Jan 19 2016
Nautilus Minerals Inc. announces that it has signed agreements with United Engineering Services LLC to provide support services associated with wet testing the Company's Seafloor Production Equipment and storing the equipment as it is delivered from various suppliers prior to integration onto the Company's Production Support Vessel.
The first of the equipment to be tested will be the three Seafloor Production Tools (SPTs). The SPTs are due for delivery from the Soil Machine Dynamics facility in Newcastle upon Tyne early in 2016. Each machine is undergoing rigorous commissioning and factory acceptance testing which has been conducted in dry conditions on land. Once delivered, the SPTs will undergo extensive wet testing at Duqm Port in Oman which is designed to provide a submerged demonstration of the fully assembled SPTs and will involve submerged testing of:
- Control systems operations and feedback
- Hydraulic functions
- Collection system functions
- Survey and visualization systems
On completion of the wet testing, the SPTs will be stored at UES facilities in Duqm, Oman for preservation and maintenance until integration on the PSV which is expected to occur in 2017.
Mike Johnston, Nautilus' CEO, commented, "It is very exciting to have the SPTs all fully assembled as we prepare for wet testing. We appreciate the ongoing support from our largest shareholder, MB Holding Company LLC, who is assisting us with the wet testing and provision of storage facilities in Oman. We look forward to the next phase of development to wet test our equipment as we work towards commencing our seafloor operations in Q1 2018."
UES is a wholly-owned subsidiary of MB Holding Company LLC ("MB"), which holds, directly or indirectly, approximately 27% of the Company's issued and outstanding shares and has two nominee directors sitting on the Company's board (Dr. Mohammed Al Barwani and Tariq Al Barwani). Accordingly, the support services and equipment storage contracts with UES constitute a "related party transaction" of the Company under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101").
The board of directors of the Company, excluding the two interested directors, unanimously approved the contracts with UES, and determined that the transaction is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 in reliance on the exemptions set forth in sections 5.5(a) and 5.7(1)(a) of MI 61-101, on the basis that, at the time the transaction was agreed to, neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the transaction exceeds 25% of the Company's market capitalization.