Nautilus Minerals Inc. (TSX:NUS) (OTC:NUSMF) (the
"
Company" or "
Nautilus")
announces that it has arranged to receive bridge loans from Deep
Sea Mining Finance Ltd. (the "
Lender") and has
also entered into a funding mandate agreement (the "
Funding
Mandate") with M. Horn & Co. Ltd. (the
"
Advisor").
Bridge Loans
The bridge loans, which the Company expects to
be in the amount of up to US$7 million, will assist the Company's
immediate working capital requirements and facilitate payments
required to continue the development of the Company's seafloor
production system to be first utilized at the Company's Solwara 1
Project. The loans bear interest at 8% per annum, payable
bi-annually in arrears with a one year maturity date.
The Company will be entitled to pre-pay each
loan prior to maturity, by paying 108% of the outstanding principal
of the loan plus accrued and unpaid interest. Each loan will be
represented by a promissory note and will initially be secured
against the assets of the Company through a general security
agreement. The Lender may subsequently require the loan to be
guaranteed by the Company's material operating subsidiaries and
secured against the assets of such subsidiaries.
The bridge loans are expected to form part of a
larger secured structured credit facility of up to US$34 million to
be provided by the Lender to the Company, on terms currently being
negotiated between the Lender and the Company. There can be no
assurance that the Company will be successful in concluding the
larger credit facility transaction or that any further funding will
be secured by the Company.
In conjunction with initial advances under the
bridge loans, the Company issued to the Lender 3,221,649 warrants
of the Company (the "Warrants"). Each Warrant
entitles the Lender to purchase one common share of the Company at
a price of C$0.17 for a period of five years from the date of
issuance of the Warrant.
As previously disclosed, the Lender is a
recently incorporated private company in the British Virgin Islands
and intended to be 50% owned by each of: (i) USM Finance Ltd, a
wholly owned subsidiary of USM Holdings Ltd, an affiliate of
Metalloinvest Holding (Cyprus) Limited; and (ii) Mawarid Offshore
Mining Ltd., a wholly-owned subsidiary of MB Holding Company
LLC.
As the Lender will be controlled by two insiders
of the Company, the Lender is a "related party" of the Company and
the loan transaction constitutes a "related party transaction" of
the Company under MI 61-101 Protection of Minority Security Holders
in Special Transactions ("MI 61-101"). The
transactions comprising the bridge loans and the Warrants will be
exempt from the formal valuation and minority shareholder approval
requirements of MI 61-101.
The independent committee of directors of the
Company, consisting of Russell Debney and John McCoach, approved,
prior to Mr. Debney's resignation, the bridge loans and the Funding
Mandate.
The Company did not file a material change
report more than 21 days before the expected closing of this
transaction, as the details of the transaction were not finalized
until immediately prior to the closing and the Company wished to
close the transaction as soon as practicable for sound business
reasons.
New Funding Mandate
Pursuant to the Funding Mandate, the Advisor has
been appointed as the Company's exclusive financial advisor, for a
period of one year, in respect of the remaining project financing
of up to US$350 million required to complete the development of the
Solwara 1 Project. The Funding Mandate replaces the existing
funding mandate agreement dated October 9, 2017 between the Company
and the Lender.
The Advisor, a private company controlled by
Mark Horn, is a corporate finance business authorized in the United
Kingdom by the Financial Conduct Authority. Mr. Horn is a previous
director of the Company.
Under the Funding Mandate, the Company will pay
the following to the Advisor:
- a cash fee (the "Commission") on the aggregate
consideration received by the Company in a funding transaction
equal to 6% in respect of equity financings, or 5% in respect of
any debt financing, trade financing or other form of funding
transaction during the term of the Agreement, and for a period of
twelve months following its cancellation in respect of investors
introduced to the Company by the Lender. The Commission will be
payable on the bridge loans and other financings provided by the
Lender; and
- a cash fee equal to 1.0% of the amount raised by the Company in
a funding transaction arising from an unsolicited investment
proposal received from a third party pursuant to the terms of the
Funding Mandate.
The Lender will have a right of first refusal in
respect of matching any unsolicited investment proposals.
The Funding Mandate will remain in effect for a
period of one year, or until terminated earlier by: (a) mutual
agreement; (b) automatically upon the closing of funding
transactions of US$350 million; or (c) upon a sale of the
Company.
A copy of the Funding Mandate will be available
under the Company's profile on the SEDAR website
(www.sedar.com).
The Company requires significant additional
funding in order to complete the build and deployment of the
seafloor production system to be utilized at the Solwara 1 Project
by the Company and its joint venture partner (as to 15%), the
Independent State of Papua New Guinea's nominee.
There can be no assurances that the Company will
be successful in securing the necessary additional financing
transactions within the required time or at all, including in
connection with the Funding Mandate. Failure to secure the
necessary financing may result in the Company undergoing various
transactions including, without limitation, asset sales, joint
ventures and capital restructurings.
The Company will provide further updates as
circumstances warrant.
For more information please refer to
www.nautilusminerals.com or contact:
Investor Relations Nautilus Minerals Inc.
(Toronto) Email: investor@nautilusminerals.com Tel: +1 416 551
1100
The TSX does not accept responsibility
for the adequacy or accuracy of this press release.
Certain of the statements made in this news
release may contain forward-looking information within the meaning
of applicable securities laws, including statements with respect to
the Company's funding requirements, the Funding Mandate, and the
continued development of the Solwara 1 Project. We have made
numerous assumptions about such statements, including assumptions
relating to the Company’s funding requirements, project funding,
and completion and operation of the Company's seafloor production
system. Even though our management believes the assumptions made
and the expectations represented by such statements are reasonable,
there can be no assurance that they will prove to be accurate.
Forward-looking information by its nature involves known and
unknown risks, uncertainties and other factors which may cause the
actual results to be materially different from any future results
expressed or implied by such forward-looking information. Please
refer to our most recently filed Annual Information Form in respect
of material assumptions and risks related to the prospects of
extracting minerals from the seafloor and other risks relating to
the Company's business and plans for development of the Solwara 1
Project. Risks related to continuing the Company's operations and
advancing the development of the Solwara 1 Project include the risk
that the Company will be unable to obtain at all or on acceptable
terms, and within the timeframes required, the remaining financings
necessary to fund completion of the build, testing and deployment
of the Company's seafloor production system and that agreements
with third party contractors for building slots within certain
timeframes are not secured as required. As the Company has not
completed an economic study in respect of the Solwara 1 Project,
there can be no assurance that the Company's production plans will,
if fully funded and implemented, successfully demonstrate that
seafloor resource production is commercially viable. Except as
required by law, we do not expect to update forward-looking
statements and information as conditions change and you are
referred to the full discussion of the Company's business contained
in the Company's reports filed with the securities regulatory
authorities in Canada.
About Nautilus Minerals Inc. Nautilus is the
first company to explore the ocean floor for polymetallic seafloor
massive sulphide deposits. Nautilus was granted the first mining
lease for such deposits at the prospect known as Solwara 1, in the
territorial waters of Papua New Guinea, where it is aiming to
produce copper, gold and silver. The Company has also been granted
its environmental permit for this site. Nautilus also holds highly
prospective exploration acreage in the western Pacific (granted and
under application), as well as in international waters in the
Central Pacific. A Canadian registered company, Nautilus is listed
on the TSX:NUS stock exchange and is also a member of the Nasdaq
International Designation program. Its corporate office is in
Brisbane, Australia. Its major shareholders include MB Holding
Company LLC, an Oman based group with interests in mining, oil
& gas, which holds a 29.3% interest and Metalloinvest, the
largest iron ore producer in Europe and the CIS, which has a 18.5%
holding (each on a non-diluted basis, excluding loan shares
outstanding under the Company’s share loan plan).