I don't think I've ever come across a stock like Nautilus Minerals (NUS). This company is proposing to build the world's first underwater mine. The implications of this is beyond enormous to say the least. Most people are probably unaware that the ocean's floors hold an abundance of untapped minerals/metals in what's called SMS deposits These deposits contain primarily copper, zinc and gold with grades far superior to that of the average land based mine. Since the discovery of SMS deposits over 50 years ago, nobody has ever attempted to exploit them until now. NUS believes that thanks to the developments in offshore oil drilling in recent years, we now have the technological capabilities to mine the ocean's floors and they believe they can do it profitably and safely (which is debated of course).
NUS first began exploring for underwater SMS deposits as far back as 1997. They became a public company in 2006 and had identified targets for underwater mining in the Bizmark Sea just off the coast of Papua New Guinea and since then they have been working towards getting all the necessary permits, studies, equipment and partnerships to achieve their vision of mining the seabed for the first time in history. The road to this vision has not been an easy one to travel. There have been serious stumbles along the way which included the financial crisis in 2008 along with a 3 year dispute with their joint venture partner, the PNG government.
In April of 2014, it appears as though NUS hit a major turning point after many years of suffering. They came to an agreement with the PNG government whereby PNG took a 15% stake in their joint venture to mine the Solwara 1 deposit with the option to increase to 30%. As a result of PNG's 15% commitment there is $113M in escrow which will be released to NUS on the condition that they secure the vessel that is required to carry out the project by November. NUS is confident they can do it and in the meantime are in the process of building the equipment and machinery needed to mine the deposit. Once the vessel is secured, mining is expected to begin 2-3 years afterwards. That's still quite some time from today but never has NUS been this close to carrying out what they set on doing 17 years ago. If NUS is successful with their first mine, the sky is the limit. They have explorations licenses for about 500,000 square KM of prime seabed real estate.
This is not just some pump and dump pipe dream stock. These guys are actually in position to make a serious go at this and they have a government partner along with some big name investors behind it. There's no doubt many serious risks and uncertainties with this play including the potential for more stumbles, but for the first time in several years NUS has the wind at their back and have never been in a better position to make their dream a reality. The hype alone could make this stock soar once they are on the verge of production and it could easily turn into a bubble stock as is the case with most "new paradigm" companies. The question I've been asking myself is how much should I commit now given that we are still 2-3 years away before mining begins (assuming things go as planned). I think some sort of a commitment now is warranted. I'm sure a lot of people including big money players are going to take a wait and see approach and only be convinced once they see results but by the time they see what they're looking for the stock will be much, much higher than 0.54. One near term catalyst is when NUS secures the vessel which would unlock the $113M from PNG. That could cause the stock could pop another 20-30 cents easy. At this valuation I think the risk is well worth the potential reward to commit 40-50% of what I have in mind and then take a wait and see approach with the balance over the next year or 2. Of course with this type of play I can't bet big but I think you gotta have a piece of this, even if it's just 500 shares.
