Nautilus Minerals (NUS.T) has ambitious plans to be the first company to explore the ocean floor for polymetallic seafloor massive sulphide deposits. Nautilus was granted a mining license in January 2011 for the Solwara 1 prospect in the territorial waters of Papua New Guinea. In April, the government of Papua New Guinea agreed on terms to become a 15% partner in the project.
As part of the agreement the state placed $113 million in escrow until two conditions were met. The first condition was met today with Nautilus securing intellectual property (IP) rights relating to the sea-floor production system. The second condition is arranging a production vessel, which when completed will trigger the release of the escrowed funds.
Mike Johnston, the company's chief executive officer, commented: "Nautilus is pleased it has satisfied the first of the conditions precedent by securing the intellectual property rights required by the state and is now one step closer to securing the release of the escrowed funds. Discussions remain on track with potential vessel partners to obtain a suitable vessel arrangement within the time frame required under the agreement, which will see the funds released from escrow."
The stock has sold off from a high of $2.75 in the last couple years, and is currently trading at $0.53 cents. It's clear project delays and concerns about the PNG government have worried investors.
However, the stock instantly doubled in April on news that the PNG government would become a 15% partner. Since then there has been little volume traded or movement in the price of the stock; the market appears to be in a 'wait and see' mode until the vessel situation is sorted out.
Once the production vessel is completed (on track to happen before the end of this year) NUS management will have north of $140 million to advance the project.
This is an interesting business concept, one that I will be following closely in the months to come.
Symbol: NUS.T
Share price: $0.53
Shares outstanding: 440.05 M
Market cap: $233.2 M
Cash: ~$36 million (June 30, 2014)
Read: Nautilus satisfies intellectual property condition precedent
Watch: Nautilus Minerals on the Discovery Channel
I have no position in any of the stocks mentioned. This is not investment advice. As always please do your own due diligence.