Nautilus still short of funds for its experimental seabed mining

Not only do communities remain firmly opposed to Nautilus experimental seabed mining, the company still does not have enough money to fund its destructive plans…

Nautilus on track to seafloor production, but funding challenge remains

Peter Koven | Financial Post

The investment community has always been a bit skeptical of Nautilus Minerals Inc. When you’re trying to be the first company to ever mine minerals off the ocean floor, it’s only natural that some people won’t believe it until they see it.

But that day should be coming soon, chief executive Mike Johnston said in an interview. Nautilus settled a key dispute with the government of Papua New Guinea (PNG) last year, and since then,  progress has moved quickly on the Solwara 1 project. The company expects to have all its undersea mining tools ready to go by the middle of next year. It has also entered a charter agreement for a massive mining vessel, which it expects to receive in late 2017. After that, Nautilus expects to start digging up copper and precious metals almost right away.

“As soon as we’re happy everything has been incorporated onto the vessel and it’s working as it should, we’ll bring it straight down to PNG. The government’s very eager to get the vessel as early as we can and get the mine in production,” Mr. Johnston said.

Of course, one big barrier remains: capital. Nautilus has spent about US$180 million to date, but will need significantly more money – potentially around $200 million. That is almost as much as the company’s current market capitalization.

Raising that amount through equity, if it can be done, would be extremely dilutive. But Mr. Johnston maintained the company has a number of other options. Royalty and streaming companies were interested in Solwara 1 before the government dispute, and he thinks they might get interested again now that it is settled. The state of Papua New Guinea has an option to boost its stake in the project, and the company is looking at potential joint ventures with mining companies, service providers, or offshore oil and gas firms.

There is still skepticism out there, but Mr. Johnston said the PDAC crowd is getting genuinely excited about his story.

“It’s a lot more exciting than going to Caterpillar and buying some trucks,” he joked.

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Filed under Financial returns, Mine construction, Papua New Guinea

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