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Nautilus is the first company to commercially explore and develop the seafloor for high grade seafloor massive sulphide deposits - a major source of the world's copper, gold, zinc and silver.
The mining technology required to mine the seafloor is capital efficient and commercially available from the oil, gas and mining sectors. The mining equipment can be simply relocated by redeploying the mining vessel and associated equipment.
The Company holds over 300,000 km2 of tenement licences and exploration applications in the territorial waters of Papua New Guinea ("PNG"), Fiji, Tonga, the Solomon Islands and New Zealand, along the western Pacific Ocean's Rim of Fire.
Given the high grade massive sulphide deposits and capital efficiency of the projects, Nautilus is well positioned as an emerging producer.
Nautilus is listed on the Toronto (TSX) and London (AIM) exchanges. It has among its largest shareholders three of the world's leading resource companies including Epion (22.4%), Teck Cominco (7.2%) and Anglo American (5.7%) and its alliances and technical partnerships position it as the world leader in underwater exploration.
Exploration and mine planning is well underway for its Solwara 1 Prospect in the Bismarck Sea in PNG, 50 km north of Rabaul township.
Accomplishments for 2007
- Completed first offshore program, incorporating two vessels completing 200 operating days of offshore operations with no lost time injuries
- Discovery of four new mineralised areas offshore of Papua New Guinea
- World first commercial electromagnetic survey of a seafloor massive sulphide ("SMS") deposit
- World first drill out using remote operated drill rigs of an SMS deposit
- World first NI 43-101 drill resource for an SMS deposit
- Completion of baseline environmental surveys at Solwara 1
- Raised US$214 million in equity capital in 2007
- Awarded a contract to build the world's first remote operated SMS mining machines
- Ended 2007 year with US$312 million cash in bank
PROJECTS AND DEVELOPMENT
Solwara Project
Nautilus is exploring for high grade polymetallic (copper, gold, zinc and silver) SMS deposits in 1,600 metres of water off the coast of PNG within the western Pacific Ocean's "Rim of Fire".
The current focus is the exploration, mine planning and development activities associated with its Solwara 1 Prospect 50 km north of Rabaul township, the main port of East New Britain Province.
Subject to PNG Government permitting, full production is expected in Q3 2010.
In 2007, Nautilus committed approximately US$23 million on environment studies and exploration activities to develop a preliminary geological resource and associated mine plan for Solwara 1. The major focus was on the Solwara 1 though there were also exploration activities that led to the new discoveries of Solwara 5,6,7,8.
Project Development Update
Nautilus continues to make considerable progress in the delivery of the Solwara 1 Project. Delivery of the Solwara 1 Mining System is in three key components:
- Seafloor Mining Tool (SMT),
- The Riser and Lifting System (RALS)
- Mining services, including provision of the mining vessel
Nautilus' approach has been to lock down the contracts for the SMT and the RALS first. The mining services contract will then be awarded as the configuration of these subsea systems has bearing on the optimal surface vessel configuration that the mining contractor will be required to provide.
The SMT contract, which is the first of the three contracts, was awarded after a four month competitive tendering process to Soil Machine Dynamics of the UK. A competitive, paid, front end engineering design program has been launched for the RALS, involving "world's best" international contractors. The mining services contract will be finalised in the second quarter of 2008, following a subsequent competitive, paid, front end engineering design study with several high calibre international groups.
Solwara 1 Resource Statement
The world's first NI 43-101 compliant resource estimate for a SMS system was completed by Golder Associates Pty Ltd., ("Golder") for the Nautilus' Solwara 1 deposit, located in the territorial waters of PNG (Figure1):
- Indicated Mineral Resource: 870 kt @ 6.8% Cu, 4.8 g/t Au, 23 g/t Ag, 0.4% Zn
- Inferred Mineral Resource: 1,300 kt @ 7.5% Cu, 7.2 g/t Au, 37 g/t Ag, 0.8% Zn
The estimate from Golder was based on the following:
- results of 111 core drill holes drilled from the seafloor in 2007
- surface mapping and sampling (133 samples)
- supporting information from 35 core holes drilled in 2006
The estimate was further supported by an electromagnetic ("EM") survey which very effectively outlines the surface extent of copper rich massive sulphide mineralisation. A cut-off of 4.0% Cu was used. The resource was open to the west and at depth where 38% of holes drilled this year finished in mineralisation (Figure 2).
The area drilled in 2007 was constrained by the time available for drilling, as a result of the vessel contract term and the depth limitations of the new Remote Operated Vehicle ("ROV") rigs. Currently the Company is working with its partners on developing drilling systems with extended depth capability to effectively evaluate the deeper potential this year.
SOLWARA 2,3,4
Nautilus and Woods Hole Oceanographic Institution completed an exploration cruise in July and August 2006 to the Solwara 2, 3 and 4 Prospects. Geophysical surveying and ROV grab sampling were completed.
SOLWARA 5,6,7,8
During a 30 day exploration program in May 2007 Nautilus identified four new prospects, Solwara 5,6,7,8.
PNG Tenements
As of December 31, 2007 Nautilus had been granted 19 exploration licences and has a further 71 tenements in Application, in the Bismarck and Solomon Seas, encompassing some 205,000 km2 in area. Teck Cominco has the option to utilise the US$12 million option payment from the recent early exercise of Nautilus options, to conduct and manage a ship based exploration program in 2008 in PNG*. However they must commit to that sea based program by notice to Nautilus by June 30, 2008.
*Excluded from the Areas are the Solwara 1 to 8 projects, a 17,500 sq km tenement package in PNG and exploration licences and applications in Tonga and Fiji applied for before October 20, 2006 which remains 100% owned by Nautilus
TONGA Tenements
As of November 14, 2007, Nautilus had been granted 16 offshore exploration licences covering 78,977 km2, being an area containing most known prospects within the 1887 Proclamation Area of the Kingdom of Tonga in the western Pacific. The exploration licences granted in Tonga cover a strike of over 900 km of highly prospective geology known to contain SMS occurrences. Nine of the 16 granted titles in Tonga (Core Titles) licences are 100% owned by Nautilus with the other seven Tongan licences subject to an option by Teck Cominco to enter into a joint venture.
SOLOMON Tenements
As of November 14, 2007 Nautilus had been granted 14 tenements covering 10,641 km2 in the Exclusive Economic Zone of the Solomon Islands, continuing the Company's tenement holding in the highly prospective Woodlark Basin to the east of PNG. The licences granted in the Solomon Islands are an extension of our highly prospective Woodlark Basin tenements to the east of PNG. All of the Solomon Island licences are 100% owned by Nautilus.
Nominated Brokers
Numis Securities Limited (NOMAD )
10 Paternoster Square
London EC4M 7LT
+44 20 7260 1000
Major Shareholders
Epion 22.4%
Teck Cominco 7.2%
Anglo American 5.7%
Capital Structure
Shares Outstanding ; 45,923,471
Options ; 13,750,270
Warrants ; 15,881,697
Fully Diluted ; 175,555,438
Assets:
Financial: Debt free as of June 30, 2007
Cash on Hand US$312 million as at December 31 2007
Additional potential cash from full dilution US$133 million
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