Nautilus Minerals Inc.: US$100 Million to Be Raised in Private Placement

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 31, 2011) - Nautilus Minerals (TSX:NUS)(AIM:NUS) is to raise approximately US$100 million (C$98.1 million*) through a private placement of common shares to fund the development of its first project, Solwara 1, in the Bismarck Sea of Papua New Guinea.

The placing will involve the issue of approximately 39 million shares to a number of investors at a price of CAD$2.52 (US$2.58) per share.

Nautilus President and CEO Steve Rogers said the private placement would provide funds for the construction of the seafloor resource production system, which initially will be deployed at Solwara 1 – the company's first deepwater copper and gold project.

The net proceeds of the non-brokered private placement, combined with the US$112 million in cash reserves held at the end of June 2011 and the contribution from joint venture partner Petromin PNG Holdings Limited are expected to be sufficient to fund the development of the offshore component of the mining joint venture excluding contingency and any working capital requirements.

Investors participating in the placing include Mawarid Mining LLC, a subsidiary of MB Holdings Company LLC, an oil and gas, mineral mining and processing group based in Muscat, Oman. It will make an investment of approximately US$50.1 million to purchase 19.4 million shares, equivalent to 9.98% of the expanded share capital of the company.

Existing Nautilus strategic shareholders, iron ore producer Metalloinvest and mining group Anglo American, also are participating in the private placement. Metalloinvest has subscribed for approximately 8.2 million shares to maintain its interest in Nautilus at 21%, and Anglo American has subscribed for approximately 4.3 million shares on the basis that its stake will be maintained at 11.1%. Institutional investors have subscribed for the remaining 7 million shares to be issued.

Under the terms of the agreements, the private placement will be completed in two tranches, with the final closing taking place on 6 October, 2011.

Nautilus has granted an anti-dilution right to the investors that will enable them to maintain their percentage ownership in the shares of Nautilus, as and when and at the price at which any common shares, or securities convertible into or exercisable for common shares, are issued by Nautilus until the earlier of the date of commencement of first production and February 28, 2014.

Nautilus has agreed to pay a finder's fee of US$1 million in cash to arm's length parties.

The private placement and payment of the finder's fee are subject to regulatory approval, including acceptance of the Toronto Stock Exchange. All securities will be subject to the statutory four-month hold period in Canada.

As a result of the financing announced today, the Board of Nautilus has formally sanctioned the development of Solwara 1, subject to the closing of the private placement in full.

Mr Rogers said he was pleased to welcome Mawarid Mining, with its strong mining and oil and gas pedigree, as a shareholder of Nautilus and noted the continued support from Metalloinvest and Anglo American.

The MB group employs more than 6500 employees from 51 nationalities in the oil & gas, manufacturing and mining industries. First established in 1982, the group has operations and subsidiaries spread across the globe, including the Middle East, Europe, North Africa, Asia, Asia-Pacific, Australia and New Zealand. It was the first private sector organization to engage in gold and copper exploration in Oman, where it operates several open pit copper mines and processes ore at its copper concentrate facility in the Al Batinah region.

The MB group is owned by Dr Mohamed Barwani and his family. Dr Barwani is a petroleum engineer who has built the business over the past three decades.

"This is a growing organisation with expertise in areas that are very relevant to our business. Its decision to participate as a shareholder represents another major vote of confidence in Nautilus and in the emerging seafloor resources industry," said Mr Rogers.

About Nautilus Minerals Inc.

Nautilus is the first company to explore the ocean floor for polymetallic seafloor massive sulphide deposits and is currently developing its first development project at Solwara 1, in the territorial waters of Papua New Guinea, where the company is aiming to produce gold, copper and silver. The company has been granted all necessary environmental and mining permits.

Nautilus is intending to commence operations at the Solwara 1 deposit, where it has defined an NI 43-101 resource as follows:

• Indicated Mineral Resource: 870 kt @ 6.8% Cu, 4.8 g/t Au, 23 g/t Ag, 0.4% Zn.
• Inferred Mineral Resource: 1,300 kt @ 7.5% Cu, 7.2 g/t Au, 37 g/t Ag, 0.8% Zn.

The news release dated December 20, 2007 regarding the resource estimate is available at http://www.nautilusminerals.com/s/Media-NewsReleases.asp?ReportID=278419

The company also holds approximately 600,000 square kilometers of highly prospective exploration acreage in the western Pacific, in PNG, the Solomon Islands, Fiji, Vanuatu and Tonga, as well as in international waters in the eastern Pacific.

A Canadian registered company, Nautilus is listed on the TSX and AIM stock exchanges and has its corporate office in Brisbane, Australia. Following the closing of the private placement, Nautilus will have approximately 195 million issued shares. Its major shareholders include Metalloinvest, the largest commercial iron ore producer in Europe and the CIS, which has a 21% holding, and global mining group Anglo American, which holds an 11.1% interest.

*Exchange rate C$1.00 = US$1.022

Certain of the statements made in this news release may contain forward-looking statements within the meaning of the United States Securities Exchange Act of 1934 and forward-looking information within the meaning of applicable Canadian securities law. Forward-looking statements and forward-looking information include, but are not limited to statements or information with respect to the completion of the private placement, the contribution of funds from Petromin PNG Holdings Limited, that proceeds from the placement, existing cash reserves, contribution from Petromin and other sources of capital will be sufficient to fund the project into production. We have made numerous assumptions about the material forward-looking statements and information contained herein, including among other things, that the approved project budget is an accurate estimate of the funding necessary to take the project into production. Even though our management believes that the assumptions made and the expectations represented by such statements or information are reasonable, there can be no assurance that the forward-looking statement or information will prove to be accurate. Forward-looking statements and information by their nature involve 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 statements or information. Such risks, uncertainties and other factors include, among others, the risk that the project budget is not an accurate estimate of funding required, the private placement is not successfully concluded by some or all parties or that Petromin does not make its contribution and regulatory approval in respect of the private placement is not received. Should one or more of these risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements and information. Although we have attempted to identify factors that would cause actual results to differ materially from those described in forward-looking statements and information, there may be other factors that cause actual results, performances, achievements or events to not be as anticipated, estimated or intended. Also, many of the factors are beyond our control. There can be no assurance that forward-looking statements or information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly you should not place undue reliance on forward-looking statements or information. 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 Nautilus's business contained in Nautilus's reports filed with the securities regulatory authorities in Canada.