Finance, a vehicle owned equally by its two largest shareholders, totalling US$18.25 million. |
| 21 February 2019 | Filed for protection under the Companies’ Creditors Arrangement Act in the Supreme Court of British Columbia, with PricewaterhouseCoopers as monitor. |
| 3 April 2019 | Delisted from the Toronto Stock Exchange at the close. |
| 17 June 2019 | The sale and investment solicitation process was terminated without a buyer. |
| 13 August 2019 | The court sanctioned the sale of the assets to Deep Sea Mining Finance. |
| 12 November 2019 | The sale closed and the monitor assigned the company into bankruptcy. |
| 23 July 2020 | The monitor was discharged. Shareholders received nothing, and the state subsidiary’s US$50.89 million claim was disallowed. |
Who owned it at the end
The last public register, from a statutory early warning report of 29 January 2019, is calculated on 674,785,995 shares.
| Holder | Shares | Percent | With lender warrants |
|---|---|---|---|
| Mawarid Offshore Mining, owned by MB Holding Company of Oman | 205,039,991 | 30.4 | 37.4 |
| Metalloinvest Holding (Cyprus), the Alisher Usmanov vehicle | 129,792,256 | 19.2 | 27.3 |
| Deep Sea Mining Finance, warrants only | None. 75,171,816 warrants at C$0.17. | n/a | 10.0 |
| The three acting together | 334,832,247 shares plus the warrants | n/a | 54.7 |
Deep Sea Mining Finance is owned equally by those same two shareholders. It lent the company the money that kept it alive through 2018 and then acquired its assets out of the insolvency, so the two largest holders ended up owning the assets directly while the public shareholders were wiped out.
What became of Solwara 1
The deposit has not been mined. Papua New Guinea imposed a moratorium on seabed mining in 2019, renewed in 2023. The Papua New Guinea operating subsidiary was deliberately kept outside the creditor protection filing and continues under a new name, seeking to revive the project. The three machines were last publicly located at Duqm in Oman and in Papua New Guinea.
Filing archive
The company reported in Canada under the symbol NUS until its delisting. Its securities filings from 2013 to the final early warning report of January 2019 are mirrored here, so the record survives whatever happens to the regulator’s own archive.