Dear Board of Directors:
(Jan 15, 2013 – Financial Press) Nautilus Mineral’s initial response yesterday to Michael Bailey’s identification of excessive waste of capital in both CEO Michael Johston’s and the entire executive management team who stopped work on the company’s flagship Solwara 1 Project, Director Stephen Rogers’s record is insulting to shareholders.
I have formally proposed a term sheet from Dutchess Capital Management for $80M of Equity financing that will not only bring Solwara 1 Project to completion but will finance phase 1 of production. I hope it has reached you and you will support your CEO Mr. Michael Johnston’s decision to use the funds to put the project back on track. I have also suggest to Mr. Johnston that he not take a salary until the share price has recovered and investors are comfortable with the pace at which the company is operating citing the auto bailout as an example.
Furthermore, Nautilus Mineral’s should consider the following go foward to prevent my take over of the company.
1) Execute term sheet with Dutchess Capital Management.
2) Start work on Solwara 1 Project without any further delays.
3) Dedicate 5% of the financing amount to corporate social responsibility including building schools and affordable housing for employees of Nautilus.
4) Seek advice from Mr. Goodden as how production can be made a reality in 2013 while simultaneously completing the Solwara 1 Project.
5) Publicly reveal the process by which it vetted Mr. Johnston as a potential CEO candidate. This disclosure should include the release of all minutes of any meeting at which Mr. Johnston’s candidacy was discussed and any reports or other materials upon which directors relied to evaluate Mr. Johnston’s candidacy.
6) Disclose whether any Board member, including Stephen Rogers, who has long-standing ties to Mr. Johnston.
7) Provide shareholders with all information regarding the director nomination process, including the so-called “preservation of capital” referred to in the Company’s statements which the Board purportedly used to determine the qualifications for the work stoppage at Solwara 1.
8) Terminate Mr. Johnston for cause immediately given his demonstrable unsuitability to remain Chief Executive Officer and a director of Nautilus and accept the resignation of Mr. Rogers for similar reasons.
If we do not hear back from the Board by Monday at Noon, we will assume it does not intend to provide this information.
Finally, we urge the Board to stop wasting valuable company resources and drop its resistance to placing my nominee Mr. Robbert Goodden as an independent director on the Board replacing Mr. Rogers. The Company can ill afford to continue this misguided fight with the government of PNG, I have provided a financing package that will solve the commitment issue and restart the Solwara 1 project without delay and while it has so many other fires to put out. There has been enough damage already so let’s get this going.
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