Nautilus enters into US$34 million loan facility with major shareholders

TORONTO, 12 JUNE 2018 (GLOBE NEWSWIRE) — Nautilus Minerals Inc has announced that it has entered into a loan agreement with Deep Sea Mining Finance Ltd. formalising the previously disclosed secured structured credit facility of up to US$34 million.

The Company, and its wholly-owned subsidiaries Nautilus Minerals Niugini Limited and Nautilus Minerals Pacific Pty Ltd,  entered into the loan agreement with the Lender, pursuant to which the Company may continue to receive secured loans from the Lender to fund the Company’s working capital requirements and enable the Company to continue the advancement of the Solwara 1 Project while the Company seeks, with the assistance of its financial advisors, the remaining project financing of up to US$350 million required to complete the development of the Solwara 1 Project.

Pursuant to the Loan Agreement, the Company may draw loans, on a monthly basis, which shall bear interest at 8% per annum, payable bi-annually in arrears. Advances of loans will be subject to, among other things, the Lender’s ongoing review and approval of the Company’s monthly operational budget.

To date the Company has received bridge loans from the Lender in the aggregate principal amount of US$11,250,000. These existing loans have now become loans made under, and subject to the terms of, the Loan Agreement, leaving up to US$22,750,000 in additional loans that may be advanced under the Loan Agreement. All loans have a maturity date of January 8, 2019 (being one year after the date that the first bridge loan was made).

The Company will be entitled to pre-pay, in whole but not in part, the loans at any time prior to maturity, by paying 108% of the outstanding principal of the loans plus accrued and unpaid interest.

The loans are secured against the assets of the Company through a general security agreement granted by the Company in favour of the Lender, along with a pledge of all the shares held by the Company in its subsidiary NMN.

NMN has guaranteed a portion of the loans (equivalent to the amount of the loans invested towards the Solwara 1 Project) and, in support thereof, NMN has granted to the Lender a charge over NMN’s 85% interest in the Solwara 1 Project, subject to receipt of applicable Papua New Guinea governmental and other third party approvals. NMN has also entered into a general security agreement in favour of the Lender in support of NMN’s guarantee. Nautilus Pacific, a wholly-owned subsidiary of the Company which holds various intellectual property rights including in relation to the Solwara 1 Project, has also guaranteed the loans under the Loan Agreement and, in support thereof, Nautilus Pacific has granted a security interest to the Lender over such intellectual property rights, subject to applicable third party approvals.

The Loan Agreement and the transactions contemplated thereby have been conditionally approved by the Toronto Stock Exchange.

As previously disclosed, the Lender is a private company owned 50 per cent by each of: (i) USM Finance Ltd., a wholly owned subsidiary of USM Holdings Ltd, an affiliate of Metalloinvest Holding and (ii) Mawarid Offshore Mining Ltd., a wholly-owned subsidiary of MB Holding Company LLC. As the Lender is indirectly controlled by two insiders of the Company, the Lender is a “related party” of the Company and the loan transaction constitutes a “related party transaction” of the Company under MI 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The transactions comprising the loans are exempt from the formal valuation and minority shareholder approval requirements of MI 61-101.

The Company did not file a material change report more than 21 days before the expected closing of this transaction, as the details of the transaction were not finalized until immediately prior to the closing and the Company wished to close the transaction as soon as practicable for sound business reasons.

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