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TORONTO, ONTARIO--(Marketwire - Nov. 13, 2012) - Nautilus Minerals Inc. (News - Market indicators)(AIM:NUS)(OTCQX:NUSMF) ("Company" or "Nautilus") announces it has decided to preserve its cash position by terminating the construction of the equipment for its Seafloor Production System.
Nautilus announced on June 1, 2012 that it was in dispute with the Independent State of Papua New Guinea ("State") as to the parties' obligations to complete the Agreement entered into in March 2011 (see links section for full press releases). A further announcement was made on June 20, 2012 confirming that the State had issued a Notice of Arbitration to the Company.
Nautilus considers that the State has a contractual obligation to pay an amount of approximately $23.5 million in respect of costs incurred in the development of the Solwara 1 Project up to January 2011, and to make pro-rata capital contributions in respect of subsequent Project development costs which, at the end of September 2012 totalled approximately $51.5 million (excluding interest). The State disputes that it is required to meet such obligations at this time. In order to continue the construction of the Seafloor Production System, Nautilus has been forced to carry the State's share of Project development costs to date.
It has been Nautilus' preference to resolve the dispute with the State by agreement and with that aim Nautilus has taken steps to meet with senior representatives of the State, including discussions with National Executive Council Ministers. Unfortunately, to date, an agreed commercial resolution with the State has not been achieved and Nautilus believes the avenues for achieving such a resolution within the timeframe that Nautilus could reasonably continue to carry the total development costs for the Project have now been exhausted. Accordingly, in order to preserve capital, Management and the Board of Directors of Nautilus have decided to terminate construction of its Seafloor Production System. All of the relevant supplier agreements contain provisions for termination without penalty. The Company has also been forced to reduce staff numbers with approximately 60 positions to be made redundant.
Nautilus' CEO, Mike Johnston, commented: "While terminating the equipment build for the Seafloor Production System and reducing staff numbers to this extent was a difficult decision, it was appropriate. Nautilus has a highly prospective ground position, which includes 19 identified prospects in Tonga, including the recent high grade discoveries in the NE Lau Basin and a 410 million tonne Inferred Mineral Resource in the Central Pacific (see links section for full press releases). Despite this setback, the Company remains committed to maximizing shareholder value by achieving its objective of developing the world's first commercial seafloor copper-gold project and launching the deep water seafloor resource production industry, whilst maintaining an environmentally and socially responsible approach."
Terminating the equipment build for the Seafloor Production System includes discontinuing discussions regarding an alternative vessel and associated funding solution. This means there will be a considerable delay in any commencement of production operations and it may also result in an increase in the Project cost.
Conference Call Details
A Conference Call and Webcast will be held by the Company on Tuesday, November 13, 2012 at 10:00 a.m. EST (Toronto), 3:00 p.m. GMT (London)
Webcast link: http://www.media-server.com/m/p/9ebch3qp
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A presentation to support the conference call will be posted on www.nautilusminerals.com for download by 9:30 a.m. EST (Toronto) on Tuesday, November 13, 2012.
For more information please refer to www.nautilusminerals.com.
Certain of the statements made in this news release may contain forward-looking statements within the meaning of the United States Securities Exchange Act of 1934 and forward-looking information within the meaning of applicable Canadian securities law. Forward-looking statements and forward-looking information include, but are not limited to statements or information with respect to Nautilus developing a seafloor copper-gold project and commencing production thereon. We have made numerous assumptions about the material forward-looking statements and information contained herein including the progression of the arbitration of the disputes between Nautilus and the State. Even though our management believes the assumptions made and the expectations represented by such statements or information are reasonable, there can be no assurance that the forward-looking statement or information will prove to be accurate. Forward-looking statements and information by their nature involve known and unknown risks, uncertainties and other factors which may cause the actual results to be materially different from any future results expressed or implied by such forward-looking statements or information. Such risks, uncertainties and other factors include, among others, the risk that arbitration involving the dispute with the State does not result in a positive outcome. Should one or more of these risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements and information. Although we have attempted to identify factors that would cause actual results to differ materially from those described in forward-looking statements and information, there may be other factors that cause actual results, performances, achievements or events not to be as anticipated, estimated or intended. Also, many of the factors are beyond our control. There can be no assurance that forward-looking statements or information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly you should not place undue reliance on forward-looking statements or information. Except as required by law, we do not expect to update forward-looking statements and information as conditions change and you are referred to the full discussion of the Company's business contained in the Company's reports filed with the securities regulatory authorities in Canada.
About Nautilus Minerals Inc.
Nautilus is the first company to explore the ocean floor for polymetallic seafloor massive sulphide deposits and is developing its first project at Solwara 1, in the territorial waters of Papua New Guinea, where it is aiming to produce copper, gold and silver. The company has been granted all necessary environmental and mining permits.
Nautilus also holds more than 500,000 km2 of highly prospective exploration acreage in the western Pacific; in PNG, the Solomon Islands, Fiji, Vanuatu and Tonga, as well as in international waters in the eastern Pacific.
A Canadian registered company, Nautilus is listed on the (News - Market indicators) and (AIM:NUS) stock exchanges and (OTCQX:NUSMF). Its corporate office is in Brisbane, Australia. Its major shareholders include Metalloinvest, the largest iron ore producer in Europe and the CIS, which has a 21% holding, global mining group Anglo American, which holds an 11.1% interest and MB Holdings, an Oman based group with interests in mining, oil & gas, which holds a 16.9% interest.