Financial Press: Gannibal Securities launches bold takeover of Nautilus Minerals

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Ottawa based trader Michael Bailey announced the commencement of a tender offer for 97 cents CAD per share, net to the seller in cash. Nautilus’ current share price is 58 cents.

A daring bid is currently underway to all outstanding shares of common stock of Nautilus Minerals Ltd., a seafloor gold and copper exploration company. Ottawa based trader Michael Bailey announced the commencement of a tender offer for 97 cents CAD per share, net to the seller in cash. Nautilus’ current share price is 58 cents.

“I like Nautilus Minerals because the company is asset rich with a low share price,” Bailey said. “They also have some of the highest grade gold deposits on earth. When this underwater mine goes into production it will change the industry.”

Nautilus explores the seafloor for massive sulphide systems, a potential source of high grade copper, gold, zinc and silver. The company is developing a production system using existing technologies adapted from the offshore oil and gas industry to enable the extraction of these high grade Seafloor Massive Sulphide (SMS) systems on a commercial scale.

Nautilus also holds more than 500,000 km2 of highly prospective exploration acreage in the western Pacific; in Papua New Guinea, the Solomon Islands, Fiji, Vanuatu and Tonga, as well as in international waters in the eastern Pacific.

Under the terms of the tender offer, the family company controlled by Michael Bailey will commence a hostile all cash bid to purchase all the outstanding shares of Nautilus for an aggregate purchase price of $237.99 million CAD. This represents a staggering 209 per cent premium to the previous day closing price of Nautilus' stock.

“This was no sudden hostile takeover, I have been watching the company for some years now,” said Bailey.

“I met the management at the PDAC a few years back and was impressed by the plan. After the company’s most recent struggles with the government of Papua New Guinea became public, I seized the opportunity.”

Nautilus owns the world's first seafloor copper and gold project, Solwara 1, which is under development in Papua New Guinea.

The company suspended work on the seafloor mining project in the region last November, due to a year-long dispute with the Papua New Guinea government over the cost of developing the project.

The issue is centred on the government's equity stake in the project, and the state has been trying to wangle its way out of whatever commitment it might have made to purchase equity in the project and take a share of the development costs.

The recent developments in the mining jurisdiction have not distracted Bailey in his takeover bid.
“Political risk is always a concern; however my goal would be to put less financial pressure on the government by offering royalties not tied to an investment and other strategies that would be a net benefit to the small country when the mine is fully operational,” he said.

The tender offer is scheduled to expire at on March 1, 2013, unless the tender offer is extended; however, it is not expected to take that long.

“I will find out Monday of next week,” Bailey said. “I am very confident as we have made a fair offer considering the company’s current status.”

Gannibal Securities has been engaged to act as advisor in this transaction and will negotiate lock up agreements with major Nautilus Minerals shareholders: Metalloinvest (21 per cent), Anglo American (11.1 per cent), MB Resources(16.9 per cent) and Teck Resources(4.5 per cent). The law offices of Faskin Martineau a national law firm will represent Bailey in this transaction.

Bailey currently owns a minority stake in Nautilus, and is now making a hostile bid to acquire 100 per cent of the outstanding company stock with the intention of taking the company private to finance and execute the underwater mining business plan.

If his takeover is successful, Bailey plans to immediately restart the building of the seafloor production system.

Nautilus was granted a mining lease by the State of Papua New Guinea in January 2011, and the company went on to state in August that the project is not a recent development.

The project equipment build at the end of June was approximately 51 per cent complete.

Stephen Rogers, Nautilus CEO, issued a statement at the time saying that Nautilus was in talks with potential partners to sell a stake in the project, and that Nautilus may sell shares to help raise $100 million if it could not find a partner.

Nautilus is in the process of finalizing details of the vessel financing, and securing a resolution to the current dispute with the Papua New Guinea government. Nautilus is still pursuing its efforts on both these matters.

Nautilus has previously stated it may need to rely on the equity markets for future financing of its development of the project in Papua New Guinea, or alternate financing in the form of joint ventures.

Michael Bailey, an experienced investor and resident of Canada is an algorithmic trader and formerly a member of the Band of Scoundrels, an elite group of high frequency proprietary traders that successfully shorted Citigroup and profited over $130 million in October 2008.

“This year will be a banner year for gold exploration as we have reached a critical point in history,” Bailey said. “I am confident that exploration firms will see massive inflows of capital as gold prices continue to rise.”

Legal Disclaimer/Disclosure: A fee has been paid for the production and distribution of this Release. This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. No information in this article should be construed as individualized investment advice. A licensed financial advisor should be consulted prior to making any investment decision. Financial Press makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness.
Expressions of opinion are those of the author’s only and are subject to change without notice. Financial Press assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this article and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, we assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this release.

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