To me this looks like a dead duck until 2015-16? There is a slight chance of rebound if the arbitration deal is successfull? Rebound to .50-60 cents. I see better fish to fry short term while we wait for this salty cod to cook.

PNG in Arreas 96 million! If that comes in the ship may get built?


Nautilus Minerals Inc. 
(NUS-T, NUS-L) C$0.29 
Dilutive Financing Keeps Solwara 1 Advancing
We are updating our estimates to reflect the company’s recent announcement 
to raise gross proceeds of C$40mm through a 200mm common share rightsoffering at a subscription price of C$0.20/share. We have also made changes 
to our estimates, following management’s investor update on April 4 and 
year-end financial statements. 
NEGATIVE. We were surprised by the company’s equity financing, given 
that in mid-November, the company announced that it had terminated 
construction on the Seafloor Production System (SPS). This decision was to 
preserve cash after discussions and arbitration proceedings with the 
Government of PNG (GPNG) failed to resolve a dispute over their joint 
partnership agreement. Nautilus has since realized that stopping construction 
of the key components of the SPS would knock its projects out of the 
construction queue, and substantially delay when production could begin. 
The company now believes that maintaining the capex spend will not unduly 
delay the project, while the dispute with the GPNG continues. We have 
revised our estimates to reflect the Rights Offering along with our estimates 
for additional future equity financing based on the current share price. Both 
were dilutive to our estimates, which lowered our 12%NAVPS estimate. We 
have reduced our P/NAV target multiple, which lowered our target price to 
C$0.40 (previously C$0.75) to reflect risks and uncertainties facing the 
? On March 28, Nautilus announced that it had filed a preliminary shortform prospectus in respect of a rights offering to raise gross proceeds of 
C$40mm through the issuance of 200mm common shares at a 
subscription price of C$0.20/share. 
? The company’s major shareholder MB Holding Company LLC (16.7%), 
has agreed to purchase the full offering in the event it is not otherwise 
fully subscribed, in consideration for a fee of C$2mm.
? Proceeds from the offering are expected to be used by the company to continue funding the three key 
contracts related to the Seafloor Production System (SPS). 
The key contracts include the Seafloor Production Tools by Soil Machine Dynamics Ltd, the supply of the 
Subsea Slurry Lift Pump by GE Hydril and the procurement of the rigid riser system by General Marine 
Contractors LLC. 
Dispute with PNG Government – arbitration decision expected in Q3/13 
The company now believes that an arbitration decision related to its dispute with the GPNG is expected in 
Q3/13. The dispute, which began in June 2012, involves a number of key sticking-points, including direct 
ownership of the project’s Intellectual Property and certain unspecified commercial terms. As a reminder, 
under the terms of the agreement, the government was to acquire a 30% interest in Solwara 1 by making an 
upfront payment of approximately $23.5mm for sunk costs, and then contributing future development costs on 
a pro-rata basis. According to the company’s 2012 year-end financial reports, the government’s pro-rata costs 
now total approximately $61.2mm (excluding interest). 
Financial position post Rights Offering 
As of December 31, 2012, the company had working capital of $46.8mm, including cash of $57.8mm. Net 
proceeds from the Rights Offering are expected to add about $37.5mm to the treasury in Q2/13. Based on our 
forecasts for capital spending of $40mm in H1/13, we anticipate the company could exit Q2/13 with a cash 
balance of $45mm. However, if the dispute with the GPNG is not resolved this year and the funds owed are 
not received, capex spending in H2/13 may have to be slowed, or funded elsewhere. We assume that the 
GPNG pays arrears of $96.7mm in Q4/13, and its pro-rata 30% joint venture share thereafter. 
Development Update 
The company noted in its 2012 year-end financial results that the project was 55% complete. It is unclear, in 
our view, whether this refers to its cost, development timeline or both. The company carries a total value of 
$211mm on its balance sheet for mineral properties ($41mm) and properties, plant and equipment ($170mm). 
We assume a total capital cost of $512mm excluding the vessel, with $353mm in capex remaining on a 100% 
On the company’s conference call, management noted that its vessel of choice has received Class approval for 
basic design and is ready to move to detailed design once a ship yard is selected and a financing structure is 
adopted. The company is exploring several alternatives to finance the vessel including traditional equity and 
debt, or have an outside investor/partner finance the construction after which the company would charter the 
vessel. In the event the company has to finance the construction, we expect increased capital costs and 
potentially more equity dilution. A charter situation would likely result in higher operating costs than an owner 
Changes to our estimates: 
? We continue to assume the GNPG maintains its 30% interest in the project, and have pushed out the 
anticipated $23.5mm contribution for sunk, and plus additional pro-rata costs until Q4/13 (Q2/13 
? We continue to assume a start-up date of Q3/15. This allows approximately 18 months to complete the 
construction and commissioning period, assuming the company receives the funding from GNPG in 
? We have boosted our exploration expenditures for 2013 along with our G&A costs 
? We have revised our larger equity financing assumptions for the company, which we believe is required 
to complete construction of Solwara 1 (excluding the vessel). We assume an equity raise of $175mm in 
Q1/14 (from $225mm in Q3/13) at C$0.30/share (C$0.60 previously), resulting in 583mm additional 
shares (375mm previously) to be issued. 
? With our new assumptions, cash drops to a low of about $44mm in Q2/15, just before the start-up of production.
Justification of Target Price
Our revised target price of C$0.40 (C$0.75 previously) is based on a 0.60x multiple (previously 0.75x) to our 
12%NAVPS estimate of $0.63 ($0.89 previously). 
Key Risks to Target Price
The main risks facing the company include financial, technical, political and forecasting risks relating to 
deposit size. These include risks related to copper, zinc, silver, gold and fuel prices. The risks also include 
governing fiscal and legislative regimes, the timing of key developments, market conditions, capital and 
operating costs, foreign exchange rates, resources and reserves, operating parameters, permitting, environment, 
and staffing and key personnel retention. Specific risks to our valuation are: constructing the world’s first 
deepwater submarine base metal mine, forecast risks due to a lack of feasibility study, partnering risk, access 
to capital, successful negotiations with joint venture partners and technical risks associated with the first-of-its 
kind deepwater mining system. 
TD Investment Conclusion
In our view, an investment in Nautilus Minerals provides high risk exposure to mining high-grade base metal 
mineralization on the sea floor – a new frontier for the mining industry. Nautilus is a recognized leader in 
finding massive sulphide deposits on the sea floor, and adapting established technologies to exploit them. Our 
valuation is based on exploiting the Solwara 1 deposit only, just one of the several deep-sea massive sulphide 
systems the company has found to date in the Bismarck Sea and around Tonga. The company’s concept is to 
exploit Solwara 1, and then exploit other deposits in sequence with little additional capex.