TORONTO, April 30, 2018 (GLOBE NEWSWIRE) -- Nautilus Minerals Inc. (TSX:NUS)
(OTC:NUSMF) (Nasdaq Intl Designation) (the "Company" or "Nautilus")
announces that it continues to arrange bridge loans from Deep Sea Mining Finance Ltd. (the "Lender") and is
providing a corporate update on the Company's affairs.
US$1.6 Million Bridge Loan
To date the Company has received bridge loans from the Lender totaling US$11,250,000. In conjunction with the
most recent loan of US$1.6 million, the Company has issued to the Lender an additional 6,872,852 warrants of the Company. Each
warrant entitles the Lender to purchase one common share of the Company at a price of C$0.23 for a period of five years from the
date of issuance of the warrant. To date the Company has issued a total of 48,324,740 share purchase warrants to the Lender in
connection with bridge loans.
The bridge loans will assist the Company's immediate working capital requirements and facilitate payments
required to continue the development of the Company's seafloor production system to be first utilized at the Company's Solwara 1
Project. The loans bear interest at 8% per annum, payable bi-annually in arrears with a one year maturity date.
The Company will be entitled to pre-pay each loan prior to maturity, by paying 108% of the outstanding principal
of the loan plus accrued and unpaid interest. Each loan is represented by a promissory note and will initially be secured against
the assets of the Company through a general security agreement. The Lender may subsequently require the loan to be guaranteed by
the Company's material operating subsidiaries and secured against the assets of such subsidiaries.
As previously disclosed, the Lender is a private company owned 50% by each of: (i) USM Finance Ltd., a wholly
owned subsidiary of USM Holdings Ltd, an affiliate of Metalloinvest Holding (Cyprus) Limited; and (ii) Mawarid Offshore Mining
Ltd., a wholly-owned subsidiary of MB Holding Company LLC. As the Lender is indirectly controlled by two insiders of the Company,
the Lender is a "related party" of the Company and the loan transaction constitutes a "related party transaction" of the Company
under MI 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The
transactions comprising the bridge loans and the share purchase warrants are exempt from the formal valuation and minority
shareholder approval requirements of MI 61-101.
The Company did not file a material change report more than 21 days before the expected closing of this
transaction, as the details of the transaction were not finalized until immediately prior to the closing and the Company wished to
close the transaction as soon as practicable for sound business reasons.
US$34 Million Facility and Project Funding Efforts
As previously disclosed, the bridge loans provided by the Lender are expected to form part of a larger secured
structured credit facility of up to US$34 million (the "Facility") to be provided by the Lender to the
Company.
The parties are in active negotiations regarding the definitive loan agreement and the additional encumbrances
to be placed on the Company and its subsidiaries' assets to secure the loans under the Facility. Once the Facility is in place,
existing bridge loans provided by the Lender to the Company will become secured loans made under the Facility.
As with the existing bridge loans, the Facility is intended to provide financial support to the Company to
enable the continued advancement of the Solwara 1 Project while the Company seeks, with the assistance of its exclusive financial
advisor, M. Horn & Co. Ltd., the remaining project financing of up to US$350 million required to complete the development of the
Solwara 1 Project. Efforts to secure project financing are ongoing and the Company, through its exclusive financial advisor, is in
active discussions with various third parties and financial advisors as the Company considers numerous financing structures and
alternatives.
Annual General Meeting (AGM)
The Company plans to hold its annual general meeting on June 25, 2018, at the offices of its Canadian legal
counsel DuMoulin Black LLP in Vancouver, British Columbia. At the AGM, in addition to routine annual business, the Company will be
seeking disinterested shareholder approvals of: (i) the issuance of the maximum number of share purchase warrants to the Lender
under the bridge loans and the Facility, in each case in an amount of up to US$34 million; and (ii) an exercise price of C$0.17 per
share in respect of such warrants (whether previously issued or to be issued), all as required by the rules of the Toronto Stock
Exchange.
Further details of the AGM will be provided in the notice of meeting and information circular to be delivered or
made available to shareholders on or about May 16, 2018.
Update on Vessel Default
The Company previously announced that Fujian Mawei Shipbuilding Ltd. (the "Shipyard"), the
owner of the shipyard where the production support vessel is being built, had notified the Company that MAC Goliath Pte. Ltd.
("MAC"), the purchaser of the vessel, had failed to pay the third installment of the contract price (approximately
US$18 million plus interest). The vessel is to be chartered to the Company by MAC and is an essential component of the Company's
seafloor production system.
If MAC fails to remedy the default, the Shipyard may rescind the shipbuilding contract between the Shipyard and
MAC. In the event that the contract is rescinded, the Shipyard has the right to either complete or not complete the vessel and to
sell the vessel by private sale either in a complete or incomplete state. In accordance with the terms of the contract, Nautilus
Minerals Niugini Limited, a wholly-owned subsidiary of the Company, has the option to either remedy the default on behalf of MAC
and/or replace MAC as a party to the contract by way of a novation or assignment.
The Company continues discussions with the Shipyard, MAC and third parties with respect to the default and
potential remedies, including in regards to one or more third parties assuming responsibility for the completion of the vessel and
subsequent charter to the Company. While, as previously announced, the vessel has been launched by the Shipyard, the vessel remains
docked near the Shipyard's facilities in China. Currently, work on the vessel has halted pending the resolution of the default
situation. The Company will provide further updates as circumstances warrant.
Solwara 1 Project Timing
As indicated, the Company requires significant additional funding in order to complete the build and deployment
of the entire seafloor production system to be utilized at the Solwara 1 Project by the Company and its joint venture partner (as
to 15%), the Independent State of Papua New Guinea's nominee. There can be no assurances that the Company will be successful in
securing the necessary additional financing transactions within the required time or at all. Failure to secure the necessary
financing may result in the Company undergoing various transactions including, without limitation, asset sales, joint ventures and
capital restructurings.
The Company had previously disclosed that the Company was planning to commence initial production activities at
the Solwara 1 Project during the third quarter of 2019, subject to securing project financing, finalizing the ship build contract
delivery date between the Shipyard and MAC and finalizing the vessel equipment integration methodology (due in Q2 2018). As a
result of the delays in securing the remaining project financing and delays in resolving the MAC default situation, the timing for
initial production at the Solwara 1 Project is expected to be delayed past Q3 2019. The Company will provide further updates as
circumstances warrant.
Stronger Board of Directors
With the appointments earlier this year of Jonathan Whitworth and Jay Layman as independent directors of the
Company (along with the appointment of John McCoach in Q4 2017), the Company’s board has been strengthened with a majority of
independent directors to assist the Company as it continues to develop its business plan and work towards advancing the seafloor
mining industry.
For more information please refer to www.nautilusminerals.com or contact:
Investor Relations
Nautilus Minerals Inc. (Toronto)
Email: investor@nautilusminerals.com
Tel: +1 416 551 1100
The TSX does not accept responsibility for the adequacy or accuracy of this press release.
Certain of the statements made in this news release may contain forward-looking information within the meaning
of applicable securities laws, including statements with respect to the Company's funding requirements, expectations to receive
additional bridge loans and enter into a credit facility, and the continued development of the Solwara 1 Project. We have made
numerous assumptions about such statements, including assumptions relating to the Company’s funding requirements, project funding,
and completion and operation of the Company's seafloor production system. Even though our management believes the assumptions made
and the expectations represented by such statements are reasonable, there can be no assurance that they will prove to be accurate.
Forward-looking information by its nature involves 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 information. Please
refer to our most recently filed Annual Information Form in respect of material assumptions and risks related to the prospects of
extracting minerals from the seafloor and other risks relating to the Company's business and plans for development of the Solwara 1
Project. Risks related to continuing the Company's operations and advancing the development of the Solwara 1 Project include the
risk that the Company will be unable to obtain at all or on acceptable terms, and within the timeframes required, the remaining
financings necessary to fund completion of the build, testing and deployment of the Company's seafloor production system; that the
Company will be unable to rectify or arrange for the rectification of the default under the shipbuilding contract for the
construction of the production support vessel; and that agreements with third party contractors for building slots within certain
timeframes are not secured as required. As the Company has not completed a prefeasibility study or feasibility study in respect of
the Solwara 1 Project, there can be no assurance that the Company's production plans will, if fully funded and implemented,
successfully demonstrate that seafloor resource production is commercially viable. 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.
Nautilus was granted the first mining lease for such deposits at the prospect known as Solwara 1, in the territorial waters of
Papua New Guinea, where it is aiming to produce copper, gold and silver. The Company has also been granted its environmental permit
for this site.
Nautilus also holds highly prospective exploration acreage in the western Pacific (granted and under application), as well as in
international waters in the Central Pacific.
A Canadian registered company, Nautilus is listed on the TSX:NUS stock exchange and is also a member of the Nasdaq International
Designation program. Its corporate office is in Brisbane, Australia. Its major shareholders include MB Holding Company LLC, an Oman
based group with interests in mining, oil & gas, which holds a 29.3% interest and Metalloinvest, the largest iron ore producer in
Europe and the CIS, which has a 18.5% holding (each on a non-diluted basis, excluding loan shares outstanding under the Company’s
share loan plan).
