Anglo Investing US$25 Million in Nautilus for 11.5% Stake

From left: Geologist Justin Baulch, Nautilus Minerals president David Heydon, and Robert Gooden, chairman of drilling contractor Seacore, which is working with Nautilus, head out to sea to witness ongoing exploration on Nautilus's Solwara seabed sulphide project.

From left: Geologist Justin Baulch, Nautilus Minerals president David Heydon, and Robert Gooden, chairman of drilling contractor Seacore, which is working with Nautilus, head out to sea to witness ongoing exploration on Nautilus's Solwara seabed sulphide project.

Vancouver — Nautilus Minerals (NUS-V, NUSMF-O) plans a US$68.5-million financing and has lined up mining giant Anglo American (AAUK-Q, AAL-L) to bankroll 36.5% of the deal.

The major is committing US$25 million to the non-brokered private placement, which will see a planned total of more than 22.8 million shares issued at US$3.00 apiece.

With the financing, Nautilus gains a valuable financial and technical partner for its planned development of the Solwara seabed sulphides, located off the coast of Papua New Guinea. Nautilus recently entered into an agreement with Belgium-based marine engineering firm Jan De Nul Group to build a 191-metre specialized mining vessel.

Anglo American, one of the world’s largest mining companies with a market capitalization of about US$66 billion, has been also been granted a 2-year anti-dilution right to maintain its percentage ownership in Nautilus.

Nautilus had previously partnered with Barrick Gold (ABX-T, ABX-N) subsidiary Placer Dome, which spent about US$12.2 million toward earning a 40% joint-venture interest. In mid-2006, Barrick elected to convert the interest into a 9.59% equity stake in Nautilus.

The seafloor metal deposits at Solwara were formed by “black smokers” — hydrothermal, chimney-like structures formed when ocean water is circulated through porous rock in an active volcanic zone and metal-sulphide minerals are dissolved and then redeposited into sizable accumulations. These occurrences are essentially the modern-day version of the well-known volcanogenic massive sulphide (VMS) deposits mined throughout the world, and can contain significant amounts of gold, silver, copper, zinc and lead.

Shares of Nautilus rallied 80 or about 40% on TSX Venture board trading, up to around $2.70 on strong volume. The company currently has 49.9 million shares outstanding, giving it a $135-million market capitalization. After the proposed financing, Anglo would hold about 11.5% of the estimated 72.7 million shares outstanding.

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