Add German complications to Papua New Guinea problems for Nautilus undersea mine
Nautilus Minerals (TSX/AIM:NUS) opened in positive territory on the TSX on Thursday, but shed 4.4% in London after the embattled seabed mining company released its unaudited consolidated financial results for the second quarter ended June 30.
The company initiated a legal battle on June 1 over a marine copper-gold-silver project off the Papua New Guinea coast in the Bismarck Sea, which saw its value on the Toronto market more than halved.
The Toronto-based company said in the Q2 report it continues to engage the government of PNG in legal proceedings held in Sydney Australia over ownership and funding for its Solwara 1 project which is now just over half built.
Nautilus said it has completed its Bismarck exploration program and signed an offtake agreement for Solwara 1 with a Chinese concern during the quarter, but that it has run into trouble with its German partners building a surface vessel for the operation which would lead to delays.
"On June 1, 2012 Nautilus announced that Harren & Partner advised that it will no longer be able to contribute the full amount of the equity to the Vessel JV contemplated by the Agreement signed by the parties in April 2011. The change in Harren & Partner‟s position, linked to a tightening of banking rules in the current European crisis and the depressed shipping market, may delay the finalisation of the terms of the third party funding and result in a consequential delay to the program for the vessel build."
The undersea mine was initially slated to begin production in the fourth quarter of 2013.
The company said it now has $87.1 million in cash and cash equivalents as at June 30, 2012 and yesterday the firm announced it is raising $34 million through a private placement to continue to build its Seafloor Production System.
The offer is priced at $0.90 per share compared to a year-low for the company on the TSX of $0.92.
The price convinced major shareholders of the $214 million market cap company to support the offer – Oman's MB Holdings will increase its stake to just under 17% and get a seat on the board, Metalloinvest holds at 21% while Anglo American has subscribed for 4.4 million shares to maintain its interest at 11%. Other large shareholders will take up the remaining 5 million shares of the total 37.7 million to be issued.