Dilution ahoy! Nautilus offers major investors new shares for less than 52-week low

Nautilus Minerals (TSX/AIM:NUS) dropped 7.3% to $1.02 in late-afternoon trade on Wednesday, despite a rare bit of positive news from the embattled seabed mining company.

The Toronto-based firm announced in a statement that 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 $212 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.

The marine mining project is already half built and is destined for the Bismarck Sea off the Papua New Guinea coast, but shareholders in Nautilus have seen the value of their investments plummet by 50% since the company initiated a legal battle on June 1 over the copper-gold-silver project.

Nautilus says PNG reneged on a deal to help fund the Solwara 1 project as part of an agreement signed last year that gave the country 30% ownership, but that deal is now the subject of arbitration which is expected to take months.

Today's press release makes no mention of any progress at the legal proceedings held in Sydney Australia. The undersea mine was initially slated to begin production in the fourth quarter of 2013.

A leading copper producer before both BHP Billiton and Rio Tinto were forced to abandon two massive mines over land and environmental disputes, PNG emerged in July from a protracted election that saw the political status quo in the country largely maintained.