Nautilus Minerals has signed a subscription agreement with Mawarid Offshore Mining Ltd and Metalloinvest Holding (Cyprus) Limited which will provide the company with bridge financing to continue development of the Solwara 1 seafloor project in Papua New Guinea. The agreement will raise gross proceeds of up to US$20 million.
Nautilus’ CEO Mike Johnston said, “The company appreciates the ongoing support of its two major shareholders through this bridge financing arrangement, especially given current market conditions.
“We are also heartened by the continued support of all of our key stakeholders, in particular, our joint venture partner in the Solwara 1 project, the Independent State of Papua New Guinea’s nominee and our vessel contractors, Marine Assets Corporation and Fujian Mawei shipyard. The global interest in seafloor mining continues to grow, and Nautilus remains the industry leader in this expanding field.”
The company requires significant additional funding in order to complete the build and deployment of the seafloor production system to be utilized at the Solwara 1 project.
The gross proceeds available under the subscription agreement will provide the bridge financing necessary to enable the company to operate and to carry on the project while it continues to explore additional financing, joint ventures or other transactions that provide the funding required to complete project development.
Under the agreement, the shares will be purchased on a private placement basis and will close in tranches, on a monthly basis, during the period from December 1, 2016 through to November 30, 2017, at the election of the company.
For the purposes of the additional funding required and in order to continue operating during the financing period, the company will implement a restructuring plan that involves:
- Completing the company’s three key equipment contracts and storing that equipment when delivered, which includes the Seafloor Production Tools and associated equipment being supplied by Soil Machine Dynamics; the Riser Pipe being supplied by General Marine Contractors; and the subsea slurry lift pump being supplied by GE Hydril.
- Marine Assets Corporation continuing construction of the production support vessel at the Fujian Mawei Shipyard up to the completion of the hull, with further construction dependent upon the company securing additional funding.
- Undertaking, with its joint venture partner, the activities necessary to maintain the good standing of the Mining Lease and Environmental Permit for the Solwara 1 project, including the completion of Environmental Management and Monitoring Plans, as well as the completion of local community projects in the regions of Papua New Guinea closest to the project area.
- Terminating other contracts for the construction of any seafloor production equipment that are in the early stages of development and not entering into any new construction contracts until additional funding is secured.
- Reviewing the joint venture’s remaining development, testing and operations plans to take account of current market conditions.
- Reducing company staff numbers by approximately 60% to maintain the key resources required to implement the above activities, whilst ensuring project and corporate knowledge is retained.
Nautilus previously disclosed that in the event that the required funding is secured and it is able to continue development of Solwara 1, the schedule would be delayed. The company has now secured the necessary bridge financing to facilitate the time required to secure that additional required funding.
If the additional required funding is secured by June 2017 and subject to ongoing detailed planning, the company could be in a position to commence the initial deployment and testing operations at the project by the end of quarter one of 2019.