WHILE it has been successful in raising critical bridging finance, subsea mining proponent Nautilus Minerals Inc. has warned that it still may need to suspend or terminate the development of the Solwara 1 Project off the PNG coast.
Nautilus recently announced that it had signed a subscription agreement with its two largest shareholders, Mawarid Offshore Mining Ltd and Metalloinvest Holding (Cyprus) Limited, that will raise gross proceeds of up to US$20 million.
“The company appreciates the ongoing support of its two major shareholders through this bridge financing arrangement, especially given current market conditions,” Nautilus CEO, Mike Johnston, said.
“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 funds raised under this agreement are being considered as bridging finance by Nautilus, which continues to seek the project financing that will enable it to commercialise the rich subsea mineral resource at Solwara.
The company said that having now secured the necessary bridging financing to facilitate the time it now has extra time 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 Solwara 1 Project by the end of Q1 2019,” Nautilus told shareholders.
However, while happy to have received the critical bridging finance support, the company also told shareholders that a failure to secure project financing may result in the company “taking various steps aimed at maximising shareholder value, including suspending or terminating the development of the Solwara 1 Project.”
The company also reported that it will be utilising the bridging finance to allow it to complete a number of key project activities. It also noted it was undertaking a restructuring plan. The work undertakings going forward involve:
- Completing the company’s three key equipment contracts and storing that equipment when delivered, which includes:
o the Seafloor Production Tools and associated equipment being supplied by Soil Machine Dynamics;
o the Riser Pipe being supplied by General Marine Contractors; and
o the subsea slurry lift pump being supplied by GE Hydril.
- Marine Assets Corporation continuing the 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 PNG closest to the Solwara 1 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. In this regard, the remaining members of the company’s executive management team, who will be responsible for implementing the restructuring plan, are:
o Mike Johnston, President & CEO; and
o Adam Wright, Vice President – PNG Operations.
- Staff reductions will include the departure of a members of the company’s executive management team by September 2, 2016:
o Shontel Norgate, Chief Financial Officer;
o Kevin Cain, Vice President – Projects;
o Jonathan Lowe, Vice President – Strategic Development and Exploration; and
o Karen Hauff, General Counsel / Company Secretary.