Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Nautilus Minerals (TSX/AIM:NUS) shot up 9.5% to $1.15 by the close of trade on Wednesday as investors digested the maiden mineral resource estimate for the company’s polymetallic nodule project in the central Pacific Ocean.
In a statement yesterday the Toronto-based company said the nodules occur in 4,000 and 6,000 meter deep waters and contain significant grades of manganese, nickel, copper and cobalt.
The nodules in the Pacific’s Clarion-Clipperton Fracture Zone (CCZ) are formed by the precipitation of metals on the seafloor, either directly from ocean waters or via decomposing microorganisms the company explains. Contractors from Germany, Korea, France and Russia are among others exploring the CCZ.
What really counts in favour of the 100%-owned Tonga Offshore Mining’s project says Nautilus is the regulatory framework the International Seabed Authority has put in place since 1994 and what the company terms “reduced social disturbance” due to the nature of deep water mining versus “large land based resource developments”.
The CCZ find is a rare bit of good news for Nautilus which has run into troubles at its flagship project off the Papua New Guinea coast.
The company’s Solwara project – what would be the world’s first seabed mine – is already half built and was slated to begin production in the fourth quarter of 2013, but a dispute with the PNG government over ownership and funding issues with its partners building a surface vessel for the operation have the put the project on ice.
Shareholders in Nautilus – after today’s jump worth $224 million on the Toronto big board – have seen the value of their investments plummet by 44% since the company initiated a legal battle on June 1 over the copper-gold-silver project in the Bismarck Sea and the troubles with its German shipbuilders.
Last week the firm closed a private placement at 90c that raised $33.9 million to continue to build its Seafloor Production System.
All the major shareholders of the company supported the offer – Oman’s MB Holdings increased its stake to just under 17%, Metalloinvest held at 21% while Anglo American maintained its interest at 11%.
Nautilus has not ruled out returning to the market for more money or finding JV partners to bring the project to completion.
