Nautilus Minerals Inc. can be added to the list of issuers that tried to raise equity capital in the domestic market but then came up short. Put it down to weak financial market conditions as investors balked at investing in a company that is seeking “to commercially explore the ocean floor for polymetallic seafloor massive sulphide deposits.”
The company is currently developing its first project at Solwara 1, in the territorial waters of Papua New Guinea in the western Pacific Ocean.
Nautilus, whose shares are listed on the TSX and on London’s Alternative Investment Market, was seeking to raise $150-million. It filed a prospectus in mid-May, planned to do a marketed offering before withdrawing its capital raising efforts last Friday. TD Securities Inc. and Credit Suisse Securities (Canada), Inc. were the two lead agents on the transaction.
Despite what it said was “a positive response” from investors during marketing of the proposed transaction over the past two weeks, adverse market conditions had meant that it was not in the interests of shareholders for the transaction to proceed, said chief executive Steve Rogers.
“While it is disappointing to withdraw the capital raising, we did not believe shareholders would be best served by issuing stock in the current market conditions. We have a strong cash position and a range of alternative options available to access capital in the future,” he added, noting that the company had a cash balance of $139-million at March 31, and no debt.
Nautilus has two prominent backers: Anglo American (11.1%) and Teck Resources (6.8%). Another backer is Russia’s Metalloinvest, which beneficially owns a 21% stake.
On the day the prospectus was filed, Nautilus (NUS/TSX-V) closed at $2.75. On the day the deal was withdrawn, the stock traded at $2.48. Over the period the deal was in the public domain, the shares traded from a high of $2.75 to a low of $2.11. The low was recorded last week, just prior to the deal being pulled.
In effect, the withdrawn financing was Nautilus’ initial public offering. The company’s project office is in Brisbane Australia. Nautilus last raised public capital in January 2007 when it raised £50.8 million (US$100 million) and was admitted to the AIM market. The next month it raised US$75 million by way of a private placement in the U.S. On those private placements, neither Anglo American, nor Teck nor Barrick Gold, participated.
Nautilus became listed on the TSX-Venture Exchange in May 2006 following a reverse takeover with ORCA Petroleum Inc.
