Anglo Investing US$25 Million in Nautilus for 11.5% Stake

Vancouver — Nautilus Minerals (NUS-V, NUSMF-O) plans a US$68.5-million financing and has lined up mining giant Anglo American (AAUK-Q, AAL-L) to bankroll 36.5% of the deal.

The major is committing US$25 million to the non-brokered private placement, which will see a planned total of more than 22.8 million shares issued at US$3.00 apiece.

With the financing, Nautilus gains a valuable financial and technical partner for its planned development of the Solwara seabed sulphides, located off the coast of Papua New Guinea. Nautilus recently entered into an agreement with Belgium-based marine engineering firm Jan De Nul Group to build a 191-metre specialized mining vessel.

Anglo American, one of the world’s largest mining companies with a market capitalization of about US$66 billion, has been also been granted a 2-year anti-dilution right to maintain its percentage ownership in Nautilus.

Nautilus had previously partnered with Barrick Gold (ABX-T, ABX-N) subsidiary Placer Dome, which spent about US$12.2 million toward earning a 40% joint-venture interest. In mid-2006, Barrick elected to convert the interest into a 9.59% equity stake in Nautilus.

The seafloor metal deposits at Solwara were formed by “black smokers” — hydrothermal, chimney-like structures formed when ocean water is circulated through porous rock in an active volcanic zone and metal-sulphide minerals are dissolved and then redeposited into sizable accumulations. These occurrences are essentially the modern-day version of the well-known volcanogenic massive sulphide (VMS) deposits mined throughout the world, and can contain significant amounts of gold, silver, copper, zinc and lead.

Shares of Nautilus rallied 80 or about 40% on TSX Venture board trading, up to around $2.70 on strong volume. The company currently has 49.9 million shares outstanding, giving it a $135-million market capitalization. After the proposed financing, Anglo would hold about 11.5% of the estimated 72.7 million shares outstanding.