Nautilus championing seabed exploration

Nautilus Minerals is still pushing ahead with under-sea exploration, despite the credit crunch and the fact that costs are unknown.

LONDON (Reuters) - 

Slumping metals prices will not halt Canada's Nautilus Minerals mining plans, but the costs of digging copper and gold from the seabed are still unknown, the junior explorer said on Friday.

Toronto-listed Nautilus is exploring high grade copper and gold deposits in the territorial waters of Papua New Guinea with the aim to process 1 to 2 million tonnes of ore per year.

"We are in a privileged position ... we have been successful in raising a lot of capital and the current situation in the market is not actually impacting us today," said Chief Executive Stephen Rogers in an interview.

At the end of the third quarter the miner had $298 million in the bank and despite expenses this quarter it would be able to fund the installation of the recently contracted mining equipment onto a specially built vessel, Rogers said.

"However, we will want to raise more money to continue with our growth plans for the company," said Rogers.

But this was not urgent and meanwhile the firm was looking at various funding strategies due to tight credit markets.

A global economic slowdown, exacerbated by a financial credit crisis, have hit commodity prices since the middle of the year with the price of copper futures falling by more than half from a record high of $8,940 a tonne in July.

Spot gold prices have also come down to around $740 an ounce on Friday from an all-time high of $1,030.80 in March.

"We do not go into production until the last quarter of 2010 and given the volatility in the market who knows what the commodity price will be then," Rogers said.

However, the mining company's capital expenditure and the operating expenditure were still unclear as the operating contracts, to be awarded in 2009, are still to be finalised.

"Copper prices at their current level -- no one will be happy with them, but we are not stressed about them," he said.

"We have the cash to continue to build the equipment and to develop the vessel and we don't have any plans to stop."

This week diversified miner Anglo American increased its stake in Nautilus to 11.1 percent, up from 5.7 percent, and Teck Cominco holds 6.8 percent in the firm.

(Reporting by Anna Stablum, editing by Editing by Peter Blackburn)

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