Nautilus says ship agreement brings it closer to underwater mining production

By The Canadian Press

VANCOUVER - Nautilus Minerals (TSX: NUS.TO) says it is one step closer to becoming the world's first deepwater mining exploration and production company after contracting with a Norwegian shipowner for a mining support vessel.

The binding agreement with North Sea Shipping Holding AS to provide the ship for its Solwara 1 project off Papua New Guinea is valued at US$125 million over five years.

"There was considerable competition in the market for this vessel, but the structure and offer proposed by North Sea shipping suited, we believe, our shareholders best," Nautilus CEO Stephen Rogers said during a conference call Tuesday.

"We are looking forward to a long and profitable relationship with North Sea shipping."

Rogers said his company and North Sea have a "strong cultural fit."

"This is very important given that we are going to have working relationship of at least seven years with this company," including two years of development before the five-year contract begins.

North Sea, an established operator in the offshore oil and gas industry, will provide the 160-metre ship on a five-year charter basis with options to extend for a further five years.

Vancouver-based Nautilus had signed a deal last year with Belgium-based dredging company Jan De Nul to build a 191-metre ship, but the agreement fell through last summer before it could be finalized.

The failed deal sank Nautilus shares from a 52-week high of $5.60 on the Toronto Stock Exchange last July. The shares were unchanged $2.49 on Tuesday, up from a low of $2.01 earlier this year.

Nautilus, which explores the ocean floor for gold and copper deposits, is aiming for production by late 2010.

Its main focus is the Solwara site in the territorial waters of Papua New Guinea in the western Pacific.