NUSMF Nautilus Minerals Inc (CE)

---

As filed with the Securities and Exchange Commission on February 10, 2016
Registration No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM F-7
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

NAUTILUS MINERALS INC.
(Exact name of Registrant as specified in its charter)

British Columbia, Canada	1000	Not Applicable
(Province or other jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
incorporation or organization)	Classification Code Number)	Identification Number)

Level 3, 33 Park Road
Milton, Queensland 4064
Australia
Telephone Number: + 61-7-3318-5555
(Address and telephone number of Registrant’s principal executive offices)

Puglisi & Associates
850 Library Avenue, Suite 204
Newark, DE 19711
Telephone: 302-738-6680
(Name, address and telephone number of agent for service in the United States)

Copies to:

Corey Dean	Herbert I. Ono
DuMoulin Black LLP	McMillan LLP
10th Floor - 595 Howe St	Suite 1500 - 1055 West Georgia Street
Vancouver, British Columbia	Vancouver, British Columbia
Canada V6C 2T5	Canada V6E 4N7
Tel: (604) 687-1224	Tel: (604) 691-7493

Approximate date of commencement of proposed sale of the securities to the public:

As soon as practicable after the filing of the next amendment to this registration statement.

1

---

This registration statement and any amendment thereto shall become effective upon filing with the Commission in accordance with Rule 467(a).

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to the home jurisdiction’s shelf prospectus offering procedures, check the following box:[   ]

(1)	Based on the noon buying rate for Canadian dollars published by the Bank of Canada on February 9, 2016 of Cdn$1.00 = US$0.7236. Represents a price of Cdn$0.15 per share and maximum aggregate offering proceeds of Cdn$103,000,000.
(2)	Calculated in accordance with General Instruction II.F of Form F-7.

II-2

---

PART I

INFORMATION REQUIRED TO BE SENT TO SHAREHOLDERS

 

 

 

 

I-1

---

IF YOU ARE A REGISTERED SHAREHOLDER AND RESIDENT IN AN ELIGIBLE JURISDICTION OR A PRE-APPROVED JURISDICTION, YOUR RIGHTS CERTIFICATE IS ENCLOSED. PLEASE READ THIS MATERIAL CAREFULLY AS YOU ARE REQUIRED TO MAKE A DECISION PRIOR TO 2:00 P.M. (VANCOUVER TIME) ON •, 2016.

A copy of this preliminary short form prospectus has been filed with the securities regulatory authorities in each of the provinces of Canada, other than Quebec, but has not yet become final for the purpose of the sale of securities. Information contained in this preliminary short form prospectus may not be complete and may have to be amended. The securities may not be sold until a receipt for the short form prospectus is obtained from the securities regulatory authorities.

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This short form prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities.

Information has been incorporated by reference in this short form prospectus from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Company Secretary of Nautilus Minerals Inc. at Level 3, 33 Park Road, PO Box 1213, Milton, Queensland, Australia 4064 (Telephone +61-73318-5555) or 10th Floor, 595 Howe Street, Vancouver, British Columbia, V6C 2T5 (Telephone 604-687-1224) and are also available electronically at www.sedar.com.

With respect to the United Kingdom, this short form prospectus is being made to and directed at and the securities being offered hereunder are only available to: (i) persons outside the United Kingdom; or (ii) persons in the United Kingdom who are: (a) a "qualified investor" within the meaning of Section 86(7) of the United Kingdom Financial Services and Markets Act 2000, as amended ("FSMA"), acting as principal or in circumstances where Section 86(2) FSMA applies; and (b) also: (1) within the categories of persons referred to in Article 19 (investment professionals) or Article 49 (high net worth companies, unincorporated associations, etc.) of the United Kingdom Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Financial Promotion Order"); or (2) are otherwise lawfully permitted to receive them (all such persons together being referred to as "relevant persons"). The securities being offered hereunder are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. This document contains no offer of transferable securities to the public in the United Kingdom within the meaning of sections 85(1) and 102B FSMA. This document is not a prospectus for the purposes of Section 85(1) FSMA. Accordingly, this document has not been examined or approved as a prospectus by the United Kingdom Financial Conduct Authority (the "FCA") under Section 87A FSMA or by the London Stock Exchange and has not been filed with the FCA pursuant to the rules published by the FCA implementing the Prospectus Directive (2003/71/EC) (the "United Kingdom Prospectus Rules") nor has it been approved by a person authorized under FSMA, for the purposes of Section 21 FSMA.

PRELIMINARY SHORT FORM PROSPECTUS

Rights Offering

February 10, 2016

NAUTILUS MINERALS INC.

$103,000,000

OFFERING OF RIGHTS TO SUBSCRIBE FOR UP TO 686,666,666 COMMON SHARES
AT A PRICE OF $0.15 PER COMMON SHARE

Nautilus Minerals Inc. (the "Company" or "Nautilus") is distributing (the "Offering") to the holders of its outstanding common shares (the "Common Shares") of record ("Shareholders") at the close of business (Vancouver time) on •, 2016 (the "Record Date") one right (the "Right") for each Common Share held which will entitle the Shareholders to subscribe for up to an aggregate of 686,666,666 Common Shares for gross proceeds to the Company of up to approximately $103,000,000.

The Rights are evidenced by transferable certificates in registered form (the "Rights Certificates"). Each Shareholder is entitled to one Right for each Common Share held on the Record Date. For each Right held, the holder thereof is entitled to purchase 1.541329 Common Shares (the "Basic Subscription Privilege") at a price of $0.15 per Common Share (the "Subscription Price") prior to 2:00 p.m. (Vancouver time) (the "Expiry Time") on •, 2016 (the "Expiry Date"). No fractional Common Shares will be issued. RIGHTS NOT EXERCISED BEFORE THE EXPIRY TIME WILL BE VOID AND OF NO VALUE. Shareholders who exercise in full the Basic Subscription Privilege for their Rights are also entitled to subscribe for additional Common Shares (the "Additional Shares"), if available, pursuant to an additional subscription privilege (the "Additional Subscription Privilege"). See "Description of Offered Securities — Additional Subscription Privilege". Any subscription for Common Shares will be irrevocable once submitted.

---

- ii -

(1)	Assuming exercise in full of all of the Rights issued under the Offering.
(2)	Before deducting the expenses of the Offering, estimated to be approximately $450,000.

Pursuant to the requirements of the Toronto Stock Exchange ("TSX"), completion of the Offering is not subject to raising a minimum amount of proceeds. The Company has not entered into a standby commitment with any person or company in respect of the Offering. This means that the Company could complete this Offering after raising only a small proportion of the Offering amount set out in the table above. See "Use of Proceeds".

This prospectus qualifies the distribution of the Rights as well as the Common Shares issuable upon exercise of the Rights in each province of Canada (other than Quebec). This prospectus also covers the offer and sale of the Common Shares issuable upon exercise of the Rights within the United States under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"). The provinces of Canada (other than Quebec) and the United States are collectively referred to in this prospectus as the "Eligible Jurisdictions". Notwithstanding registration under the U.S. Securities Act, the securities or blue sky laws of certain states (including California, Ohio, Arizona, Arkansas, Iowa, Minnesota and Wisconsin) may not permit the Company to offer Rights and/or Common Shares in such states, or to certain persons in those states, or may otherwise limit the Company's ability to do so, and as a result the Company will treat those states as Ineligible Jurisdictions (as defined below) under the Offering.

The Company has applied to list the Rights distributed under this prospectus and the Common Shares issuable upon the exercise of the Rights on the TSX. The approval of such listing is subject to the Company fulfilling all of the listing requirements of the TSX. The Common Shares currently outstanding are listed and posted for trading on the TSX under the symbol "NUS" and are quoted on the OTCQX International (Nasdaq International Designation) under the symbol "NUSMF". On February 9, 2016, the closing price for the Common Shares on the TSX was $0.315 per share and on the OTCQX International was US$0.2205 per share.

The Rights are fully transferable into and within the Eligible Jurisdictions in Canada by the holders thereof. The Rights may not be transferred to any person within the United States. Holders of Common Shares in the United States who receive Rights may transfer or resell them only in transactions outside of the United States in accordance with Regulation S under the U.S. Securities Act, which generally will permit the resale of the Rights through the facilities of the TSX.

Computershare Investor Services Inc. (the "Subscription Agent"), at its principal office in the City of Vancouver, British Columbia (the "Subscription Office"), is the subscription agent for this Offering. See "Description of Offered Securities — Subscription and Transfer Agent".

For Common Shares held through a securities broker or dealer, bank or trust company or other participant (a "CDS Participant") in the book based system administered by CDS Clearing and Depository Services Inc. ("CDS"), a subscriber in an Eligible Jurisdiction or an Approved Eligible Holder (as defined herein) may subscribe for Common Shares by instructing the CDS Participant holding the subscriber's Rights to exercise all or a specified number of such Rights and forwarding the Subscription Price for each Common Share subscribed for to such CDS Participant in accordance with the terms of this Offering. A subscriber wishing to subscribe for Additional Shares pursuant to the Additional Subscription Privilege must forward its request to the CDS Participant that holds the subscriber's Rights prior to the Expiry Time on the Expiry Date, along with payment for the number of Additional Shares requested. Any excess funds will be returned by mail or credited to the subscriber's account with its CDS Participant without interest or deduction. Subscriptions for Common Shares made through a CDS Participant will be irrevocable and subscribers will be unable to withdraw their subscriptions for Common Shares once submitted. See "Description of Offered Securities — Rights Certificate — Common Shares Held Through CDS".

---

- iii -

For Common Shares held in registered form, a Rights Certificate evidencing the number of Rights to which a holder is entitled will be mailed with a copy of this prospectus to each registered Shareholder as of the close of business on the Record Date. In order to exercise the Rights represented by the Rights Certificate, the holder of Rights must complete and deliver the Rights Certificate to the Subscription Agent in the manner and upon the terms set out in this prospectus. All exercises of Rights are irrevocable once submitted. See "Description of Offered Securities — Rights Certificate — Common Shares Held in Registered Form".

If a Shareholder does not exercise, or sells or otherwise transfers, its Rights, then such Shareholder's current percentage ownership in the Company will be diluted as a result of the exercise of Rights by other Shareholders.

This prospectus qualifies the distribution of the Rights as well as the Common Shares issuable upon exercise of the Rights in the Eligible Jurisdictions. The Rights as well as the Common Shares issuable upon exercise of the Rights are not being distributed or offered to Shareholders in any jurisdiction other than the Eligible Jurisdictions (an "Ineligible Jurisdiction") and, except under the circumstances described herein, Rights may not be exercised by or on behalf of a holder of Rights resident in an Ineligible Jurisdiction (an "Ineligible Holder"). This prospectus is not, and under no circumstances is to be construed as, an offering of any Rights or Common Shares for sale in any Ineligible Jurisdiction or a solicitation therein of an offer to buy any securities. Rights Certificates will not be sent to Shareholders with addresses of record in any Ineligible Jurisdiction, other than Pre-Approved Jurisdictions (as defined herein). Instead, such Ineligible Holders will be sent a letter advising them that their Rights Certificates will be held by the Subscription Agent, who will hold such Rights as agent for the benefit of all such Ineligible Holders. See "Description of Offered Securities — Ineligible Holders".

No underwriter has been involved in the preparation of this prospectus or performed any review of the contents of this prospectus.

There are risks associated with an investment in the Common Shares. See "Risk Factors" for a discussion of factors that should be considered by prospective investors and their advisors in assessing the appropriateness of an investment in the Common Shares.

The Company's two largest shareholders, MB Holding Company LLC, which, together with its affiliates (collectively, "MB"), holds approximately 28% of the outstanding Common Shares, and Metalloinvest Holding (Cyprus) Limited, which, together with its affiliates (collectively, "Metallo"), holds approximately 21% of the outstanding Common Shares, have each indicated to the board of directors of the Company their present intention to participate in the Offering by exercising all or a portion of their Basic Subscription Privilege, but they will determine the extent of their participation in the contexts of the market and there can be no assurance that either MB or Metallo will exercise their Basic Subscription Privilege. The Company believes that insiders of the Company, including MB and Metallo, will be issued Rights to purchase approximately 331,794,574 Common Shares, representing approximately 50% of the Offering. See "Intention of Insiders to Exercise Rights".

All calculations of outstanding Common Shares in this prospectus exclude outstanding Common Shares that have been issued under, and remain subject to the restrictions of, the Company's Share Loan Plan. See "Description of Share Capital – Loan Shares".

---

- iv -

The Company's head office in Canada is located at Suite 1400, 400 Burrard Street, Vancouver, British Columbia, V6C 3A6. The Company also has a project and operations office located at Level 3, 33 Park Road, Milton, Queensland, Australia 4064, PO Box 1213. The Company's registered and records office is located at 10th Floor, 595 Howe Street, Vancouver, British Columbia, V6C 2T5. The Company also has a corporate office located at Suite 1702, 141 Adelaide Street West, Toronto, Ontario M5H 3L5.

The persons signing the Company's certificate page for this prospectus, the balance of the Company's directors and certain persons for whom the Company is required to file a consent in connection herewith, reside outside of Canada. See "Enforcement of Judgments Against Foreign Persons".

We are permitted to prepare this prospectus in accordance with Canadian disclosure requirements, which are different from those of the United States. We prepare our financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and they may be subject to Canadian auditing and auditor independence standards. They may not be comparable to financial statements of United States companies.

Owning the securities may subject you to tax consequences both in the United States and Canada. This prospectus or any applicable prospectus supplement may not describe these tax consequences fully. See "Certain U.S. Federal Income Tax Considerations". You should read the tax discussion in any applicable prospectus supplement.

Your ability to enforce civil liabilities under the United States federal securities laws may be affected adversely because we are existing under the laws of British Columbia, some or all of our officers and directors may be residents of a country other than the United States, some or all of the experts named in this prospectus may be residents of a country other than the United States, and all of our assets are located outside the United States.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC"). NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.

---

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS	2
CANADIAN MINERAL DISCLOSURE STANDARDS	2
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	3
CURRENCY AND EXCHANGE RATE INFORMATION	4
DOCUMENTS INCORPORATED BY REFERENCE	5
MARKETING MATERIALS	6
SUMMARY OF RIGHTS OFFERING	6
SUMMARY DESCRIPTION OF BUSINESS	9
INTENTION OF INSIDERS TO EXERCISE RIGHTS	11
RISK FACTORS	11
USE OF PROCEEDS	13
PRIOR SALES	16
TRADING PRICE AND VOLUME	16
CONSOLIDATED CAPITALIZATION	17
DESCRIPTION OF SHARE CAPITAL	17
DESCRIPTION OF OFFERED SECURITIES	18
PLAN OF DISTRIBUTION	30
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS	31
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS	33
ELIGIBILITY FOR INVESTMENT	45
AUDITORS, TRANSFER AGENT AND REGISTRAR	46
ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS	46
INTEREST OF EXPERTS	47
PURCHASERS' STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION	47
CERTIFICATE OF THE COMPANY	C-1

---

- 2 -

ABOUT THIS PROSPECTUS

In this prospectus, "Nautilus", the "Company", "we", "us" and "our" refer collectively to Nautilus Minerals Inc. and each of its material subsidiaries, unless the context otherwise requires.

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering the Rights, and offering to sell and seeking offers to buy the Common Shares, only in jurisdictions where, and to persons to whom, offers and sales are lawfully permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the Rights or Common Shares. You should bear in mind that although the information contained in this prospectus is accurate as of any date on the front of such documents, such information may also be amended, supplemented or updated by the subsequent filing of additional documents deemed by law to be or otherwise incorporated by reference into this prospectus and by any subsequently filed prospectus amendments.

Unless stated otherwise or the context otherwise requires, all references to dollar amounts in this prospectus are references to Canadian Dollars. The Company prepares its annual financial statements, including those incorporated herein by reference, in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board, and its interim financial statements, including those incorporated herein by reference, in accordance with International Accounting Standard 34, Interim Financial Reporting. As a result, the Company's financial statements may not be comparable to financial statements of United States companies that report in accordance to United States Generally Accepted Accounting Principles ("U.S. GAAP"). The Company presents its financial statements in United States dollars.

CANADIAN MINERAL DISCLOSURE STANDARDS

This prospectus has been prepared in accordance with the requirements of securities laws in effect in Canada, which differ from the requirements of United States securities laws. In Canada, an issuer is required to provide technical information with respect to mineralization, including reserves and resources, if any, on its mineral exploration properties in accordance with Canadian requirements, which differ significantly from the requirements of the United States Securities and Exchange Commission (the "SEC") applicable to registration statements and reports filed by United States companies pursuant to the 1933 Act or the United States Securities Exchange Act of 1934, as amended (the "Exchange Act"). As such, information contained or incorporated by reference in this prospectus concerning descriptions of mineralization under Canadian standards may not be comparable to similar information made public by United States companies subject to the reporting and disclosure requirements of the SEC.

Mineral resource estimates included in this prospectus and in any document incorporated by reference herein or therein have been prepared in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") and the Canadian Institute of Mining and Metallurgy Classification System, as required by Canadian securities regulatory authorities. In particular, this prospectus and any document incorporated by reference herein, include the terms "measured mineral resource", "indicated mineral resource" and "inferred mineral resource." While these terms are recognized and required by Canadian regulations (under NI 43-101), the SEC does not recognize them. In addition, a document incorporated by reference in this prospectus includes disclosure of "contained ounces" of mineralization. Although such disclosure is permitted under Canadian regulations, the SEC only permits issuers to report mineralization as in place tonnage and grade without reference to unit measures.

The definitions of proven and probable reserves used in NI 43-101 differ from the definitions in SEC Industry Guide 7. Under SEC Industry Guide 7 (under the Exchange Act), as interpreted by the staff of the SEC, mineralization may not be classified as a "reserve" for United States reporting purposes unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reserves under the SEC standards.

---

- 3 -

United States investors are cautioned not to assume that any part or all of the mineral deposits identified as a "measured mineral resource", "indicated mineral resource" or "inferred mineral resource" will ever be converted to reserves as defined in NI 43-101 or SEC Industry Guide 7. Further, "inferred mineral resources" have a great amount of uncertainty as to their existence and economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of "inferred mineral resources" may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that part or all of an inferred mineral resource exists, or is economically or legally mineable.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus and the documents incorporated by reference herein contain "forward-looking statements" or "forward-looking information" within the meaning of applicable securities legislation (together, "forward-looking statements"), which include all statements other than statements of historical fact. These forward-looking statements are made as of the date of this prospectus or, in the case of documents incorporated by reference herein, as of the date of such documents and, except as required under applicable securities legislation, the Company does not intend, and does not assume any obligation, to update these forward-looking statements.

Capitalized terms used and not defined herein are defined in the AIF (as defined in "Documents Incorporated by Reference" below).

Forward-looking statements include, but are not limited to, statements with respect to the future price of copper, gold and other metals; the estimation of mineral resources; the realization of mineral resource estimates; plans for establishing or expanding mineral resource estimates on the Projects; the construction and delivery of the PSV; the fulfillment of the obligations under the Tongling sales agreement and the timing and sustainability of such arrangements; costs and timing of the development of the Seafloor Production System; the Company's SMS prospects (including Solwara 1) and new deposits; success of exploration and development activities; permitting time lines; currency fluctuations; requirements for additional capital; government regulation of exploration operations; the Company's financial position; business strategy; plans and objectives of management for future operations; the design and performance of the PSV and SPTs; and the procurement of the PSV. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the risk of failure to obtain required equity or debt funding; the risk that material assumptions listed in the paragraph below will not be borne out; changes in project parameters as plans continue to be refined; any additional permitting or licensing requirements associated with any modifications to the scope of the Solwara 1 Project; future prices of copper, gold and other metals being lower than expected; the over-arching risk that the Company will not commence production of mineralized material; possible variations in resources, grade or recovery rates; the risk of failure to conclude the investigation into the cyber-attack, the inability to reach agreement with MAC as to the deposit under the vessel charter agreement, the insolvency of MAC or the applicable shipyard and other events which may cause a delay to the delivery of the PSV; the risk that the obligations under the Tongling sales agreement are not fulfilled; late delivery of the PSV and SPTs or other equipment; variations in the cost of the PSV and SPTs or other equipment; variations in exchange rates; the failure to obtain regulatory approval for financings; changes in the cost of fuel and other inflationary factors; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities.

---

- 4 -

Other risks are discussed in this prospectus under "Risk Factors".

Such forward-looking statements are current only as at the date on which they are stated to be made and are based on numerous material assumptions (that management believes were reasonable at the time they are made) regarding the Company's present and future business strategies and the environment in which the Company will operate in the future, including the Company's continued compliance with regulatory requirements and the estimated costs and availability of funding for the continued development of the Seafloor Production System. The Company has also assumed that market fundamentals will result in sustained copper and gold demand and prices; that the proposed development of its Seafloor Production System will be viable operationally and economically and proceed as expected; and that any additional financing needed will be available on reasonable terms. With respect to the arrangement with MAC, the Company is assuming that the parties will observe their obligations, that the investigation into the cyber-attack will reach a timely conclusion and that MAC and the Company can agree how to proceed in relation to the payment of the deposit under the vessel charter agreement. Other assumptions are discussed throughout the AIF and, in particular, under the heading "Risk Factors" in the AIF, and under "Critical Accounting Estimates and Judgments" and "Critical Accounting Estimates" in the management's discussion and analysis incorporated herein by reference.

Although the Company has attempted to identify important factors that could cause actual results to differ materially, the assumptions made may not prove to be correct or there may be unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Except as may be required by applicable laws, the Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

CURRENCY AND EXCHANGE RATE INFORMATION

This prospectus contains references to United States dollars and Canadian dollars. All dollar amounts referenced, unless otherwise indicated, are expressed in Canadian dollars. References to "$" or "C$" are to Canadian dollars and references to "US$" are to U.S. dollars.

The closing, high, low and average exchange rates for the United States dollar in terms of Canadian dollars for each of the three years ended December 31, 2015, December 31, 2014, and December 31, 2013 as reported by the Bank of Canada, were as follows:

---

- 5 -

	(1)	The exchange rates are nominal quotations (not buying or selling rates) of the daily noon exchange rates published by the Bank of Canada and are intended for statistical purposes.
	(2)	Calculated as an average of the daily noon rates for each period.

On February 9, 2016, the Bank of Canada noon rate of exchange was C$1.00 = US$0.7236 or US$1.00 = C$1.3820.

The financial statements of the Company incorporated by reference herein are reported in United States dollars and have been prepared in accordance with IFRS.

DOCUMENTS INCORPORATED BY REFERENCE

Information has been incorporated by reference in this prospectus from documents filed with securities commissions and similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained upon request without charge from Company Secretary of Nautilus Minerals Inc. at Level 3, 33 Park Road, PO Box 1213, Milton, Queensland, Australia 4064 (Telephone +61-73318-5555) or 10th Floor, 595 Howe Street, Vancouver, British Columbia, V6C 2T5 (Telephone 604-687-1224) and are also available electronically at www.sedar.com.

The following documents of Nautilus, filed with securities commissions and similar authorities in Canada, are specifically incorporated by reference into, and form an integral part of, this prospectus:

1)	Annual Information Form dated March 30, 2015 and filed on SEDAR on March 31, 2015 (the "AIF");
2)	Audited consolidated financial statements for the years ended December 31, 2014 and December 31, 2013, together with the notes thereto and the auditors' report thereon, filed on SEDAR on March 31, 2015;
3)	Management's Discussion & Analysis for the years ended December 31, 2014 and December 31, 2013 and filed on SEDAR on March 31, 2015 (the "Annual MD&A");
4)	Unaudited consolidated financial statements for the three and nine month periods ended September 30, 2015 and September 30, 2014, together with the notes thereto, filed on SEDAR on November 9, 2015;
5)	Management's Discussion & Analysis for the nine months ended September 30, 2015, filed on SEDAR on November 9, 2015 (the "Interim MD&A");
6)	Material Change Report dated December 16, 2015 and filed on SEDAR on December 16, 2015, with respect to the Company entering into a new agreement with Tongling Nonferrous Metals Co. Ltd. for the sale of material extracted from the Company's Solwara 1 Project;

---

- 6 -

7)	Material Change Report dated May 7, 2015 and filed on SEDAR on May 7, 2015, with respect to a change of directors of the Company;
8)	Material Change Report dated February 4, 2015 and filed on SEDAR on February 4, 2015, with respect to the pre-payment of the charterer's guarantee relating to the construction of the production support vessel; and
9)	Management Information Circular dated May 7, 2015 and filed on SEDAR on May 19, 2015 prepared in connection with Nautilus' annual meeting of shareholders held on June 16, 2015 (the "AGM Circular").

Any documents of the Company of the type described in section 11.1 of Form 44-101F1 – Short Form Prospectus filed by the Company with any securities regulatory authorities after the date of this prospectus and prior to the termination of this distribution will be deemed to be incorporated by reference into this prospectus.

Any statement contained in this prospectus or in a document incorporated or deemed to be incorporated by reference herein will be deemed to be modified or superseded, for purposes of this prospectus, to the extent that a statement contained in this prospectus or in any other subsequently filed document which also is, or is deemed to be, incorporated by reference herein modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement will not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded will not, except as so modified or superseded, be deemed to constitute a part of this prospectus.

MARKETING MATERIALS

Any "template version" of any "marketing materials" (as such terms are defined under applicable Canadian securities laws) that are prepared in connection with the Offering are not part of this prospectus to the extent that the contents of the template version of the marketing materials have been modified or superseded by a statement contained in this prospectus. Any template version of any marketing materials that has been, or will be, filed on SEDAR (www.sedar.com) before the termination of the distribution under the Offering (including any amendments to, or an amended version of, any template version of any marketing materials) is deemed to be incorporated by reference into this prospectus.

SUMMARY OF RIGHTS OFFERING

The following is a summary of the principal features of the Offering and should be read in conjunction with, and is qualified in its entirety by, the more detailed information and financial data and statements contained elsewhere or incorporated by reference in this prospectus. Certain terms used in this summary and in the prospectus are defined elsewhere herein.

---

- 7 -

Eligible Jurisdictions	All provinces of Canada (other than Quebec) and the United States. Notwithstanding registration under the U.S. Securities Act, the securities or blue sky laws of certain states (including California, Ohio, Arizona, Arkansas, Iowa, Minnesota and Wisconsin) may not permit the Company to offer Rights and/or Common Shares in such states, or to certain persons in those states, or may otherwise limit the Company's ability to do so, and as a result the Company will treat those states as Ineligible Jurisdictions under the Offering. The Company will only offer Rights in states where, and to such persons to whom, it is legally permitted to do so.
Pre-Approved Jurisdictions	The Commonwealth of Australia, New Zealand, the Republic of Cyprus, the British Virgin Islands, France and Oman.
Record Date	•, 2016
Commencement Date	•, 2016
Expiry Date	•, 2016
Expiry Time	2:00 p.m. (Vancouver time) on the Expiry Date. Rights not exercised at or before the Expiry Time will be void and have no value.
Subscription Price	$0.15 per Common Share.
Standby Commitment	There is no standby commitment.
Maximum Net Proceeds	Approximately $102,550,000, after deducting the estimated expenses of the Offering of approximately $450,000, and assuming exercise in full of the Rights.
Use of Proceeds	The Company intends to use the net proceeds of the Offering to advance the construction and development of the Company's Seafloor Production System (as defined in the AIF) and for general working capital requirements. See "Use of Proceeds".
Basic Subscription Privilege	Each Right entitles the holder thereof to subscribe for 1.541329 Common Shares upon payment of the Subscription Price. No fractional Common Shares will be issued. Where the exercise of Rights would appear to entitle a holder of Rights to receive fractional Common Shares, the holder's entitlement will be reduced to the next lowest whole number of Common Shares. See "Description of Offered Securities — Basic Subscription Privilege".
Additional Subscription Privilege	Holders of Rights who exercise in full the Basic Subscription Privilege for their Rights are also entitled to subscribe pro rata for additional Common Shares, if any, not otherwise purchased pursuant to the Basic Subscription Privilege. See "Description of Offered Securities — Additional Subscription Privilege".
Exercise of Rights	For all Shareholders whose Common Shares are held in registered form with an address of record in an Eligible Jurisdiction or a Pre-Approved Jurisdiction, a Rights Certificate representing the total number of Rights to which such Shareholder is entitled as at the Record Date will be mailed with a copy of this prospectus to each such Shareholder. In order to exercise the Rights represented by the Rights Certificate, such holder of Rights must complete and deliver the Rights Certificate in accordance with the instructions set out under "Description of Offered Securities — How to Complete the Rights Certificate". For Common Shares held through a CDS Participant, a subscriber in an Eligible Jurisdiction or a Pre-Approved Jurisdiction may subscribe for Common Shares by instructing the CDS Participant holding the subscriber's Rights to exercise all or a specified number of such Rights and forwarding the Subscription Price for each Common Share subscribed for in accordance with the terms of this Offering to such CDS Participant.

---

- 8 -

Holders in Ineligible Jurisdictions	This Offering is made in all of the Eligible Jurisdictions. No subscription under the Basic Subscription Privilege nor under the Additional Subscription Privilege will be accepted from any person, or such person's agent, who appears to be, or who the Company has reason to believe is, an Ineligible Holder, except that the Company may accept subscriptions in certain circumstances from persons in such jurisdictions if the Company determines that such offering to and subscription by such person or agent is lawful and in compliance with all securities and other laws applicable in the jurisdiction where such person or agent is resident (each, an "Approved Eligible Holder"). The Company is treating Shareholders of record on the Record Date in the Commonwealth of Australia, New Zealand, Cyprus, the British Virgin Islands, France and Oman (the "Pre-Approved Jurisdictions") as Approved Eligible Holders. No Rights Certificates will be mailed to Ineligible Holders (other than to Shareholders in Pre-Approved Jurisdictions) and Ineligible Holders (other than Shareholders in Pre- Approved Jurisdictions) will not be permitted to exercise their Rights. Registered holders of Common Shares who have not received Rights Certificates but are resident in an Eligible Jurisdiction or a Pre-Approved Jurisdiction or wish to be recognized as Approved Eligible Holders should contact the Subscription Agent at the earliest possible time. Rights of Ineligible Holders will be held by the Subscription Agent until 5:00 p.m. (Vancouver time) on •, 2016 in order to provide the beneficial holders outside the Eligible Jurisdictions and Pre-Approved Jurisdictions an opportunity to claim the Rights Certificate by satisfying the Company that the exercise of their Rights will not be in violation of the laws of the applicable jurisdiction. After such time, the Subscription Agent will attempt to sell the Rights of such registered Ineligible Holders on such date or dates and at such price or prices as the Subscription Agent will determine in its sole discretion. Holders of Rights who reside outside of the Eligible Jurisdictions and any persons (including any CDS Participants) who have a contractual or legal obligation to forward this document to a jurisdiction outside the Eligible Jurisdictions should read the section entitled "Description of Offered Securities – Ineligible Holders".
Listing and Trading	The Company has applied to list the Rights and the Common Shares issuable upon exercise of the Rights on the TSX. The approval of such listing will be subject to the Company fulfilling all of the listing requirements of the TSX.
Risk Factors	An investment in Common Shares is subject to a number of risk factors. See "Risk Factors".
United States Transfer Restrictions	The Rights may be transferred or resold only in transactions outside of the United States in accordance with Regulation S under the U.S. Securities Act, which generally will permit the resale of the Rights through the facilities of the TSX. See "Description of Offered Securities – U.S. Shareholders".

---

- 9 -

SUMMARY DESCRIPTION OF BUSINESS

Summary

Nautilus is a company existing under the Business Corporations Act (British Columbia). Nautilus' current notice of articles were filed on SEDAR (www.sedar.com) on August 13, 2015 and its current articles were filed on July 24, 2013. See also "Corporate Structure" in the AIF.

Nautilus is a seafloor resource exploration and development company and the first publicly listed company to commercially explore the ocean floor for copper, gold, silver and zinc rich seafloor massive sulphide deposits and for manganese, nickel, copper and cobalt nodule deposits. Nautilus holds tenement licences and exploration applications in various locations in the western and central Pacific Ocean and is establishing a pipeline of prospects for development. The Company's goal is to develop a seafloor production system that can be used to extract resources from its seafloor prospects.

Nautilus' seafloor production system, once developed, has the potential to open a new frontier of resource development as land-based mineral deposits continue to be depleted and the cost of development and extraction continue to rise and grades continue to fall.

Nautilus has completed an independent NI 43-101 resource estimate for its Solwara 1 Project, where the Company plans to first deploy and test its seafloor production system. The Company has received both the mining lease and environmental permit for its Solwara 1 Project from the State of PNG. The Company's 85% interest in the Solwara 1 Project is held through a joint venture (the "Solwara 1 JV") with Eda Kopa (Solwara) Limited as the nominee of the Independent State of Papua New Guinea (the "State Nominee"), whose 15% interest is fully funded up to first production. In December 2015 the State Nominee elected not to exercise its option to take up to a further 15% interest in the Solwara 1 Project.

Nautilus has also released, through one of its 100% owned subsidiaries, Tonga Offshore Mining Limited, an independent NI 43-101 resource estimate in respect of its Clarion-Clipperton Fracture Zone polymetallic nodule project, located within the Central Pacific Ocean.

Recent Developments

New Offtake Agreement for Solwara 1 Project

On December 11, 2015, the Company announced it had entered into a new agreement with Tongling Nonferrous Metals Group Co. Ltd ("Tongling") for the sale of material extracted from the Company's Solwara 1 Project. Following a series of detailed negotiations focused on achieving a mutually beneficial and workable arrangement, the parties finalized the terms of the new take or pay agreement, referred to as the Master Ores Sales and Processing Agreement (the "MOSPA"), which replaces the terms of the previous binding heads of agreement dated April 21, 2012 between the parties (the "HOA"). The MOSPA was filed under the Company's profile on the SEDAR website (www.sedar.com).

Compared to the HOA, the terms of the MOSPA offer significant cost savings and reduced business risk to Nautilus, while giving Tongling the freedom to process the Solwara 1 material in a manner intended to optimize its return. The MOSPA has simplified the arrangements between the parties in many respects and it now operates as a more conventional material sales agreement where Tongling will pay Nautilus for a fixed proportion of copper, gold and silver in the mineralized material.

The copper payment will be for 95% of recoverable copper as determined by locked cycle testwork on samples of shipments. The gold payment is fixed at 50% of the contained gold in the mineralized material which represents a premium payment for gold compared to the HOA. Payment for silver is fixed at 30% of contained silver in the mineralized material. The Asian international copper concentrate benchmark will still be used as the basis for smelter treatment and refining charges related to the recoverable copper.

---

- 10 -

From Tongling's perspective, the MOSPA offers greater flexibility over the design and operation of a concentrator to be built specifically for the processing of Solwara 1 material. The construction of the concentrator will initially be financed by Tongling, with these costs recovered through a fixed plant capital fee payable by Nautilus monthly over the term of the MOSPA. Nautilus shall provide Tongling with a bank guarantee covering 50% of the concentrator capital cost. Tongling now has the exclusive right to market or process any pyrite concentrates produced from the Solwara 1 material, whereas under the HOA the parties were to jointly market any pyrite concentrates sharing any profit on a 50/50 basis.

For further details refer to the Company's material change report dated December 16, 2015.

Equipment Storage and Wet Testing Contracts

On January 18, 2016, the Company announced that it had signed agreements with United Engineering Services LLC ("UES") 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 in the first half of 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 and 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 production support vessel which is expected to occur in 2017.

UES is a wholly-owned subsidiary of MB, which holds, directly or indirectly, approximately 28% of the outstanding Common 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.

Delivery of SPTs

On February 1, 2016 the Company announced that the Solwara 1 JV had taken delivery of the three SPTs from Soil Machine Dynamics Limited's facility in Newcastle upon Tyne. The three SPTs are being transported to Oman, where they are scheduled to undergo extensive wet testing at Duqm Port.

Assembly and Testing of SSLP

On February 4, 2016 the Company announced that the Solwara 1 JV was advised that factory acceptance testing on the Subsea Slurry Lift Pump ("SSLP") had commenced at the GE Oil & Gas manufacturing facility in Houston, USA. The SSLP is a key element in the Solwara 1 JV's seafloor production system. The SSLP and riser system is designed to transfer the mineralized material as slurry from the deep ocean up onto the production support vessel, where the mineralized solids are removed. The return water is then filtered to 8 microns, and transferred back down to the pump via the auxiliary riser pipes where it is released back into the same environment from which it originally came.

---

- 11 -

INTENTION OF INSIDERS TO EXERCISE RIGHTS

The Company's two largest shareholders, MB and Metallo, have each indicated to the board of directors of the Company their present intention to participate in the Offering by exercising all or a portion of their Basic Subscription Privilege, but they will determine the extent of their participation in the contexts of the market and there can be no assurance that either MB or Metallo will exercise their Basic Subscription Privilege. The Company believes that insiders of the Company, including MB and Metallo, will be issued Rights to purchase approximately 331,794,574 Common Shares, representing approximately 50% of the Offering.

MB currently owns 122,316,260 Common Shares, representing approximately 28% of the outstanding Common Shares. If no Rights are exercised by persons other than MB and MB fully exercises its Basic Subscription Privilege, then following the Closing MB could own up to approximately 310,845,859 Common Shares, representing up to approximately 50% of the issued and outstanding Common Shares.

Metallo currently owns 90,668,516 Common Shares, representing approximately 21% of the outstanding Common Shares. If no Rights are exercised by persons other than Metallo and Metallo fully exercises its Basic Subscription Privilege, then following the Closing Metallo could own up to 230,418,529 Common Shares, representing up to approximately 40% of the issued and outstanding Common Shares.

The Company has determined that each of MB and Metallo is an Approved Eligible Holder.

RISK FACTORS

An investment in the Common Shares is highly speculative due to the nature of the Company's involvement in the exploration and development of undersea mineral resources. A prospective purchaser of Common Shares should carefully consider the information and risks faced by the Company described in this prospectus and the documents incorporated by reference including, without limitation, the risk factors set out under the heading "Risk Factors" in each of the AIF, the Annual MD&A and Interim MD&A incorporated by reference in this prospectus. Such risks may not be the only risks facing the Company; additional risks not currently known may also impair the Company's business prospects and operations.

The Company's Seafloor Production System is Untested and May Not be Economically Viable

The machines, equipment and systems comprising the Company's proposed Seafloor Production System, including the sub-sea mining equipment and the production support vessel, are in the process of being designed and constructed and have not been completed or tested and may not be technically feasible, may not perform the tasks designed for, may prove uneconomic, unreliable or may not be delivered on a timely basis.

The majority of exploration companies fail to ever locate an economic deposit and given that no economic seafloor massive sulphide (SMS) deposit has ever been proven, such risks are especially significant to the Company. The model for SMS deposits has never been tested by closed spaced drilling and/or production for the purpose of establishing resource tonnage at economic grades. SMS deposits have never been mined and there is a risk that mining and sulphide material recovery methods and equipment may not be able to be developed to allow for economic development of SMS deposits.

The Company has not completed and does not intend to complete a preliminary economic assessment, pre-feasibility study or feasibility study before completing the construction and first deployment of the Seafloor Production System at the Company's Solwara 1 Project. Management considers the Company's best interests would be served by first testing the operational viability of the Seafloor Production System at the Solwara 1 Project. There is significant risk with this approach, and no assurance can be given that the Seafloor Production System, if fully funded and completed for deployment at the Solwara 1 Project, will successfully demonstrate that seafloor resource development is commercially viable.

In addition, the Company's existing mineral resources will not be sufficient to economically operate the Seafloor Production System. In order to demonstrate the economic viability of the Seafloor Production System, the Company will need to locate and classify significant new mineral resources or mineral reserves on its existing or new tenements, and there can be no assurance that the Company will be able to do so. The Company's only SMS resources comprise the inferred and indicated mineral resources at the Solwara 1 Project and an inferred resource at Solwara 12, 25 km to the northwest of Solwara 1, and no other SMS deposit has even been sufficiently sampled or drilled to determine a resource, and there is a risk that techniques and equipment may not be suitable or cannot be developed to allow further resources to be determined. There is a risk of poor recovery from such drilling, making it difficult to accurately quantify tonnage and grade of identified SMS deposits. It is possible that if a new deposit is located it will be unable to be treated as a mineral resource or mineral reserve according to the definitions of a mineral resource and mineral reserve under NI 43-101.

---

- 12 -

Dilution and Control of the Company

If a Shareholder does not exercise all of its Rights pursuant to the Basic Subscription Privilege, the Shareholder's current percentage ownership in the Company will be diluted by the issuance of Common Shares upon the exercise of Rights by other Shareholders.

No Minimum

Pursuant to TSX requirements, completion of the Offering is not subject to raising a minimum amount of proceeds. This means that the Company could complete the Offering after raising only a small portion of the gross proceeds. See "Use of Proceeds".

Trading Market for Rights

Although the Company expects that the Rights will be listed on the TSX, the Company cannot provide any assurance that an active or any trading market in the Rights will develop or that Rights can be sold on the TSX at any time.

Negative Cash Flow

The Company has no producing mines and has no source of operating cash flow other than through equity, joint ventures and/or debt financing. As such, it has and it is expected to continue to have negative operating cash flow. To the extent the Company has negative cash flow in future periods, the Company may use a portion of its general working capital to fund such negative cash flow.

Discretion in the Use of Proceeds

Management will have broad discretion concerning the use of the proceeds of the Offering as well as the timing of their expenditures. As a result, an investor will be relying on the judgment of management for the application of the net proceeds of the Offering. While the Company intends to use the net proceeds as described under "Use of Proceeds", future results from the Company's operations, external events or other sound business reasons may make it desirable for the Company to re-allocate some or all of the net proceeds. Management may use the net proceeds of the Offering in ways that an investor may not consider desirable. The results and the effectiveness of the application of the proceeds are uncertain. If the proceeds are not applied effectively, the Company's results of operations may suffer.

No Underwriter

There is no underwriter for the Offering. Accordingly, there has not been an independent "due diligence" review of matters covered by this prospectus, such as would customarily be conducted by an underwriter if one had been involved in this Offering.

---

- 13 -

Exercises of Rights Irrevocable

Subject to certain statutory withdrawal and rescission rights available to holders in Canada, if the Common Share trading price declines below the Subscription Price, resulting in a loss of some or all of the holder's subscription payment, holders may not revoke or change the exercise of Rights after they send in their subscription forms and payment.

Subscription Price Not Necessarily Indication of Value

The Subscription Price does not necessarily bear any relationship to the book value of the Company's assets, past operations, losses, financial condition or any other established criteria for value. Holders of Rights should not consider the Subscription Price to be an indication of the Company's value and the Common Shares may trade at prices above or below the Subscription Price.

Responsibilities of Holders of Rights

Holders of Rights who wish to purchase Common Shares in the Offering must act promptly to ensure that all required forms and payments are actually received by the Subscription Agent or the CDS Participant holding the subscriber's Rights in sufficient time prior to the Expiry Time on the Expiry Date. If a holder of Rights fails to complete and sign the required subscription forms, sends an incorrect payment amount or otherwise fails to follow the subscription procedures that apply to the transaction in question, the Subscription Agent or CDS Participant, as the case may be, may, depending on the circumstances, reject a subscription or accept it to the extent of the payment received. None of the Company, the Subscription Agent or CDS Participant undertakes to contact a holder of Rights concerning, or attempt to correct, an incomplete or incorrect payment or subscription form. The Board of Directors of the Company has the sole discretion to determine whether a subscription properly follows subscription procedures.

USE OF PROCEEDS

Pursuant to TSX requirements, completion of the Offering is not subject to raising a minimum amount of proceeds. The estimated net proceeds to be received by the Company from the Offering, after deducting the estimated expenses of the Offering of approximately $450,000, are set forth in the table below based on various thresholds which are provided for illustrative purposes:

The Company plans to use the net proceeds from the Offering, together with the Company's existing cash reserves, to advance the development of the Company's Seafloor Production System (as defined in the AIF) and for general working capital requirements. As at January 31, 2016, the Company had approximately US$52.2 million in cash and cash equivalents.

The table below sets forth the significant contracts in place as at the date of this prospectus relating to the construction of certain equipment forming part of the Company's Seafloor Production System and the outstanding value of such contracts as at January 31, 2016.

---

- 14 -

Refer to "Overview of Business – Products, Services and Components" in the AIF for a summary description of all of the equipment and systems associated with the Company's Seafloor Production System, including the equipment noted above and the production support vessel.

15% Raised

Assuming 15% of the maximum gross proceeds of the Offering is raised, the Company expects that 100% of the net proceeds, along with the Company’s existing cash reserves, will be applied towards the outstanding contract values noted above following the closing of the Offering in order to advance the development of the Company's Seafloor Production System, with the balance of the Company's available funds used toward project management and general working capital requirements. If this level of proceeds is raised, the Company expects that such proceeds will enable the Company to achieve the following business objectives or milestones in relation to advancing the development of the Company's Seafloor Production System:

The Company would need additional funding to enable it to complete the construction and development of the entire Seafloor Production System and a failure to obtain such funding as required would likely result in a delay to the Company's anticipated timetable for the start of seafloor operations in the first quarter of 2018.

50% Raised

Assuming 50% of the maximum gross proceeds of the Offering is raised, the Company expects that approximately 100% of the net proceeds, along with the Company's existing cash reserves, will be applied towards the outstanding contract values noted above following the closing of the Offering, with part of the balance of the Company's available funds used towards the design and fabrication of the dewatering plant in order to advance the development of the Company's Seafloor Production System. The remaining balance of the available funds would be applied toward project management and general working capital requirements. If this level of proceeds is raised, the Company expects that such proceeds will enable the Company to achieve the business objectives or milestones noted in the table immediately above, as well as the purchase of equipment for the fabrication of the dewatering plant by the manufacturer by the anticipated date of the end of June 2016.

---

- 15 -

The Company would need to secure additional funding to enable it to complete the construction and development of the entire Seafloor Production System and a failure to obtain such funding as required would likely result in a delay to the Company's anticipated timetable for the start of seafloor operations in the first quarter of 2018.

Maximum Offering

If the maximum Offering amount is raised, the Company expects that approximately 100% of the net proceeds, along with the Company’s existing cash reserves, will be applied to the outstanding contract values noted above following the closing of the Offering, with part of the balance of the Company's available funds used for the fabrication of the dewatering plant and wet testing the Seafloor Production Tools and Subsea Slurry Lift Pump in order to advance the development of the Company's Seafloor Production System. The remaining balance of the available funds would be applied toward project management and general working capital requirements. If this level of proceeds is raised, the Company expects that such proceeds will enable the Company to achieve the following business objectives or milestones in relation to advancing the development of the Company's Seafloor Production System:

The anticipated dates disclosed in the two tables above are based on management's estimates as at the date of this prospectus, and delays by the equipment manufacturers, equipment breakdowns or failures and other unanticipated events could result in such dates being delayed, in some cases significantly. See also "Risk Factors – Discretion in the Use of Proceeds" in this prospectus.

---

- 16 -

Additional Funding Required

In order to complete the construction and development of the entire Seafloor Production System for initial deployment and testing operations, Nautilus will need to raise additional equity, debt and/or joint venture partner funding in excess of the maximum Offering amount. Such additional costs would include an updated plan and estimates for the integration of the Company's equipment into the production support vessel, remaining amounts under various contracts relating to the Seafloor Production System, including the riser handling system, and revised owners costs and charterers guarantees associated with the production support vessel. There can be no assurance that Nautilus will be able to secure such additional funding on terms acceptable to Nautilus or at all. See "Risk Factors – Exploration, Development and Operating Risks – Financial resources" and "Risk Factors – Exploration, Development and Operating Risks – Future funding requirements and risk" in the AIF. See also "Risk Factors" in this prospectus.

See also the disclosure in the AIF titled "Overview of Business – Nautilus' Strategy" and "Overview of Business – Development Plan for Bismarck Sea Prospects".

Nautilus has not yet achieved positive operating cash flow. It is anticipated that a majority or all of the net proceeds of the Offering will be used to fund negative cash flow from operating activities.

PRIOR SALES

The following table sets forth for the 12 month period prior to the date of this prospectus details of the price at which securities have been issued or are to be issued by the Company, the number of securities issued at that price and the date on which the securities were issued:

(1)	See "Description of Share Capital – Share Loan Plan".
(2)	The outstanding loan in respect of these shares was repaid by the plan participant, and accordingly the shares were released by the trustee to the participant without any further restrictions under the Share Loan Plan, all pursuant to the terms of the Share Loan Plan.

TRADING PRICE AND VOLUME

The following table sets forth for the 12 month period prior to the date of this prospectus details of the trading prices and volume on a monthly basis of the Common Shares traded through the facilities of the TSX:

---

- 17 -

In addition, the Common Shares were quoted under the symbol "NUSMF" on OTCQX International effective as at April 27, 2012, and effective December 9, 2015 the Company became a member of the Nasdaq International Designation program.

CONSOLIDATED CAPITALIZATION

As of the date of this prospectus, there have been no material changes in the share and loan capital of the Company, on a consolidated basis, since the date of its unaudited interim financial statements for the nine month period ended September 30, 2015, being the Company's most recently completed financial period and which are incorporated by reference in this prospectus.

The following table sets forth the consolidated capitalization of Nautilus as at the date indicated, before and after giving effect to the Offering. This table should be read in conjunction with the financial statements of the Company (including the notes thereto) incorporated by reference in this prospectus.

		Outstanding after giving effect
		to the issuance of Common
	Outstanding as at September	Shares under the Offering(1)(2)(3)
Description	30, 2015(1)	(unaudited)
Outstanding Common Shares	445,702,865	1,132,369,531
(unlimited number authorized)
Issued Capital	US$514,161,841	US$588,692,641(4)
Total Capitalization	US$236,854,090	US$311,384,890(4)

	(1)	Including 11,685,000 Common Shares which were issued under, and remained subject to the terms and conditions of, the Company's Share Loan Plan. Subsequent to September 30, 2015, an aggregate of 200,000 Common Shares were cancelled pursuant to the terms and conditions of the Company's Share Loan Plan, which is not reflected in these figures.
	(2)	Assumes that all Rights will be exercised under the Offering.
	(3)	Based on gross proceeds.
	(4)	Based on the noon rate of exchange on February 9, 2016 reported by the Bank of Canada, which was C$1.00 = US$0.7236.

DESCRIPTION OF SHARE CAPITAL

Authorized Capital

The authorized share capital of Nautilus consists of an unlimited number of Common Shares without par value. As of the date of this prospectus, there are 445,502,865 Common Shares issued and outstanding (including 11,485,000 shares which have been issued under, and remain subject to the terms and conditions of, the Company's Share Loan Plan).

---

- 18 -

Common Shares

The holders of Common Shares are entitled to one vote per Common Share at all meetings of shareholders, to receive dividends as and when declared by the directors, and to receive a pro rata share of the remaining property and assets of the Company in the event of liquidation, dissolution or winding up of the Company. The Common Shares have no pre-emptive, conversion, exchange, redemption, retraction, purchase for cancellation or surrender provisions. There are no sinking fund provisions in relation to the Common Shares and they are not liable to further calls or to assessment by the Company. The Company's Articles provide that the rights and provisions attached to any class of shares, in which shares are issued, may not be modified, amended or varied unless consented to by special resolution passed by a majority of not less than 66 2/3% of the votes cast in person or by proxy by holders of shares of that class.

Loan Shares

Nautilus has in place two equity compensation plans, each of which has been approved by shareholders, being the Share Loan Plan and the Stock Option Plan. As described in detail in the AGM Circular (see "Documents Incorporated by Reference"), the Share Loan Plan allows for the issuance of Common Shares to those directors, officers and employees of the Company that are resident in Australia. Such Common Shares (referred to hereinafter as "Loan Shares") are subject to restrictions on transfer, among other things, until the applicable loan for the subscription proceeds is paid by the plan participant, being the person to whom the shares are issued. The Share Loan Plan also provides that the holders of Loan Shares who have not repaid the applicable loan will not be entitled to receive, exercise or sell Rights in respect of such Common Shares. As of the date of this prospectus, there were 11,485,000 Loan Shares outstanding.

Options

As of the date of this prospectus, there were options ("Stock Options") outstanding to purchase 5,645,000 Common Shares at exercise prices ranging from $0.22 to $1.01 with expiry dates ranging from April 9, 2016 to July 1, 2018.

Change of Control Provisions

The outstanding Loan Shares and Stock Options contain certain provisions with respect to a change of control of the Company. The Offering could result in a change of control, as such term is defined in each of the Stock Option Plan and the Share Loan Plan, if any person acquires greater than 50% of the outstanding Common Shares, or enough Common Shares to elect a majority of the Board of Directors. In such event, any outstanding unvested Stock Options and Loan Shares shall vest. In the event that the Offering results in a change of control, 2,180,000 Stock Options and 2,500,000 Loan Shares shall vest upon closing of the Offering.

DESCRIPTION OF OFFERED SECURITIES

Issue of Rights and Record Date

Shareholders of record at the close of business (Vancouver time) on the Record Date will receive Rights on the basis of one Right for each Common Share held at that time. The Rights permit the holders thereof (provided that such holders are in an Eligible Jurisdiction or are Approved Eligible Holders) to subscribe for and purchase from the Company up to an aggregate of 686,666,666 Common Shares, assuming exercise in full of the Rights issued hereunder. The Rights are transferable in Canada by the holders thereof. See "Sale or Transfer of Rights". The Rights may not be transferred to any person within the United States.

---

- 19 -

Holders of Common Shares in the United States who receive Rights may transfer or resell them only in transactions outside of the United States in accordance with Regulation S under the U.S. Securities Act, which generally will permit the resale of the Rights through the facilities of the TSX. See "Description of Offered Securities – U.S. Shareholders".

The Rights will be represented by the Rights Certificates that will be issued in registered form. For Shareholders who hold their Common Shares in registered form, a Rights Certificate evidencing the number of Rights to which a holder is entitled as at the Record Date and the number of Common Shares which may be obtained on exercise of those Rights will be mailed with a copy of this prospectus to each such registered Shareholder as of the close of business on the Record Date. See "Rights Certificate — Common Shares Held in Registered Form".

Shareholders that hold their Common Shares through a CDS Participant will not receive physical certificates evidencing their ownership of Rights. On the Record Date, a global certificate representing such Rights will be issued in registered form to, and in the name of, CDS or its nominee. See "Rights Certificate — Common Shares Held Through CDS".

Subscription Basis

For each Right held, the holder thereof is entitled to subscribe for 1.541329 Common Shares at the Subscription Price of $0.15 per Common Share. Any subscription for Common Shares will be irrevocable once submitted.

Fractional Common Shares will not be issued upon the exercise of Rights. Where the exercise of Rights would appear to entitle a holder of Rights to receive fractional Common Shares, the holder's entitlement will be reduced to the next lowest whole number of Common Shares. CDS Participants that hold Rights for more than one beneficial holder may, upon providing evidence satisfactory to the Company, exercise Rights on behalf of its accounts on the same basis as if the beneficial owners of Common Shares were holders of record on the Record Date.

Commencement Date and Expiry Date

The Rights will be eligible for exercise following •, 2016 (the "Commencement Date"). The Rights will expire at the Expiry Time on the Expiry Date. Shareholders who exercise the Rights will become holders of Common Shares issued through the exercise of the Rights on the completion of the Offering, which is expected to occur on or before the second business day following the seventh day after the Expiry Date.
RIGHTS NOT EXERCISED PRIOR TO THE EXPIRY TIME ON THE EXPIRY DATE WILL BE VOID AND OF NO VALUE.

Basic Subscription Privilege

Each Shareholder at the close of business on the Record Date is entitled to receive one Right for each Common Share held. For each Right held, the holder (other than an Ineligible Holder) is entitled to acquire 1.541329 Common Shares under the Basic Subscription Privilege at the Subscription Price by subscribing and making payment in the manner described herein prior to the Expiry Time on the Expiry Date. A holder of Rights that subscribes for some, but not all, of the Common Shares pursuant to the Basic Subscription Privilege will be deemed to have elected to waive the unexercised balance of such Rights and such unexercised balance of Rights will be void and of no value unless the Subscription Agent is otherwise specifically advised by such holder at the time the Rights Certificate is surrendered that the Rights are to be transferred to a third party or are to be retained by the holder. Holders of Rights who exercise in full the Basic Subscription Privilege for their Rights are also entitled to subscribe for the Additional Shares, if any, that are not otherwise subscribed for under the Offering on a pro rata basis, prior to the Expiry Time on the Expiry Date pursuant to the Additional Subscription Privilege. See "Additional Subscription Privilege". Fractional Common Shares will not be issued upon the exercise of Rights. CDS Participants that hold Rights for more than one beneficial Shareholder as at the Record Date may, upon providing evidence satisfactory to the Company and the Subscription Agent, exercise Rights on behalf of their accounts on the same basis as if the beneficial owners of Common Shares were holders of record on the Record Date.

---

- 20 -

For Common Shares held in registered form, in order to exercise the Rights represented by a Rights Certificate, the holder of Rights must complete and deliver the Rights Certificate to the Subscription Agent in accordance with the terms of this Offering in the manner and upon the terms set out in this prospectus and pay the aggregate Subscription Price. All exercises of Rights are irrevocable once submitted.

For Common Shares held through a CDS Participant, a holder (other than an Ineligible Holder) may subscribe for Common Shares by instructing the CDS Participant holding the subscriber's Rights to exercise all or a specified number of such Rights and forwarding the Subscription Price for each Common Share subscribed for in accordance with the terms of this Offering to such CDS Participant. Subscriptions for Common Shares made in connection with the Offering through a CDS Participant will be irrevocable and subscribers will be unable to withdraw their subscriptions for Common Shares once submitted.

The Subscription Price is payable in Canadian funds by certified cheque, bank draft or money order drawn to the order of the Subscription Agent. In the case of subscription through a CDS Participant, the Subscription Price is typically payable by certified cheque, bank draft or money order drawn to the order of such CDS Participant, by direct debit from the subscriber's brokerage account or by electronic funds transfer or other similar payment mechanism. The entire Subscription Price for Common Shares subscribed for must be paid at the time of subscription and must be received by the Subscription Agent at the Subscription Office prior to the Expiry Time on the Expiry Date. Accordingly, a subscriber subscribing through a CDS Participant must deliver its payment and instructions sufficiently in advance of the Expiry Date to allow the CDS Participant to properly exercise the Rights on its behalf.

Payment of the Subscription Price will constitute a representation to the Company and, if applicable, to the CDS Participant, by the subscriber (including by its agents) that: (a) either the subscriber is not a citizen or resident of an Ineligible Jurisdiction or the subscriber is an Approved Eligible Holder; and (b) the subscriber is not purchasing the Common Shares for resale to any person who is a citizen or resident of an Ineligible Jurisdiction.

Additional Subscription Privilege

Each holder of Rights who has exercised in full the Basic Subscription Privilege for its Rights may subscribe for Additional Shares, if available, at a price equal to the Subscription Price for each Additional Share. The number of Additional Shares will be the difference, if any, between the total number of Common Shares issuable upon exercise of Rights and the total number of Common Shares subscribed and paid for pursuant to the Basic Subscription Privilege at the Expiry Time on the Expiry Date. Subscriptions for Additional Shares will be received subject to allotment only and the number of Additional Shares, if any, that may be allotted to each subscriber will be equal to the lesser of: (a) the number of Additional Shares that such subscriber has subscribed for; and (b) the product (disregarding fractions) obtained by multiplying the number of Additional Shares available to be issued by a fraction, the numerator of which is the number of Rights previously exercised by the subscriber and the denominator of which is the aggregate number of Rights previously exercised under the Offering by all holders of Rights that have subscribed for Additional Shares. If any holder of Rights has subscribed for fewer Additional Shares than such holder's pro rata allotment of Additional Shares, the excess Additional Shares will be allotted in a similar manner among the holders who were allotted fewer Additional Shares than they subscribed for.

---

- 21 -

To apply for Additional Shares under the Additional Subscription Privilege, each registered holder of Rights must forward their request to the Subscription Agent at the Subscription Office prior to the Expiry Time on the Expiry Date. Beneficial owners holding Rights through a CDS Participant should comply with the timing requirements of their CDS Participant. Payment for Additional Shares, in the same manner as required upon exercise of the Basic Subscription Privilege, must accompany the request when it is delivered to the Subscription Agent or a CDS Participant, as applicable. Any excess funds will be returned by mail by the Subscription Agent or credited to a subscriber's account with its CDS Participant, as applicable, without interest or deduction. Payment of such price must be received by the Subscription Agent prior to the Expiry Time on the Expiry Date, failing which the subscriber's entitlement to such Additional Shares will terminate. Accordingly, a subscriber subscribing through a CDS Participant must deliver its payment and instructions to its CDS Participant sufficiently in advance of the Expiry Time on the Expiry Date to allow the CDS Participant to properly exercise the Additional Subscription Privilege on its behalf.

Subscription and Transfer Agent

The Subscription Agent has been appointed the agent of the Company to receive subscriptions and payments from holders of Rights Certificates, to act as registrar and transfer agent for the Common Shares and to perform certain services relating to the exercise and transfer of Rights. The Company will pay for the services of the Subscription Agent. Subscriptions and payments under the Offering should be sent to the Subscription Agent as follows:

By Mail

P.O. Box 7021
31 Adelaide Street East
Toronto, Ontario
M5C 3H2
Attention: Corporate Actions

By Registered Mail, Hand or by Courier to the attention of Corporate Actions as follows:

Toronto:	Vancouver:
100 University Ave.	510 Burrard Street
8th Floor	2nd Floor
Toronto, Ontario	Vancouver, British Columbia
M5J 2Y1	V6C 3B9

Inquiries

Toll Free: 1-800-564-6253 (North America)
Phone: 1-514-982-7555 (Overseas)
E-mail: corporateactions@computershare.com

Rights Certificate — Common Shares Held in Registered Form

For all Shareholders with an address of record in an Eligible Jurisdiction or Pre-Approved Jurisdiction whose Common Shares are held in registered form, a Rights Certificate representing the total number of Rights to which each such Shareholder is entitled as at the Record Date and the number of Common Shares which may be obtained on exercise of those Rights will be mailed with a copy of this prospectus to each such Shareholder. In order to exercise the Rights represented by the Rights Certificate, such holder of Rights must complete and deliver the Rights Certificate in accordance with the instructions set out under "How to Complete the Rights Certificate". Rights not exercised by the Expiry Time on the Expiry Date will be void and of no value.

---

- 22 -

Rights Certificate — Common Shares Held Through CDS

For all Shareholders who hold their Common Shares through a securities broker or dealer, bank or trust company or other CDS Participant with an address of record in an Eligible Jurisdiction in the book based system administered by CDS, a global certificate representing the total number of Rights to which all such Shareholders as at the Record Date are entitled will be issued in registered form to CDS and will be deposited with CDS on the Commencement Date. The Company expects that each beneficial Shareholder will receive a confirmation of the number of Rights issued to it from its CDS Participant in accordance with the practices and procedures of that CDS Participant. CDS will be responsible for establishing and maintaining book-entry accounts for CDS Participants holding Rights.

Neither the Company nor the Subscription Agent will have any liability for: (a) the records maintained by CDS or CDS Participants relating to the Rights or the book-entry accounts maintained by them; (b) maintaining, supervising or reviewing any records relating to such Rights; or (c) any advice or representations made or given by CDS or CDS Participants with respect to the rules and regulations of CDS or any action to be taken by CDS or CDS Participants.

The ability of a person having an interest in Rights held through a CDS Participant to pledge such interest or otherwise take action with respect to such interest (other than through a CDS Participant) may be limited due to the lack of a physical certificate.

Shareholders who hold their Common Shares through a CDS Participant must arrange purchases or transfers of Rights through their CDS Participant. It is anticipated by the Company that each such purchaser of a Common Share or Right will receive a customer confirmation of issuance or purchase, as applicable, from the CDS Participant through which such Right is issued or such Common Share is purchased in accordance with the practices and policies of such CDS Participant.

How to Complete the Rights Certificate

	1.	Form 1 — Basic Subscription Privilege. The maximum number of Rights that may be exercised pursuant to the Basic Subscription Privilege is shown in the box on the upper right hand corner of the face of the Rights Certificate. Form 1 must be completed and signed to exercise all or some of the Rights represented by the Rights Certificate pursuant to the Basic Subscription Privilege. If Form 1 is completed so as to exercise some but not all of the Rights represented by the Rights Certificate, the holder of the Rights Certificate will be deemed to have waived the unexercised balance of such Rights, unless the Subscription Agent is otherwise specifically advised by such holder at the time the Rights Certificate is surrendered that the Rights are to be transferred to a third party or are to be retained by the holder.
	2.	Form 2 — Additional Subscription Privilege. Complete and sign Form 2 on the Rights Certificate only if you also wish to participate in the Additional Subscription Privilege. See "Additional Subscription Privilege".
	3.	Form 3 — Transfer of Rights. Complete and sign Form 3 on the Rights Certificate only if you wish to transfer the Rights. Your signature must be guaranteed by a Schedule I bank, a major trust company in Canada, or a member of an acceptable Medallion Signature Guarantee Program, including STAMP, SEMP, and MSP. Members of STAMP are usually members of a recognized stock exchange in Canada or members of the Investment Industry Regulatory Organization of Canada. The guarantor must affix a stamp bearing the actual words "Signature Guaranteed". It is not necessary for a transferee to obtain a new Rights Certificate to exercise the Rights, but the signatures of the transferee on Forms 1 and 2 must correspond in every particular with the name of the transferee (or the bearer if no transferee is specified) as the absolute owner of the Rights Certificate for all purposes. If Form 3 is completed, the Subscription Agent will treat the transferee as the absolute owner of the Rights Certificate for all purposes and will not be affected by notice to the contrary.

---

- 23 -

The Rights may be transferred only in transactions outside of the United States in accordance with Regulation S under the U.S. Securities Act, which will permit the resale of the Rights by a Rights holder through the facilities of the TSX, provided that the offer is not made to a person in the United States, neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, and no "directed selling efforts", as that term is defined in Regulation S, are conducted in the United States in connection with the resale. Certain additional conditions are applicable to the Company's "affiliates", as that term is defined under the U.S. Securities Act. In order to enforce this resale restriction, a Rights holder thereof will be required to execute a declaration certifying that such sale is being made through the facilities of the TSX in accordance with Regulation S.

	4.	Form 4 — Dividing or Combining. Complete and sign Form 4 on the Rights Certificate only if you wish to divide or combine the Rights Certificate, and surrender it to the Subscription Agent at the Subscription Office. Rights Certificates need not be endorsed if the new Rights Certificate(s) are issued in the same name. The Subscription Agent will then issue a new Rights Certificate in such denominations (totalling the same number of Rights as represented by the Right(s) Certificates being divided or combined) as are required by the Rights Certificate holder. Rights Certificates must be surrendered for division or combination in sufficient time prior to the Expiry Time to permit the new Rights Certificates to be issued to and used by the Rights Certificate holder.
	5.	Payment. Enclose payment in Canadian funds by certified cheque, bank draft or money order payable to the order of "Computershare Investor Services Inc.". The amount of payment will be $0.15 per Common Share. Payment must also be included for any Additional Shares subscribed for under the Additional Subscription Privilege.
	6.	Deposit. Deliver or mail the completed Rights Certificate and payment in the enclosed return envelope addressed to the Subscription Agent so that it is received by the Subscription Office listed above before the Expiry Time on the Expiry Date. If mailing, registered mail is recommended. Please allow sufficient time to avoid late delivery. The signature of the Rights Certificate holder must correspond in every particular with the name that appears on the face of the Rights Certificate.

Signatures by a trustee, executor, administrator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity should be accompanied by evidence of authority satisfactory to the Subscription Agent. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of any subscription will be determined by the Company in its sole discretion, and any determination by the Company will be final and binding on the Company and its security holders. Upon delivery or mailing of the completed Rights Certificate to the Subscription Agent, the exercise of the Rights and the subscription for Common Shares is irrevocable. The Company reserves the right to reject any subscription if it is not in proper form or if the acceptance thereof or the issuance of Common Shares pursuant thereto could be unlawful. The Company also reserves the right to waive any defect in respect of any particular subscription. Neither the Company nor the Subscription Agent is under any duty to give any notice of any defect or irregularity in any subscription, nor will they be liable for the failure to give any such notice. Any holder of Rights that fails to complete their subscription in accordance with the foregoing instructions prior to the Expiry Time on the Expiry Date will forfeit their Rights under the Basic Subscription Privilege and the Additional Subscription Privilege attaching to those Rights.

---

- 24 -

Undeliverable Rights

Rights Certificates returned to the Subscription Agent as undeliverable will not be sold by the Subscription Agent and no proceeds of sale will be credited to such holders.

Sale or Transfer of Rights

Holders of Rights (other than Ineligible Holders) in registered form in Canada may, instead of exercising their Rights to subscribe for Common Shares, sell or transfer their Rights to any person that is not an Ineligible Holder by completing Form 3 on the Rights Certificate and delivering the Rights Certificate to the transferee. See "How to Complete the Rights Certificate — Form 3 — Transfer of Rights". A permitted transferee of the Rights of a registered holder of a Rights Certificate may exercise the Rights transferred to such permitted transferee without obtaining a new Rights Certificate. If a Rights Certificate is transferred in blank, the Company and the Subscription Agent may thereafter treat the bearer as the absolute owner of the Rights Certificate for all purposes and neither the Company nor the Subscription Agent will be affected by any notice to the contrary.

Holders of Rights (other than Ineligible Holders) through CDS Participants in Canada who wish to sell or transfer their Rights must do so in the same manner in which they sell or transfer Common Shares. See "Rights Certificate – Common Shares Held Through CDS".

Persons interested in selling or purchasing Rights should be aware that the exercise of Rights by holders who are not located in an Eligible Jurisdiction or a Pre-Approved Jurisdiction will not be permitted unless the person exercising the Rights meets the conditions and satisfies the procedures described under "Ineligible Holders" below.

Dividing or Combining Rights Certificates

A Rights Certificate may be divided, exchanged or combined. See "How to Complete the Rights Certificate — Form 4 — Dividing or Combining".

Reservation of Shares

The Company will, at all times, reserve sufficient unissued Common Shares as will permit the exchange of all the outstanding Rights for Common Shares during the period beginning on the Commencement Date and ending on the Expiry Date at the Expiry Time.

Dilution to Existing Shareholders

If a Shareholder does not exercise all of its Rights pursuant to the Basic Subscription Privilege, the Shareholder's current percentage ownership in the Company will be diluted by the issuance of Common Shares upon the exercise of Rights by other Shareholders.

Ineligible Holders

This Offering is made only in the Eligible Jurisdictions. Accordingly, neither a subscription under the Basic Subscription Privilege nor under the Additional Subscription Privilege will be accepted from any person, or such person's agent, who appears to be, or who the Company has reason to believe is an Ineligible Holder, except that the Company may accept subscriptions in certain circumstances from an Approved Eligible Holder.

---

- 25 -

Rights Certificates will not be issued and forwarded by the Company to Ineligible Holders who are not Approved Eligible Holders. Ineligible Holders will be presumed to be resident in the place of their registered address unless the contrary is shown to the satisfaction of the Company. Registered Ineligible Holders other than registered Shareholders in Pre-Approved Jurisdictions will be sent a cover letter with this Prospectus and a form of investor representation letter (the "Representation Letter") advising them that their Rights Certificates will be issued to and held on their behalf by the Subscription Agent. The Representation Letter will set out the conditions required to be met, and procedures that must be followed, by certain Ineligible Holders in certain jurisdictions wishing to participate in the Offering. Rights Certificates in respect of Rights issued to registered Ineligible Holders will be issued to and held by the Subscription Agent as agent for the benefit of Ineligible Holders. The Subscription Agent will hold the Rights until 5:00 p.m. (Vancouver time) on •, 2016 in order to provide certain Ineligible Holders an opportunity to claim a Rights Certificate by satisfying the Company that the issue of Common Shares pursuant to the exercise of Rights will not be in violation of the laws of the applicable jurisdiction. Following such date, the Subscription Agent, for the account of registered Ineligible Holders (including Ineligible Holders with an address of record in the United States), will, prior to the Expiry Time on the Expiry Date, attempt to sell the Rights of such registered Ineligible Holders represented by Rights Certificates in the possession of the Subscription Agent on such date or dates and at such price or prices as the Subscription Agent determines in its sole discretion.

CDS Participants receiving Rights on behalf of Ineligible Holders will be instructed by CDS not to permit the exercise of such Rights unless the holder is an Approved Eligible Holder. After •, 2016, CDS Participants should attempt to sell the Rights of Ineligible Holders for the accounts of such holders and should deliver any proceeds of sale to such holders.

Beneficial owners of Common Shares registered in the name of a resident of an Ineligible Jurisdiction, who are not themselves resident in an Ineligible Jurisdiction, who wish to be recognized as an Approved Eligible Holder and who believe that their Rights Certificates may have been delivered to the Subscription Agent, should contact their broker at the earliest opportunity and in any case in advance of 5:00 p.m. (Vancouver time) on •, 2016 to request to have their Rights Certificates mailed to them.

The Rights and the Common Shares issuable on the exercise of the Rights have not been qualified for distribution in any Ineligible Jurisdiction and, accordingly, may only be offered, sold, acquired, exercised or transferred in transactions not prohibited by applicable laws in Ineligible Jurisdictions. Notwithstanding the foregoing, persons located in certain Ineligible Jurisdictions may be able to exercise the Rights and purchase Common Shares provided that they furnish the Representation Letter satisfactory to the Company on or before •, 2016. The form of Representation Letter will be available from the Company or the Subscription Agent upon request. Beneficial owners of Rights or Common Shares should contact their broker to obtain the Representation Letter. The Company is treating Shareholders in Pre-Approved Jurisdictions as Approved Eligible Holders. A holder of Rights in an Ineligible Jurisdiction holding on behalf of a person resident in an Eligible Jurisdiction may be able to exercise the Rights provided the holder certifies in the Representation Letter that the beneficial purchaser is resident in an Eligible Jurisdiction and satisfies the Company that such subscription is lawful and in compliance with all securities and other applicable laws.

No charge will be made for the sale of Rights by the Subscription Agent except for a proportionate share of any brokerage commissions incurred by the Subscription Agent and the costs of or incurred by the Subscription Agent in connection with the sale of the Rights. Registered Ineligible Holders will not be entitled to instruct the Subscription Agent in respect of the price or the time at which the Rights are to be sold. The Subscription Agent will endeavour to effect sales of Rights on the open market and any proceeds received by the Subscription Agent with respect to the sale of Rights net of brokerage fees and costs incurred and, if applicable, the Canadian tax required to be withheld, will be divided on a pro rata basis among such registered Ineligible Holders and delivered by mailing cheques (in Canadian funds) of the Subscription Agent therefor as soon as practicable to such registered Ineligible Holders at their addresses recorded on the books of the Company. Amounts of less than $10.00 will not be remitted. The Subscription Agent will act in its capacity as agent of the registered Ineligible Holders on a best efforts basis only and the Company and the Subscription Agent do not accept responsibility for the price obtained on the sale of, or the inability to sell, the Rights on behalf of any registered Ineligible Holder. Neither the Company nor the Subscription Agent will be subject to any liability for the failure to sell any Rights of registered Ineligible Holders or as a result of the sale of any Rights at a particular price or on a particular day. There is a risk that the proceeds received from the sale of Rights will not exceed the costs of or incurred by the Subscription Agent in connection with the sale of such Rights and, if applicable, the Canadian tax required to be withheld. In such event, no proceeds will be remitted.

---

- 26 -

Holders of Rights who are not resident in Canada should be aware that the acquisition and disposition of Rights or Common Shares may have tax consequences in the jurisdiction where they reside, which are not described herein. Accordingly, such holders should consult their own tax advisors about the specific tax consequences in the jurisdiction where they reside of acquiring, holding and disposing of Rights or Common Shares.

Pre-Approved Offshore Jurisdictions

Australia

This prospectus does not constitute a disclosure document under Part 6D.2 of the Corporations Act 2001 of the Commonwealth of Australia (the "Corporations Act 2001 (Cth)"). It does not necessarily contain all of the information a prospective investor would expect to be contained in an offer document or which he/she may require to make an investment decision. The Offering to which this prospectus relates is being made in Australia in reliance on ASIC Corporations (Foreign Rights Issues) Instrument 2015/356 issued by the Australian Securities and Investments Commission. This prospectus only constitutes an offer in Australia for the issue of the Rights and/or Common Shares to persons who are recorded as holders of Common Shares on the Record Date. Accordingly, Australian resident Shareholders as at the Record Date will be treated by the Company as Approved Eligible Holders.

New Zealand

The offer of Rights and Common Shares under this prospectus is being made to New Zealand Shareholders pursuant to the New Zealand Securities Act (Overseas Companies) Exemption Notice 2013. Accordingly, New Zealand resident Shareholders as at the Record Date will be treated by the Company as Approved Eligible Holders.

British Virgin Islands

The securities offered hereunder may not be offered in the British Virgin Islands ("BVI") unless the Company or the person offering the securities on its behalf is licensed to carry on business in the BVI. The securities may be offered to BVI business companies or BVI resident individuals from outside the BVI without restriction. A BVI business company is a company formed under or otherwise governed by the BVI Business Companies Act (British Virgin Islands) (as amended). Accordingly, BVI business companies and BVI resident individuals as at the Record Date will be treated by the Company as Approved Eligible Holders.

---

- 27 -

It is expected that Part II of the Securities and Investment Business Act ("SIBA") will be brought into force and become law in the BVI in the near future. Upon Part II of SIBA coming into force, the securities offered hereunder may not be, and will not be, offered to the public or to any person in the BVI for purchase or subscription by or on behalf of the Company. The securities may continue to be offered to BVI business companies, but only where the offer will be made to, and received by, the relevant BVI company entirely outside of the BVI. The securities may also be offered to persons located in the BVI who are "qualified investors" for the purposes of SIBA.

This prospectus has not been registered with the Financial Services Commission of the BVI and will not be so registered upon Part II of SIBA coming into force. No registered prospectus has been or will be prepared in respect of the securities for the purposes of SIBA.

Cyprus

Shareholders resident in Cyprus as at the Record Date will be treated by the Company as Approved Eligible Holders. This prospectus has not been approved by and will not be submitted for approval to the Cyprus Securities and Exchange Commission ("CySEC") and this prospectus and the Rights and Common Shares do not constitute an offer to the public within the meaning of law for the Conditions for Making an Offer to the Public of Securities, on the Prospectus to be Published when Securities are Offered to the Public or Admitted to Trading on a Regulated Market and other Incidental Matters, Law 114(I)/2005 of the statute laws of Cyprus, as amended from time to time.

The contents of this document have not been reviewed by any regulatory authority in Cyprus. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.

This document has not been approved or registered by the Department of Official Receiver and Registrar of Companies in Cyprus, the Central Bank of Cyprus or the CySEC.

France

The Rights as well as the Common Shares have not been offered or sold and will not be offered or sold, directly and indirectly, to the public in France.

This Prospectus and any other offering material relating to Rights as well as the Common Shares have not been, and will not be submitted to the Autorité des Marchés financiers (AMF) for approval in France and, accordingly, may not be distributed, directly and indirectly, to the public in France.

Such offers, sales and distribution have been and shall only be made in France (i) to qualified investors ("investisseurs qualifiés") acting for their own account, as defined in and in accordance with Articles L. 411-2-II-2°, D. 411-1, L. 533-16, L. 533-20, D. 533-11, D. 533-13, D. 744-1, D. 754-1 and D. 764-1 of the French Monetary and Financial Code and any implementing regulation and/or (ii) to a restricted number of non-qualified investors ("cercle restreint d’investisseurs") acting for their own account as defined in and in accordance with Articles L. 411-2-II-2°, D. 411-4, D. 744-1, D. 754-1 and D. 764-1 of the French Monetary and Financial Code and any implementing regulation. Shareholders resident in France on the Record Date will be treated by the Company as Approved Eligible Holders.

Pursuant to Article 211-3 of the General regulation of the AMF, investors are informed that the Rights as well as the Common Shares cannot be distributed (directly or indirectly) to the public in France by investors otherwise than in accordance to Articles L. 411-1, L. 411-2, L. 412-1 and L. 621-8 to L.621-8-3 of the French Monetary and Financial Code.

---

- 28 -

Oman

The information contained, or referred to, in this prospectus neither constitutes a public offer of securities in the Sultanate of Oman as contemplated by the Commercial Companies Law of Oman (Sultani Decree 4/74) or the Capital Market Law of Oman (Sultani Decree 80/98), nor does it constitute an offer to sell, or the solicitation of any offer to buy non-omani securities in the Sultanate of Oman as contemplated by Article 139 of the executive regulations to the Capital Market Law (issued vide CMA Decision 1/2009). In addition, the Company is not and will not be regulated and/or supervised by Oman's Capital Market Authority, or the Central Bank of Oman.

Shareholders resident in Oman on the Record Date will be treated by the Company as Approved Eligible Holders.

Other Offshore Jurisdictions

United Kingdom

With respect to the United Kingdom, this short form prospectus is being made to and directed at and the securities being offered hereunder are only available to: (i) persons outside the United Kingdom; or (ii) persons in the United Kingdom who are: (a) a "qualified investor" within the meaning of Section 86(7) of FSMA, acting as principal or in circumstances where Section 86(2) FSMA applies; and (b) are also: (1) within the categories of persons referred to in Article 19 (investment professionals) or Article 49 (high net worth companies, unincorporated associations, etc.) of the Financial Promotion Order; or (2) are otherwise lawfully permitted to receive them (all such persons together being referred to as "relevant persons"). The securities being offered hereunder are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. This document contains no offer of transferable securities to the public in the United Kingdom within the meaning of sections 85(1) and 102B FSMA. This document is not a prospectus for the purposes of Section 85(1) FSMA. Accordingly, this document has not been examined or approved as a prospectus by the FCA under Section 87A FSMA or by the London Stock Exchange and has not been filed with the FCA pursuant to the United Kingdom Prospectus Rules nor has it been approved by a person authorized under FSMA, for the purposes of Section 21 FSMA.

Hong Kong

Holders of Rights resident in Hong Kong should note the following:

WARNING

The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.

This document has not been registered by the Registrar of Companies in Hong Kong pursuant to the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong) (the "CO").

Accordingly, this document must not be issued, circulated or distributed in Hong Kong and the Rights and Common Shares will not be offered or distributed in Hong Kong, other than (1) to "professional investors" as defined in the Securities and Futures Ordinance (Chapter 571) of the Laws of Hong Kong (the "SFO") and any rules made under that Ordinance, (2) to persons and in circumstances which do not result in this document being a "prospectus" as defined in section 2(1) of the CO or which do not constitute an offer to the public within the meaning of the CO or an invitation to the public within the meaning of the SFO or (3) otherwise pursuant to, and in accordance with the conditions of, any other applicable provisions of the SFO and the CO.

---

- 29 -

Switzerland

The Rights as well as the Common Shares issuable upon exercise of the Rights may not be publicly offered, distributed or redistributed in or from Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or any other stock exchange or regulated trading facility in Switzerland. This document and any other offering or marketing material relating to the Offering neither constitutes a listing prospectus according to the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland nor an issue prospectus according to Art. 652a and/or Art. 1156 of the Swiss Code of Obligations ("CO"), and, therefore, it has been prepared without regard to the disclosure standards for issuance prospectuses under Art. 652a or Art. 1156 CO or the disclosure standards for listing prospectuses under Art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. This document as well as any other offering or marketing material relating to the Offering is personal and confidential and does not constitute an offer to any other person. Neither this document nor any other offering or marketing material relating to the Offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the Company or the Offering have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed, and the Offering will not be supervised by, the Swiss Financial Market Supervisory Authority (FINMA), and the Offering has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes ("CISA"). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of Rights or the Common Shares issuable upon exercise of the Rights.

Luxembourg

The terms and conditions relating to this prospectus have not been approved by and will not be submitted for approval to the Luxembourg Financial Services Authority (Commission de Surveillance du Secteur Financier) for purposes of a public offering or sale in the Grand Duchy of Luxembourg and this prospectus shall not constitute an offer to the public within the meaning of the Luxembourg law of July 10, 2005 on prospectuses for securities, as amended from time to time. Accordingly, the Rights and Common Shares shall not be offered or sold to the public in the Grand Duchy of Luxembourg, directly or indirectly, and neither this prospectus nor any other circular, offering memorandum, form of application, advertisement or other material shall be distributed, or otherwise made available in or from, or published in the Grand Duchy of Luxembourg which could qualify as a public offering in the above sense.

In addition, the Company is not and will not be regulated and/or supervised by the Luxembourg Financial Services Authority (Commission de Surveillance du Secteur Financier) by virtue of the issue of the Rights and Common Shares.

For the purposes of this provision, the expressions "an offer to the public" or "offered or sold to the public" in relation to the Rights and Common Shares in the Grand Duchy of Luxembourg means the communication to persons in any form and by any means presenting sufficient information on the terms of the offer and the Rights and Common Shares to be offered so as to enable an investor to decide to purchase or subscribe the Rights and Common Shares, it being understood that this definition shall also be applicable to the placing of the Rights and Common Shares through financial intermediaries.

---

- 30 -

Germany

With respect to Germany, the securities being offered hereunder are only available to: (i) persons outside Germany; or (ii) persons in Germany who are "qualified investors" within the meaning of Section 3 para. 2 sentence 1 no. 1 of the German Securities Prospectus Act (Wertpapierprospektgesetz). Accordingly, this document has not been examined or approved as a securities prospectus by the German Financial Services Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin). The securities being offered hereunder are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with qualified investors. Any person who is not a qualified investor should not act or rely on this document or any of its contents.

U.S. Shareholders

The Company has filed with the SEC in the United States a Registration Statement on Form F-7 under the U.S. Securities Act so that the Common Shares issuable upon the exercise of the Rights will not be subject to transfer restrictions. However, the Rights may be transferred only in transactions outside of the United States in accordance with Regulation S under the U.S. Securities Act, which will permit the resale of the Rights by persons through the facilities of the TSX, provided that the offer is not made to a person in the United States, neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, and no "directed selling efforts", as that term is defined in Regulation S, are conducted in the United States in connection with the resale. Certain additional conditions are applicable to the Company's "affiliates", as that term is defined under the U.S. Securities Act. In order to enforce this resale restriction, holders thereof will be required to execute a declaration certifying that such sale is being made outside the United States in accordance with Regulation S, which is included as part of Form 3. See "How to Complete the Rights Certificate – Form 3 – Transfer of Rights".

PLAN OF DISTRIBUTION

Each Shareholder on the Record Date will receive one Right for each Common Share held.

The Subscription Price was determined by the board of directors of the Company based on a 50% discount to the five-day volume-weighted average trading price of the Common Shares on the TSX immediately preceding the date of this prospectus.

The Company has applied to list the Rights and the Common Shares issuable on the exercise of the Rights on the TSX. The approval of such listing will be subject to the Company fulfilling all of the listing requirements of the TSX.

This prospectus qualifies the distribution under applicable Canadian securities laws of the Rights and the Common Shares issuable upon exercise of the Rights in each province of Canada (other than Quebec). This prospectus also covers the offer and sale of the Common Shares issuable upon exercise of the Rights within the United States under the U.S. Securities Act. Notwithstanding registration under the U.S. Securities Act, the securities or blue sky laws of certain states (including California, Ohio, Arizona, Arkansas, Iowa, Minnesota and Wisconsin) may not permit the Company to offer Rights and/or Common Shares in such states, or to certain persons in those states, or may otherwise limit the Company's ability to do so, and as a result the Company will treat those states as Ineligible Jurisdictions under the Offering.

The Rights as well as the Common Shares issuable upon the exercise of the Rights are not qualified under the securities laws of, or being distributed or offered in, any Ineligible Jurisdiction and, except under the circumstances described herein, Rights may not be exercised by or on behalf of an Ineligible Holder. This prospectus is not, and under no circumstances is to be construed as, an offering of any Rights or Common Shares for sale in any Ineligible Jurisdiction or a solicitation therein of an offer to buy any securities. Rights Certificates will not be sent to Shareholders with addresses of record in any Ineligible Jurisdiction (other than the Pre-Approved Jurisdictions). Instead, such Ineligible Holders will be sent a letter advising them that their Rights Certificates will be held by the Subscription Agent, who will hold such Rights as agent for the benefit of all such Ineligible Holders. See "Description of Offered Securities — Ineligible Holders".

---

- 31 -

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

In the opinion of Thorsteinssons LLP, special Canadian tax counsel to the Company, the following is, as the date of this Prospectus, a general summary of the principal Canadian federal income tax considerations concerning the Rights issuable under the Offering and Common Shares issuable on the exercise of Rights. This summary is only applicable to Shareholders who: (i) are, at all relevant times, residents or deemed to be residents of Canada for the purposes of the Income Tax Act (the "Tax Act") and any applicable tax treaty or convention, (ii) deal at arm's length with and are not affiliated with the Company for the purposes of the Tax Act, and (iii) will hold the Rights and the Common Shares issued pursuant to the exercise of the Rights, as a capital property for the purposes of the Tax Act.

This summary is based on the current provisions of the Tax Act, the regulations thereunder (the "Regulations") in force as of the date hereof, and counsel's understanding of the current published administrative practices of the Canada Revenue Agency (the "CRA"). This summary also takes into account all specific proposals to amend the Tax Act and the Regulations publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the "Tax Proposals") and assumes the Tax Proposals will be enacted in the form proposed, although no assurance can be given that the Tax Proposals will be enacted in their current form or at all. This summary does not otherwise take into account any changes in law or in the administrative policies or assessing practices of the CRA whether by legislative, governmental or judicial decision or action nor does it take into account or consider any provincial, territorial or foreign income tax considerations, which considerations may differ significantly from the Canadian Federal income tax considerations discussed in this summary, but does not otherwise take into account or anticipate any changes in the law, whether by legislative, governmental or judicial action, or the CRA’s published administrative practices.

Rights issued under the Offering and the Common Shares issuable on the exercise of Rights will constitute capital property of a Shareholder unless such Rights or Common Shares are held in the course of carrying on a business of trading or dealing in securities or otherwise as part of a business of buying and selling securities, or are acquired in a transaction or transactions considered to be an adventure in the nature of trade. Certain holders that are resident in Canada for the purposes of the Tax Act whose Common Shares issuable on the exercise of Rights might not otherwise be considered to be capital property may be eligible to make an irrevocable election under the Tax Act to have such Common Shares and every "Canadian security" (as defined in the Tax Act) owned by such Shareholder in the taxation year of the election and all subsequent years deemed to be capital property. Rights are not "Canadian securities" for this purpose; accordingly, the characterization of Rights as capital property is unaffected by a Shareholder's election under subsection 39(4) of the Tax Act. Shareholders should consult their own tax advisors with respect to whether this election is available or advisable in their particular circumstances.

This summary does not apply to a Shareholder: (i) that is a "financial institution", for the purposes of the mark-to-market rules in the Tax Act, (ii) that is a "specified financial institution" as defined in the Tax Act, (iii) an interest in which is a "tax shelter investment" for the purposes of the Tax Act, (iv) that has made a functional currency reporting election pursuant to section 261 of the Tax Act, (v) that has, or will, enter into, with respect to the Rights or Common Shares, a "derivative forward agreement", as defined in the Tax Act, or (vi) that is exempt from tax under Part I of the Tax Act. Such Shareholders should consult their own tax advisors.

---

- 32 -

This summary is of general nature only and does not take into account or consider the tax laws of any province or territory or any jurisdiction outside Canada. This summary is not intended to be, nor should it be construed to be, legal or tax advice to any particular Shareholder, and no representations concerning the tax consequences to any particular Shareholder are made. Shareholders should consult their own tax advisors regarding the income tax considerations applicable to them having regard for their particular circumstances.

Receipt of Rights

No amount will be required to be included in computing the income of a Shareholder as a consequence of being issued Rights under the Offering, on the basis that all Shareholders are given the right to acquire Rights, all Rights are identical and Rights are issued with respect to each Common Share. The cost to a Shareholder of a Right received under the Offering will be nil for the purposes of the Tax Act. The adjusted cost base of each identical Right held by a Shareholder will be averaged with the adjusted cost base of each other Right held by that Shareholder as capital property (including any identical Rights acquired otherwise than pursuant to the Offering).

Exercise of Rights

The exercise of Rights will not constitute a disposition of property for purposes of the Tax Act and, consequently, no gain or loss will be realized upon the exercise of Rights. A Common Share acquired by a Shareholder upon the exercise of Rights will have a cost to the Shareholder equal to aggregate of the Subscription Price for such Common Share and the adjusted cost base to the Shareholder of the Rights so exercised. The adjusted cost base of a Common Share acquired by a Shareholder upon the exercise of Rights will be averaged with the adjusted cost base to the Shareholder of all other Common Shares held at that time as capital property to determine the adjusted cost base of each such Common Share to the Shareholder.

Disposition of Rights or Common Shares

A Shareholder who disposes of or is deemed to dispose of Rights or Common Shares, will realize a capital gain (or a capital loss) equal to the amount, if any, by which the proceeds of disposition exceed (or are exceeded by) the aggregate of the Shareholder’s adjusted cost base of the security so disposed of immediately before disposition and any reasonable costs of disposition. Upon the expiry of a Right, the holder will realize a capital loss equal to the amount, if any, of the Shareholder's adjusted cost base thereof.

A Shareholder will be required to include in income one-half of any capital gain (a "taxable capital gain") realized on a disposition or deemed disposition of a Right or Common Share. Subject to and in accordance with the provisions of the Tax Act, a Shareholder must deduct against taxable capital gains realized in the year one-half of any capital loss (an "allowable capital loss") realized on the disposition or expiry of Rights or the disposition of Common Shares. Allowable capital losses for a taxation year in excess of taxable capital gains for that year generally may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any subsequent taxation year against net taxable capital gains realized in such years, to the extent and under the circumstances described in the Tax Act.

The amount of any capital loss realized on the disposition or deemed disposition of Common Shares by a Shareholder that is a corporation may be reduced by the amount of dividends received or deemed to have been received by it on such shares or shares substituted for such shares to the extent and in the circumstance specified by the Tax Act. Similar rules may apply where a Shareholder that is a corporation is a member of a partnership or beneficiary of a trust that owns Common Shares or that is itself a member of a partnership or a beneficiary of a trust that owns Common Shares.

---

- 33 -

A Shareholder that is a "Canadian-controlled private corporation", as defined in the Act, may be liable to pay an additional refundable tax of 6 2/3 % (or 10 2/3% if the relevant Tax Proposals are enacted) on its "aggregate investment income" for the year which will include taxable capital gains.

Dividends

A Shareholder will be required to include in computing its income for a taxation year any taxable dividends received or deemed to be received on such Shareholder's Common Shares. In the case of a Shareholder who is an individual (other than certain trusts), such taxable dividends will be subject to the gross up and dividend tax credit rules normally applicable to taxable dividends received from "taxable Canadian corporations" (as defined in the Tax Act), including the enhanced gross up and dividend tax credit rules for "eligible dividends" (as defined in the Tax Act). Eligible dividends will generally include dividends paid by a taxable Canadian corporation, such as the Company, where those dividends have been designated as "eligible dividends" by the corporation at or prior to the time the dividends are paid. There are limitations on the ability of a corporation to designate dividends as eligible dividends.

A Shareholder that is a corporation will be required to include dividends received or deemed to be received on the Common Shares in computing its income for tax purposes and generally will be entitled to deduct the amount of such dividends in computing its taxable income, subject to all applicable restrictions under the Tax Act. A corporation that is a "private corporation" or a "subject corporation" for purposes of the Tax Act may also be liable to pay a 33 1/3% (or 38 1/3% if the relevant Tax Proposals are enacted) refundable tax under Part IV of the Tax Act on dividends received or deemed to be received to the extent that such dividends are deductible in computing the corporation's taxable income.

Minimum Tax

In general terms, a Shareholder that is an individual or trust, other than certain types of specified trusts, that received or is deemed to receive taxable dividends on Common Shares or realizes a capital gain on the disposition or deemed disposition of Common Shares, may realize an increase in the Shareholder’s liability for minimum tax. Shareholders should consult their own tax advisors with respect to application of alternative minimum tax.

CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following is a general summary of certain material U.S. federal income tax considerations applicable to a U.S. Holder (as defined below) arising from and relating to the receipt, exercise, termination or disposition of Rights (which for purposes of this discussion, will include any Rights acquired pursuant to the Additional Subscription Privilege) under the Offering and the ownership and disposition of Common Shares received upon the exercise of such Rights. For purposes of this summary, the references to "Rights Shares" shall mean Common Shares received upon the exercise of the Rights.

This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations that may apply to a U.S. Holder arising from and relating to the receipt, exercise, termination or disposition of Rights and the ownership and disposition of Common Shares and Rights Shares. In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences to such U.S. Holder, including specific tax consequences to a U.S. Holder under an applicable tax treaty. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any U.S. Holder. This summary does not address the U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax consequences to U.S. Holders of the receipt, exercise, termination or disposition of Rights and the ownership and disposition of Common Shares and Rights Shares. In addition, except as specifically set forth below, this summary does not discuss applicable income tax reporting requirements. Each U.S. Holder should consult its own tax advisors regarding the U.S. and non-U.S. tax consequences relating to the receipt, exercise, termination or disposition of Rights and the ownership and disposition of Common Shares and Rights Shares.

---

- 34 -

No legal opinion from U.S. legal counsel or ruling from the Internal Revenue Service (the "IRS") has been requested, or will be obtained, regarding the U.S. federal income tax consequences of the receipt, exercise, termination or disposition of Rights and the ownership and disposition of Common Shares and Rights Shares. This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, and contrary to, the positions taken in this summary. In addition, because the authorities on which this summary is based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or more of the positions taken in this summary.

Scope of this Summary

Authorities

This summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations (whether final, temporary, or proposed), published rulings and administrative positions of the IRS, the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the "Canada-U.S. Tax Convention"), and U.S. court decisions that are applicable and, in each case, as in effect and available, as of the date of this document. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive or prospective basis which could affect the U.S. federal income tax considerations described in this summary. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive or prospective basis.

U.S. Holders

For purposes of this summary, the term "U.S. Holder" means a beneficial owner of Rights or Rights Shares acquired upon the exercise of Rights received pursuant to the Offering that is for U.S. federal income tax purposes:

---

- 35 -

U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed

This summary does not address the U.S. federal income tax considerations applicable to U.S. Holders that are subject to special provisions under the Code, including, but not limited to, U.S. Holders: (a) that are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) that are financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; (c) that are broker-dealers, dealers, or traders in securities or currencies that elect to apply a mark-to-market accounting method; (d) that have a "functional currency" other than the U.S. dollar; (e) that own Rights, Common Shares or Rights Shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (f) that acquired Rights, Common Shares or Rights Shares in connection with the exercise of employee stock options or otherwise as compensation for services; (g) that hold Rights, Common Shares or Rights Shares other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes); or (h) that own or have owned (directly, indirectly, or by attribution) 10% or more of the total combined voting power of the outstanding shares of the Company. This summary also does not address the U.S. federal income tax considerations applicable to U.S. Holders who are: (a) U.S. expatriates or former long-term residents of the U.S.; (b) persons that have been, are, or will be a resident or deemed to be a resident in Canada for purposes of the Tax Act; (c) persons that use or hold, will use or hold, or that are or will be deemed to use or hold Rights, Common Shares or Rights Shares in connection with carrying on a business in Canada; (d) persons whose Rights, Common Shares or Rights Shares constitute "taxable Canadian property" under the Tax Act; or (e) persons that have a permanent establishment in Canada for the purposes of the Canada-U.S. Tax Convention. U.S. Holders that are subject to special provisions under the Code, including, but not limited to, U.S. Holders described immediately above, should consult their own tax advisors regarding the U.S. and non-U.S. tax consequences relating to the receipt, exercise, termination or disposition of Rights and the ownership and disposition of Common Shares and Rights Shares.

If an entity or arrangement that is classified as a partnership (or "pass-through" entity) for U.S. federal income tax purposes holds Rights, Common Shares or Rights Shares, the U.S. federal income tax consequences to such entity and the owners of such entity generally will depend on the activities of the entity and the status of such owners. This summary does not discuss U.S. tax consequences to such entities or owners. Owners of entities or arrangements that are classified as partnerships for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences arising from and relating to the receipt, exercise, termination or disposition of Rights and the ownership and disposition of Common Shares and Rights Shares.

Taxation of Rights

The following discussion is subject in its entirety to the rules described below under the heading "Passive Foreign Investment Corporation Rules".

Receipt of Rights

Generally, a U.S. Holder that receives a right to acquire shares will not be treated as receiving a taxable dividend. However, under certain circumstances, a U.S. Holder that receives a right to acquire shares may be treated as receiving a taxable dividend in an amount equal to the value of such right. For example, a U.S. Holder that receives a right to acquire common shares generally will be treated as having received a taxable dividend if such U.S. Holder's proportionate interest in the earnings and profits or assets of the corporation is increased and any other shareholder receives a distribution of cash or other property. For purposes of the preceding sentence, the term "shareholder" includes holders of warrants, options and convertible securities. During the last 36 months, the Company has not made any distributions of cash or non-stock property with respect to: (i) shares of the Company; or (ii) options or warrants to acquire shares of the Company. The distribution of the Rights hereunder is an isolated transaction and is not part of a plan to increase any shareholder's proportionate interest in the Company's earnings and profits. The Company does not have any convertible debt outstanding. Nor does the Company currently intend to issue any convertible debt or pay any dividends on Common Shares (other than the issuance of the Rights in connection with the Rights Offering).

---

- 36 -

While the issue is not free from doubt, the Company believes that the distribution of the Rights should be treated as a non-taxable stock distribution under Section 305(a) of the Code and the Company and its agents (including the depositary) intend to treat the distribution of the Rights consistently with this belief. The following discussion is based upon the treatment of the Right issuance as a non-recognition event for federal income tax purposes under Section 305(a) of the Code. The following discussion assumes that the IRS and U.S. courts will respect the Company's position and that the U.S. Holder is not subject to United States federal income tax on the receipt (or deemed receipt) of a Right. However, the Company's position is not binding on the IRS and no assurance can be made that the IRS will not disagree with such position. If the Company's position were finally determined by the IRS or a U.S. court to be incorrect, the fair market value of the Rights a U.S. Holder receives would be taxable to that U.S. Holder as a dividend in the manner described below under "Taxation of Common Shares — Taxation of Distributions". Although no assurance can be given, it is anticipated that the Company will not have current and accumulated earnings and profits through the end of 2015. U.S. Holders should consult their own tax advisors regarding the risk of having a taxable distribution as a result of the receipt of the Rights.

If the fair market value of the Rights on the date of their distribution equals or exceeds 15% of the fair market value on such date the Common Shares with respect to which the Rights are distributed, a U.S. Holder's tax basis in such Common Shares must be allocated between such Common Shares and the Rights. Such an allocation must be made in proportion to the fair market value of the Common Shares and the fair market value of the Rights on the date the Rights are distributed.

If the fair market value of the Rights on the date the Company distributes them is less than 15% of the fair market value of the Common Shares on the same date, a U.S. Holder's tax basis in such Rights will be zero and the U.S. Holder's basis in the Common Shares with respect to which the Rights are distributed will remain unchanged. Notwithstanding the foregoing, a U.S. Holder may elect (in a statement attached to the U.S. Holder's United States federal income tax return for the year in which the Rights were received) to allocate to the Rights a portion of the U.S. Holder's basis in such Common Shares in the manner described in the immediately preceding paragraph. Any such election is irrevocable and must be applied to all of the Rights an investor receives pursuant to the Offering.

Sale or Other Disposition of Rights

Upon a sale or other disposition of a Right, a U.S. Holder will recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S. Holder's adjusted tax basis in the Right. The amount realized on a sale or other disposition of a Right for cash generally will be the amount of cash a U.S. Holder receives in exchange for such Right. If the consideration a U.S. Holder receives for the Right is not paid in U.S. dollars, the amount realized will be the U.S. dollar value of the payment the U.S. Holder receives determined by reference to the spot exchange rate in effect on the date of the sale or other disposition or, if the Right sold or exchanged is traded on an "established securities market" and the U.S. Holder is a cash basis taxpayer or an electing accrual basis taxpayer, the spot exchange rate in effect on the settlement date.

Subject to the passive foreign investment company (as defined below, a "PFIC") rules discussed below, any gain or loss a U.S. Holder recognizes on the sale or other disposition of a Right to a third party will be long-term capital gain or loss if the U.S. Holder's holding period in the Right is deemed to be greater than one year. A U.S. Holder's holding period in a Right will be deemed to have begun on the same date as that of the Common Share with respect to which the U.S. Holder received such Right. Any gain or loss will generally be treated as U.S. source gain or loss. The deductibility of capital losses is subject to limitations.

---

- 37 -

Termination of Rights

If a U.S. Holder allows a Right to expire without such Right being exercised, sold or exchanged by the U.S. Holder or on the U.S. Holder's behalf, no portion of the tax basis in the Common Shares owned by such holder with respect to which such Rights were distributed will be allocated to the unexercised Rights. If a U.S. Holder allocates a portion of its tax basis in the Common Shares held by such holder to the Rights and the Rights expire without exercise after the holder disposes of the Common Shares with respect to which the Rights were received, then the tax consequences are unclear. Either the U.S. Holder recomputes its gain or loss from the sale of the Common Shares as if no basis were allocated to the Rights or the U.S. Holder should recognize a capital loss from the expiration of the Rights equal to the tax basis allocated to such Rights. U.S. Holders should consult their own tax advisors regarding this issue.

Exercise of Rights

The exercise of a Right by a U.S. Holder will not be a taxable transaction for United States federal income tax purposes. A U.S. Holder's initial basis in Rights Shares acquired upon exercise of a Right generally will be equal to the Subscription Price plus the U.S. Holder's basis (if any) in the Right in U.S. dollars. Subject to the PFIC rules discussed below, the holding period for Rights Shares acquired on the exercise of a Right will begin on the date of exercise.

Passive Foreign Investment Corporation Rules

If the Company is considered a "passive foreign investment company" under the meaning of Section 1297 of the Code (a "PFIC") at any time during a U.S. Holder's holding period, the following sections will generally describe the U.S. federal income tax consequences to U.S. Holders of the acquisition, ownership, and disposition of Common Shares, Rights or Rights Shares. The Company believes that it was classified as a PFIC for its tax year ended December 31, 2015, and based on current business plans and financial expectations, the Company expects to be a PFIC for its current tax year ending December 31, 2016 and may be a PFIC in future tax years. The determination of whether any corporation was, or will be, a PFIC for a tax year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations. In addition, whether any corporation will be a PFIC for any tax year depends on the assets and income of such corporation over the course of each such tax year and, as a result, cannot be predicted with certainty as of the date of this document. Accordingly, there can be no assurance that the IRS will not challenge any determination made by the Company concerning its PFIC status or that the Company was not, or will not be, a PFIC for any tax year. Each U.S. Holder should consult its own tax advisors regarding the PFIC status of the Company.

In any year in which the Company is classified as a PFIC, a U.S. Holder will be required to file an annual report with the IRS containing such information as Treasury Regulations and/or other IRS guidance may require. In addition to penalties, a failure to satisfy such reporting requirements may result in an extension of the time period during which the IRS can assess a tax. U.S. Holders should consult their own tax advisors regarding the requirements of filing such information returns under these rules, including the requirement to file an IRS Form 8621.

The Company generally will be a PFIC if, for a tax year, (a) 75% or more of the gross income of the Company is passive income (the "income test") or (b) 50% or more of the value of the Company's assets either produce passive income or are held for the production of passive income, based on the quarterly average of the fair market value of such assets (the "asset test"). "Gross income" generally includes all sales revenues less the cost of goods sold, plus income from investments and from incidental or outside operations or sources, and "passive income" generally includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions. Active business gains arising from the sale of commodities generally are excluded from passive income if substantially all (85% or more) of a foreign corporation's commodities are stock in trade or inventory, depreciable property used in a trade or business, or supplies regularly used or consumed in the ordinary course of its trade or business, and certain other requirements are satisfied.

---

- 38 -

For purposes of the PFIC income test and asset test described above, if the Company owns, directly or indirectly, 25% or more of the total value of the outstanding shares of another corporation, the Company will be treated as if it (a) held a proportionate share of the assets of such other corporation and (b) received directly a proportionate share of the income of such other corporation. In addition, for purposes of the PFIC income test and asset test described above, "passive income" does not include any interest, dividends, rents, or royalties that are received or accrued by the Company from a "related person" (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to the income of such related person that is not passive income.

In addition, under certain attribution rules, if the Company is a PFIC, U.S. Holders will be deemed to own their proportionate share of any subsidiary of the Company which is also a PFIC (a "Subsidiary PFIC"), and will be subject to U.S. federal income tax on their proportionate share of any (a) distribution on the shares of a Subsidiary PFIC and (b) disposition or deemed disposition of shares of a Subsidiary PFIC, both as if such U.S. Holders directly held the shares of such Subsidiary PFIC.

Default PFIC Rules Under Section 1291 of the Code

If the Company is a PFIC, the U.S. federal income tax consequences to a U.S. Holder of the acquisition, ownership, and disposition of Common Shares, Rights and Rights Shares will depend on whether such U.S. Holder makes a timely election to treat the Company (and/or a Subsidiary PFIC) as a "qualified electing fund" or "QEF" under Section 1295 of the Code (a "QEF Election") or makes a timely mark-to-market election under Section 1296 of the Code (a "Mark-to-Market Election") with respect to Common Shares or Rights Shares (as described below, a QEF Election will not be available with respect to the Rights). A U.S. Holder that does not make either a QEF Election or a Mark-to-Market Election will be referred to in this summary as a "Non-Electing U.S. Holder".

A Non-Electing U.S. Holder will be subject to the rules of Section 1291 of the Code with respect to (a) any gain recognized on the sale or other taxable disposition of Common Shares, Rights and Rights Shares and (b) any excess distribution received on the Common Shares and Rights Shares. A distribution generally will be an "excess distribution" to the extent that such distribution (together with all other distributions received in the current tax year) exceeds 125% of the average distributions received during the three preceding tax years (or during a U.S. Holder's holding period for the Common Shares and Rights Shares, if shorter).

Under Section 1291 of the Code, any gain recognized on the sale or other taxable disposition of Common Shares, Rights and Rights Shares (including an indirect disposition of the stock of any Subsidiary PFIC), and any excess distribution received on such Common Shares and Rights Shares (or a distribution by a Subsidiary PFIC to its shareholder that is deemed to be received by a U.S. Holder) must be ratably allocated to each day in a Non-Electing U.S. Holder's holding period for the Common Shares, Rights, or Rights Shares, as applicable. The amount of any such gain or excess distribution allocated to the tax year of disposition or distribution of the excess distribution and to years before the entity became a PFIC, if any, would be taxed as ordinary income. The amounts allocated to any other tax year would be subject to U.S. federal income tax at the highest tax rate applicable to ordinary income in each such year, and an interest charge would be imposed on the tax liability for each such year, calculated as if such tax liability had been due in each such year. A Non-Electing U.S. Holder that is not a corporation must treat any such interest paid as "personal interest," which is not deductible.

---

- 39 -

If the Company is a PFIC for any tax year during which a Non-Electing U.S. Holder holds Common Shares, Rights Shares or Rights, the Company will continue to be treated as a PFIC with respect to such Non-Electing U.S. Holder, regardless of whether the Company ceases to be a PFIC in one or more subsequent tax years. If the Company ceases to be a PFIC, a Non-Electing U.S. Holder may terminate this deemed PFIC status with respect to Common Shares and Rights Shares by electing to recognize gain (which will be taxed under the rules of Section 1291 of the Code discussed above), but not loss, as if such Common Shares and Rights Shares were sold on the last day of the last tax year for which the Company was a PFIC. No such election, however, may be made with respect to Rights.

Under proposed Treasury Regulations, if a U.S. Holder has an option, warrant, or other right to acquire stock of a PFIC (such as the Rights), such option, warrant or right is considered to be PFIC stock subject to the default rules of Section 1291 of the Code. Under the rules described below, the holding period for the Rights Shares will begin on the date a U.S. Holder acquires the Rights. This will impact the availability of the QEF Election and Mark-to-Market Election with respect to the Rights Shares. Thus, a U.S. Holder will have to account for Rights Shares and Common Shares under the PFIC rules and the applicable elections differently. See discussion below under "QEF Election" and under "Mark-to-Market Election".

QEF Election

A U.S. Holder that makes a timely QEF Election for the first tax year in which its holding period of its Common Shares begins, generally, will not be subject to the rules of Section 1291 of the Code discussed above with respect to its Common Shares. A U.S. Holder that makes a timely QEF Election will be subject to U.S. federal income tax on such U.S. Holder's pro rata share of (a) the net capital gain of the Company, which will be taxed as long-term capital gain to such U.S. Holder, and (b) the ordinary earnings of the Company, which will be taxed as ordinary income to such U.S. Holder. Generally, "net capital gain" is the excess of (a) net long-term capital gain over (b) net short-term capital loss, and "ordinary earnings" are the excess of (a) "earnings and profits" over (b) net capital gain. A U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such amounts for each tax year in which the Company is a PFIC, regardless of whether such amounts are actually distributed to such U.S. Holder by the Company. However, for any tax year in which the Company is a PFIC and has no net income or gain, U.S. Holders that have made a QEF Election would not have any income inclusions as a result of the QEF Election. If a U.S. Holder that made a QEF Election has an income inclusion, such a U.S. Holder may, subject to certain limitations, elect to defer payment of current U.S. federal income tax on such amounts, subject to an interest charge. If such U.S. Holder is not a corporation, any such interest paid will be treated as "personal interest," which is not deductible.

A U.S. Holder that makes a timely QEF Election with respect to the Company generally (a) may receive a tax-free distribution from the Company to the extent that such distribution represents "earnings and profits" of the Company that were previously included in income by the U.S. Holder because of such QEF Election and (b) will adjust such U.S. Holder's tax basis in the Common Shares to reflect the amount included in income or allowed as a tax-free distribution because of such QEF Election. In addition, a U.S. Holder that makes a QEF Election generally will recognize capital gain or loss on the sale or other taxable disposition of Common Shares.

The procedure for making a QEF Election, and the U.S. federal income tax consequences of making a QEF Election, will depend on whether such QEF Election is timely. A QEF Election will be treated as "timely" if such QEF Election is made for the first year in the U.S. Holder's holding period for the Common Shares in which the Company was a PFIC. A U.S. Holder may make a timely QEF Election by filing the appropriate QEF Election documents at the time such U.S. Holder files a U.S. federal income tax return for such year. If a U.S. Holder does not make a timely QEF Election for the first year in the U.S. Holder's holding period for the Common Shares, the U.S. Holder may still be able to make a timely QEF Election in a subsequent year if such U.S. Holder also makes a "purging" election to recognize gain (which will be taxed under the rules of Section 1291 of the Code discussed above) as if such Common Shares were sold for their fair market value on the day the QEF Election is effective.

---

- 40 -

A timely QEF Election will apply to the tax year for which such QEF Election is made and to all subsequent tax years, unless such QEF Election is invalidated or terminated or the IRS consents to revocation of such QEF Election. If a U.S. Holder makes a QEF Election and, in a subsequent tax year, the Company ceases to be a PFIC, the QEF Election will remain in effect (although it will not be applicable) during those tax years in which the Company is not a PFIC. Accordingly, if the Company becomes a PFIC in another subsequent tax year, the QEF Election will be effective and the U.S. Holder will be subject to the QEF rules described above during any subsequent tax year in which the Company qualifies as a PFIC.

Under proposed Treasury Regulations, if a U.S. Holder has an option, warrant or other right to acquire stock of a PFIC (such as the Rights), such option, warrant or right is considered to be PFIC stock subject to the default rules of Section 1291 of the Code. However, a holder of an option, warrant or other right to acquire stock of a PFIC may not make a QEF Election that will apply to the option, warrant or other right to acquire PFIC stock. In addition, under proposed Treasury Regulations, if a U.S. Holder holds an option, warrant or other right to acquire stock of a PFIC, the holding period with respect to shares of stock of the PFIC acquired upon exercise of such option, warrant or other right will include the period that the option, warrant or other right was held.

Consequently, if a U.S. Holder of Common Shares makes a QEF Election, such election generally will not be treated as a timely QEF Election with respect to Rights Shares and the rules of Section 1291 of the Code discussed above will continue to apply with respect to such U.S. Holder's Rights Shares. However, a U.S. Holder of Rights Shares should be eligible to make a timely QEF Election if such U.S. Holder elects in the tax year in which such Rights Shares are received to recognize gain (which will be taxed under the rules of Section 1291 of the Code discussed above) as if such Rights Shares were sold for fair market value on the date such U.S. Holder acquired them. In addition, gain recognized on the sale or other taxable disposition (other than by exercise) of the Rights by a U.S. Holder will be subject to the rules of Section 1291 of the Code discussed above. Each U.S. Holder should consult its own tax advisors regarding the application of the PFIC rules to the Common Shares, Rights, and Rights Shares.

U.S. Holders should be aware that there can be no assurances that the Company will satisfy the record keeping requirements that apply to a QEF, or that the Company will supply U.S. Holders with information that such U.S. Holders require to report under the QEF rules, in the event that the Company is a PFIC and a U.S. Holder wishes to make a QEF Election. Thus, U.S. Holders may not be able to make a QEF Election with respect to their Common Shares and with respect to the shares in any Subsidiary PFICs. Each U.S. Holder should consult its own tax advisors regarding the availability of, and procedure for making, a QEF Election.

A U.S. Holder makes a QEF Election by attaching a completed IRS Form 8621, including a PFIC Annual Information Statement, to a timely filed U.S. federal income tax return. However, if the Company does not provide the required information with regard to the Company or any of its Subsidiary PFICs, U.S. Holders will not be able to make a QEF Election for such entity and will continue to be subject to the rules discussed above that apply to Non-Electing U.S. Holders with respect to the taxation of gains and excess distributions.

---

- 41 -

Mark-to-Market Election

A U.S. Holder may make a Mark-to-Market Election only if the Common Shares and Rights Shares are marketable stock. The Common Shares and Rights Shares generally will be "marketable stock" if the Common Shares and Rights Shares are regularly traded on (a) a national securities exchange that is registered with the Securities and Exchange Commission, (b) the national market system established pursuant to section 11A of the Securities and Exchange Act of 1934, or (c) a foreign securities exchange that is regulated or supervised by a governmental authority of the country in which the market is located, provided that (i) such foreign exchange has trading volume, listing, financial disclosure, and other requirements and the laws of the country in which such foreign exchange is located, together with the rules of such foreign exchange, ensure that such requirements are actually enforced and (ii) the rules of such foreign exchange ensure active trading of listed stocks. If such stock is traded on such a qualified exchange or other market, such stock generally will be "regularly traded" for any calendar year during which such stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter.

A U.S. Holder that makes a Mark-to-Market Election with respect to its Common Shares generally will not be subject to the rules of Section 1291 of the Code discussed above with respect to such Common Shares. However, if a U.S. Holder does not make a Mark-to-Market Election beginning in the first tax year of such U.S. Holder's holding period for the Common Shares or such U.S. Holder has not made a timely QEF Election, the rules of Section 1291 of the Code discussed above will apply to certain dispositions of, and distributions on, the Common Shares.

Any Mark-to-Market Election made by a U.S. Holder for the Common Shares will also apply to such U.S. Holder's Rights Shares. As a result, if a Mark-to-Market Election has been made by a U.S. Holder with respect to Common Shares, any Rights Shares received will automatically be marked-to-market in the year of exercise. Because a U.S. Holder's holding period for Rights Shares includes the period during which such U.S. Holder held the Rights, a U.S. Holder will be treated as making a Mark-to-Market Election with respect to its Rights Shares after the beginning of such U.S. Holder's holding period for the Rights Shares unless the Rights Shares are acquired in the same tax year as the year in which the U.S. Holder received its Rights. Consequently, the default rules under Section 1291 described above generally will apply to the mark-to-market gain realized in the tax year in which Rights Shares are received. However, the general mark-to-market rules will apply to subsequent tax years.

A U.S. Holder that makes a Mark-to-Market Election will include in ordinary income, for each tax year in which the Company is a PFIC, an amount equal to the excess, if any, of (a) the fair market value of the Common Shares and any Rights Shares, as of the close of such tax year over (b) such U.S. Holder's tax basis in the Common Shares and any Rights Shares. A U.S. Holder that makes a Mark-to-Market Election will be allowed a deduction in an amount equal to the excess, if any, of (i) such U.S. Holder's adjusted tax basis in the Common Shares and any Rights Shares, over (ii) the fair market value of such Common Shares and any Rights Shares (but only to the extent of the net amount of previously included income as a result of the Mark-to-Market Election for prior tax years).

A U.S. Holder that makes a Mark-to-Market Election generally also will adjust such U.S. Holder's tax basis in the Common Shares and Rights Shares to reflect the amount included in gross income or allowed as a deduction because of such Mark-to-Market Election. In addition, upon a sale or other taxable disposition of Common Shares and Rights Shares, a U.S. Holder that makes a Mark-to-Market Election will recognize ordinary income or ordinary loss (not to exceed the excess, if any, of (a) the amount included in ordinary income because of such Mark-to- Market Election for prior tax years over (b) the amount allowed as a deduction because of such Mark-to-Market Election for prior tax years).

---

- 42 -

A U.S. Holder makes a Mark-to-Market Election by attaching a completed IRS Form 8621 to a timely filed U.S. federal income tax return. A Mark-to-Market Election applies to the tax year in which such Mark-to-Market Election is made and to each subsequent tax year, unless the Common Shares and Rights Shares cease to be "marketable stock" or the IRS consents to revocation of such election. Each U.S. Holder should consult its own tax advisors regarding the availability of, and procedure for making, a Mark-to-Market Election.

Although a U.S. Holder may be eligible to make a Mark-to-Market Election with respect to the Common Shares and Rights Shares, no such election may be made with respect to the stock of any Subsidiary PFIC that a U.S. Holder is treated as owning because such stock is not marketable. Hence, the Mark-to-Market Election will not be effective to eliminate the application of the default rules of Section 1291 of the Code described above with respect to deemed dispositions of Subsidiary PFIC stock or distributions from a Subsidiary PFIC.

Other PFIC Rules

Under Section 1291(f) of the Code, the IRS has issued proposed Treasury Regulations that, subject to certain exceptions, would cause a U.S. Holder that had not made a timely QEF Election to recognize gain (but not loss) upon certain transfers of Common Shares and Rights Shares that would otherwise be tax-deferred (e.g., gifts and exchanges pursuant to corporate reorganizations). However, the specific U.S. federal income tax consequences to a U.S. Holder may vary based on the manner in which Common Shares, Rights or Rights Shares are transferred.

Certain additional adverse rules will apply with respect to a U.S. Holder if the Company is a PFIC, regardless of whether such U.S. Holder makes a QEF Election. For example under Section 1298(b)(6) of the Code, a U.S. Holder that uses Common Shares, Rights or Rights Shares as security for a loan will, except as may be provided in Treasury Regulations, be treated as having made a taxable disposition of such Common Shares, Rights or Rights Shares.

In addition, a U.S. Holder who acquires Common Shares, Rights or Rights Shares from a decedent will not receive a "step up" in tax basis of such Common Shares, Rights or Rights Shares to fair market value.

Special rules also apply to the amount of foreign tax credit that a U.S. Holder may claim on a distribution from a PFIC. Subject to such special rules, foreign taxes paid with respect to any distribution in respect of stock in a PFIC are generally eligible for the foreign tax credit. The rules relating to distributions by a PFIC and their eligibility for the foreign tax credit are complicated, and a U.S. Holder should consult with their own tax advisors regarding the availability of the foreign tax credit with respect to distributions by a PFIC.

The PFIC rules are complex, and each U.S. Holder should consult its own tax advisors regarding the PFIC rules and how the PFIC rules may affect the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares, Rights and Rights Shares.

Taxation of Common Shares

The following discussion is subject in its entirety to the rules described above under the heading "Passive Foreign Investment Corporation Rules".

Taxation of Distributions

A U.S. Holder that receives a distribution, including a constructive distribution, with respect to a Common Share will be required to include the amount of such distribution in gross income as a dividend (without reduction for any non-U.S. income tax withheld from such distribution) to the extent of the current or accumulated "earnings and profits" of the Company, as computed for U.S. federal income tax purposes. To the extent that a distribution exceeds the current and accumulated "earnings and profits" of the Company, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder's tax basis in the Common Shares and thereafter as gain from the sale or exchange of such Common Shares (see "Taxation of Common Shares – Sale or Other Taxable Disposition of Common Shares" below). However, the Company may not maintain the calculations of earnings and profits in accordance with U.S. federal income tax principles, and each U.S. Holder should therefore assume that any distribution by the Company with respect to the Common Shares will constitute ordinary dividend income. Dividends received on Common Shares generally will not constitute qualified dividend income eligible for the "dividends received deduction". Subject to applicable limitations and provided the Company is eligible for the benefits of the Canada-U.S. Tax Convention, dividends paid by the Company to non-corporate U.S. Holders, including individuals, generally will be eligible for the preferential tax rates applicable to long-term capital gains for dividends, provided certain holding period and other conditions are satisfied, including that the Company not be classified as a PFIC in the tax year of distribution or in the preceding tax year. The dividend rules are complex, and each U.S. Holder should consult its own tax advisors regarding the application of such rules.

---

- 43 -

Sale or Other Taxable Disposition of Common Shares

A U.S. Holder will recognize gain or loss on the sale or other taxable disposition of Common Shares in an amount equal to the difference, if any, between (a) the amount of cash plus the fair market value of any property received and (b) such U.S. Holder's tax basis in such Common Shares sold or otherwise disposed of. Any such gain or loss generally will be capital gain or loss, which will be long-term capital gain or loss if, at the time of the sale or other disposition, such Common Shares are held for more than one year.

Subject to the PFIC rules discussed above, preferential tax rates apply to long-term capital gains of a U.S. Holder that is an individual, estate, or trust. There are currently no preferential tax rates for long-term capital gains of a U.S. Holder that is a corporation. Deductions for capital losses are subject to significant limitations under the Code.

Additional Considerations

Receipt of Foreign Currency

The amount of any distribution paid to a U.S. Holder in foreign currency, or on the receipt, exercise, termination or disposition of Rights and the ownership and disposition of Common Shares, generally will be equal to the U.S. dollar value of such foreign currency based on the exchange rate applicable on the date of receipt (regardless of whether such foreign currency is converted into U.S. dollars at that time). A U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Any U.S. Holder who converts or otherwise disposes of the foreign currency after the date of receipt may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes. Different rules apply to U.S. Holders who use the accrual method of tax accounting. Each U.S. Holder should consult its own U.S. tax advisors regarding the U.S. federal income tax consequences of receiving, owning, and disposing of foreign currency.

Foreign Tax Credit

Subject to the PFIC rules discussed above, a U.S. Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on the Common Shares generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid. Generally, a credit will reduce a U.S. Holder's U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder's income subject to U.S. federal income tax. This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a year.

---

- 44 -

Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holder's U.S. federal income tax liability that such U.S. Holder's "foreign source" taxable income bears to such U.S. Holder's worldwide taxable income. In applying this limitation, a U.S. Holder's various items of income and deduction must be classified, under complex rules, as either "foreign source" or "U.S. source". Generally, dividends paid by a foreign corporation should be treated as foreign source for this purpose, and gains recognized on the sale of stock of a foreign corporation by a U.S. Holder should be treated as U.S. source for this purpose, except as otherwise provided in an applicable income tax treaty, and if an election is properly made under the Code. However, the amount of a distribution with respect to the Common Shares that is treated as a "dividend" may be lower for U.S. federal income tax purposes than it is for Canadian federal income tax purposes, resulting in a reduced foreign tax credit allowance to a U.S. Holder. In addition, this limitation is calculated separately with respect to specific categories of income. The foreign tax credit rules are complex, and each U.S. Holder should consult its own U.S. tax advisors regarding the foreign tax credit rules.

Additional Tax on Passive Income

Certain U.S. Holders that are individuals, estates or trusts (other than trusts that are exempt from tax) will be subject to a 3.8% tax on all or a portion of their "net investment income," which includes dividends on the Common Shares, and net gains from the disposition of the Rights or Common Shares. Further, excess distributions treated as dividends, gains treated as excess distributions, and mark-to-market inclusions and deductions are all included in the calculation of net investment income.

Treasury Regulations provide, subject to the election described in the following paragraph, that solely for purposes of this additional tax, that distributions of previously taxed income will be treated as dividends and included in net investment income subject to the additional 3.8% tax. Additionally, to determine the amount of any capital gain from the sale or other taxable disposition of Rights or Common Shares that will be subject to the additional tax on net investment income, a U.S. Holder who has made a QEF Election will be required to recalculate its basis in the Common Shares excluding QEF basis adjustments.

Alternatively, a U.S. Holder may make an election which will be effective with respect to all interests in controlled foreign corporations and QEFs held in that year or acquired in future years. Under this election, a U.S. Holder pays the additional 3.8% tax on QEF income inclusions and on gains calculated after giving effect to related tax basis adjustments. U.S. Holders that are individuals, estates or trusts should consult their own tax advisors regarding the applicability of this tax to any of their income or gains in respect of the Rights and Common Shares.

Backup Withholding and Information Reporting

Under U.S. federal income tax law and Treasury Regulations, certain categories of U.S. Holders must file information returns with respect to their investment in, or involvement in, a foreign corporation. For example, U.S. return disclosure obligations (and related penalties) are imposed on individuals who are U.S. Holders that hold certain specified foreign financial assets in excess of certain threshold amounts. The definition of specified foreign financial assets includes not only financial accounts maintained in foreign financial institutions, but also, unless held in accounts maintained by certain financial institutions, any stock or security issued by a non-U.S. person, any financial instrument or contract held for investment that has an issuer or counterparty other than a U.S. person and any interest in a foreign entity. U. S. Holders may be subject to these reporting requirements unless their Rights or Common Shares are held in an account at certain financial institutions. Penalties for failure to file certain of these information returns are substantial. U.S. Holders should consult with their own tax advisors regarding the requirements of filing information returns.

---

- 45 -

Payments made within the U.S. or by a U.S. payor or U.S. middleman, of dividends on Common Shares, and proceeds arising from the sale or other taxable disposition of, Rights or Common Shares will generally be subject to information reporting and backup withholding tax, at the rate of 28%, if a U.S. Holder (a) fails to furnish such U.S. Holder's correct U.S. taxpayer identification number (generally on Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding tax. However, certain exempt persons generally are excluded from these information reporting and backup withholding rules. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a U.S. Holder's U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner.

The discussion of reporting requirements set forth above is not intended to constitute an exhaustive description of all reporting requirements that may apply to a U.S. Holder. A failure to satisfy certain reporting requirements may result in an extension of the time period during which the IRS can assess a tax, and under certain circumstances, such an extension may apply to assessments of amounts unrelated to any unsatisfied reporting requirement. Each U.S. Holder should consult its own tax advisors regarding the information reporting and backup withholding rules.

ELIGIBILITY FOR INVESTMENT

In the opinion of Thorsteinssons LLP, special Canadian tax counsel to the Company, based on the provisions of the Tax Act and the Regulations in effect on the date hereof, provided the Common Shares are listed on a "designated stock exchange" as defined in the Tax Act (which includes the TSX) at the particular time, the Rights and the Common Shares issued on the exercise of such Rights will, at that particular time, be qualified investments under the Tax Act for a trust governed by a registered retirement savings plan ("RRSP"), a registered retirement income fund ("RRIF"), a deferred profit sharing plan, a registered education savings plan and a tax-free savings account ("TFSA") (each, a "Registered Plan"), provided, in the case of Rights, the Company deals at arm's length for the purposes of the Tax Act with each person who is an annuitant, a beneficiary, an employer, or a subscriber under, or a holder of, the Registered Plan.

Notwithstanding that the Rights and the Common Shares issuable upon exercise of the Rights may be qualified investments as described above, the holder of a TFSA or the annuitant under a RRSP or RRIF that holds Rights or Common Shares will be subject to a penalty tax if such Rights or Common Shares are a "prohibited investment" for the purposes of the Tax Act. The Rights and the Common Shares will be a "prohibited investment" if the holder of a TFSA or the annuitant of a RRSP or RRIF, as the case may be: (i) does not deal at arm's length with the Company for the purposes of the Tax Act; or (ii) has a "significant interest" (within the meaning of the Tax Act) in the Company.

Prospective investors who intend to hold Rights or Common Shares in a TFSA, RRSP or RRIF should consult their own tax advisors to ensure the Common Shares and Rights would not be a prohibited investment in their particular circumstances.

---

- 46 -

AUDITOR, TRANSFER AGENT AND REGISTRAR

The Company's auditor is PricewaterhouseCoopers LLP, Chartered Professional Accountants, of Suite 700, 250 Howe Street, Vancouver, British Columbia, V6C 3S7.

The registrar and transfer agent for the Company's common shares is Computershare Investor Services Inc. at its principal offices in Vancouver, British Columbia and Toronto, Ontario.

PricewaterhouseCoopers LLP has advised the Company that it is independent within the meaning of the Rules of Professional Conduct of the Institute of Chartered Professional Accountants of British Columbia.

ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS

The following individuals reside outside of Canada and have appointed the agent listed below for service of process in Canada:

---

- 47 -

(1)	The "Solwara 1 and 12 Report" and the "Updated CCZ Report" have the meaning given under "Definitions" in the AIF.

Purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person or company that is incorporated, continued or otherwise organized under the laws of a foreign jurisdiction, or resides outside of Canada, even if the party has appointed an agent for service of process.

INTEREST OF EXPERTS

Thorsteinssons LLP has prepared the opinion and disclosure contained in this prospectus under the headings "Certain Canadian Federal Income Tax Considerations" and "Eligibility of Investment". As of the date hereof, the partners and associates of Thorsteinssons LLP, as a group, beneficially own, directly or indirectly, less than one percent (1%) of the outstanding Common Shares.

See also "Interests of Experts" in the AIF.

PURCHASERS' STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION

Securities legislation in certain of the provinces of Canada provides purchasers with the right to withdraw from an agreement to purchase securities, which right includes the right to withdraw from an agreement to subscribe for the Common Shares underlying the Rights. This right may only be exercised within two business days after receipt or deemed receipt of a prospectus and any amendment thereto. In several of the provinces, the securities legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, revisions of the price or damages if the prospectus and any amendment thereto contains a misrepresentation or is not delivered to the purchaser, provided that the remedies for rescission, revision of the price or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province for the particulars of these rights or consult with a legal adviser.

---

C-1

CERTIFICATE OF NAUTILUS

Dated: February 10, 2016

This short form prospectus, together with the documents incorporated herein by reference, constitutes full, true and plain disclosure of all material facts relating to the securities offered by this short form prospectus as required by the securities legislation of all provinces of Canada other than Quebec.

(Signed)	MICHAEL JOHNSTON	(Signed)	SHONTEL NORGATE
	Chief Executive Officer		Chief Financial Officer

On behalf of the Board of Directors

(Signed)	CYNTHIA THOMAS	(Signed)	RUSSELL DEBNEY
	DIRECTOR		DIRECTOR

---

PART II

INFORMATION NOT REQUIRED TO BE SENT TO SHAREHOLDERS

EXHIBITS

Exhibit
Number	Description
2.1	The Registrant’s annual information form dated March 30, 2015 for the year ended December 31, 2014.
2.2	The Registrant’s audited consolidated financial statements for the years ended December 31, 2014 and December 31, 2013, together with the notes thereto and the auditors' report thereon.
2.3	The Registrant’s management's discussion and analysis for the years ended December 31, 2014 and December 31, 2013.
2.4	The Registrant’s unaudited consolidated financial statements for the three and nine month periods ended September 30, 2015 and September 30, 2014, together with the notes thereto.
2.5	The Registrant’s management's discussion and analysis for the nine months ended September 30, 2015, filed on SEDAR on November 9, 2015.
2.6	The Registrant’s material change report dated December 16, 2015 and filed on SEDAR on December 16, 2015, with respect to entering into a new agreement with Tongling Nonferrous Metals Group Co. Ltd. for the sale of the product extracted from the Registrant’s Solwara 1 deposit.
2.7	The Registrant’s material change report dated May 7, 2015 and filed on SEDAR on May 7, 2015, with respect to a change of directors of the Registrant.
2.8	The Registrant’s material change report dated February 4, 2015, with respect to the pre- payment of the charterer's guarantee relating to the construction of the production support vessel.
2.9	The Registrant’s management information circular dated May 7, 2015, prepared in connection with the Registrant’s annual meeting of shareholders held on June 16, 2015.
3.1	Consent of PricewaterhouseCoopers LLP
3.2	Consent of Thorsteinssons LLP
3.3	Consent of Ian Lipton.
3.4	Consent of Peter Munro.
3.5	Consent of Phil Jankowski.
3.6	Consent of James Jonathan Lowe.
3.7	Consent of Matthew Nimmo.

II-1

---

3.8	Consent of Charles Morgan.
3.9	Consent of Davey Banning.
4.1	Powers of Attorney (included on the signature page of this Registration Statement).

II-2

---

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-7 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Brisbane, Queensland, Australia, on February 10, 2016.

 

NAUTILUS MINERALS INC.

	By:	/s/ Michael Johnston
		Name:	Michael Johnston
		Title:	Chief Executive Officer

 

 

II-3

---

POWERS OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Michael Johnston and Shontel Norgate, and each of them, either of whom may act without the joinder of the other, the true and lawful attorney-in-fact and agent of the undersigned, with full power of substitution and resubstitution, to execute in the name, place and stead of the undersigned, in any and all such capacities, any and all amendments (including post-effective amendments) to this Registration Statement, and all instruments necessary or in connection therewith, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the United States Securities and Exchange Commission, and hereby grants to each such attorney-in-fact and agent, each acting alone, full power and authority to do and perform in the name and on behalf of the undersigned each and every act and thing whatsoever necessary or advisable to be done, as fully and to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by or on behalf of the following persons in the capacities indicated, on February 10, 2016.

Signature		Title
/s/ Michael Johnston		President and Chief Executive Officer
Michael Johnston		(Principal Executive Officer)
/s/ Shontel Norgate		Chief Financial Officer
Shontel Norgate		(Principal Financial and Principal Accounting Officer)
/s/ Geoffrey Loudon		Director and Chair
Geoffrey Loudon
/s/ Russell Debney		Director
Russell Debney
/s/ Cynthia Thomas		Director
Cynthia Thomas
/s/ Mohammed Al Barwani		Director
Dr. Mohammed Al Barwani
/s/ Mark Horn		Director
Mark Horn
/s/ Tariq Al Barwani		Director
Tariq Al Barwani

II-4

---

AUTHORIZED REPRESENTATIVE

Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, as amended, the undersigned certifies that it is the duly authorized United States representative of the Registrant and has duly signed this Registration Statement in the City of Newark, State of Delaware, on  February 10, 2016.

PUGLISI AND ASSOCIATES

	By:	/s/ Donald Puglisi
		Name:	Donald Puglisi
		Title:	President

II-5

---

INDEX TO EXHIBITS

Exhibit
Number	Description
2.1	The Registrant’s annual information form dated March 30, 2015 for the year ended December 31, 2014.
2.2	The Registrant’s audited consolidated financial statements for the years ended December 31, 2014 and December 31, 2013, together with the notes thereto and the auditors' report thereon.
2.3	The Registrant’s management's discussion and analysis for the years ended December 31, 2014 and December 31, 2013.
2.4	The Registrant’s unaudited consolidated financial statements for the three and nine month periods ended September 30, 2015 and September 30, 2014, together with the notes thereto.
2.5	The Registrant’s management's discussion and analysis for the nine months ended September 30, 2015, filed on SEDAR on November 9, 2015.
2.6	The Registrant’s material change report dated December 16, 2015 and filed on SEDAR on December 16, 2015, with respect to entering into a new agreement with Tongling Nonferrous Metals Group Co. Ltd. for the sale of the product extracted from the Registrant’s Solwara 1 deposit.
2.7	The Registrant’s material change report dated May 7, 2015 and filed on SEDAR on May 7, 2015, with respect to a change of directors of the Registrant.
2.8	The Registrant’s material change report dated February 4, 2015, with respect to the pre- payment of the charterer's guarantee relating to the construction of the production support vessel.
2.9	The Registrant’s management information circular dated May 7, 2015, prepared in connection with the Registrant’s annual meeting of shareholders held on June 16, 2015.
3.1	Consent of PricewaterhouseCoopers LLP
3.2	Consent of Thorsteinssons LLP
3.3	Consent of Ian Lipton.
3.4	Consent of Peter Munro.
3.5	Consent of Phil Jankowski.
3.6	Consent of James Jonathan Lowe.
3.7	Consent of Matthew Nimmo.

3.8	Consent of Charles Morgan.
3.9	Consent of Davey Banning.
4.1	Powers of Attorney (included on the signature page of this Registration Statement).

---

---

 

 

NAUTILUS MINERALS INC.

 

 

ANNUAL INFORMATION FORM
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014

 

 

March 30, 2015

 

 

Suite 1400, 400 Burrard Street
Vancouver, British Columbia
V6C 3A6

 

 

---

NAUTILUS MINERALS INC.

ANNUAL INFORMATION FORM FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2014

PAGE

CONTENTS

INTRODUCTORY NOTES	4
NOMENCLATURE	4
TECHNICAL AND SCIENTIFIC INFORMATION	4
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS	4
CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION	5
CAUTIONARY NOTE TO UNITED STATES INVESTORS	6
DOCUMENTS INCORPORATED BY REFERENCE	7
DEFINITIONS	8
CORPORATE STRUCTURE	11
NAME, ADDRESS AND INCORPORATION	11
INTERCORPORATE RELATIONSHIPS	11
GENERAL DEVELOPMENT OF THE BUSINESS OF THE COMPANY	13
THREE YEAR HISTORY	13
2012	13
2013	16
2014	18
Recent Developments in 2015	19
OVERVIEW OF BUSINESS	21
General	21
Summary	21
Nautilus' Strategy	21
Development Plan for Bismarck Sea Prospects	22
Business Strengths and Competitive Advantages	23
New Products	24
Products, Services and Components	25
Intangible Properties	30
Cycles	31
Economic Dependence	32
Changes to Contracts	32
Environmental Protection	32
Employees	32
Foreign Operations	33
Social and Environmental Policies	33
MINERAL PROJECTS	37
Solwara Project	37
Summary of the Solwara 1 and 12 Report	37
Clarion-Clipperton Zone Project	44
Summary of the Updated CCZ Report	44
RISK FACTORS	49

Nautilus Minerals Inc – Annual Information Form 2014

Page 2

---

Exploration, Development and Operating Risks	49
Risks Relating to the Mining Industry	56
Risks Relating to our Common Shares and the Trading Market	60
DIVIDENDS	62
DESCRIPTION OF CAPITAL STRUCTURE	63
MARKET FOR SECURITIES	64
ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER	65
DIRECTORS AND OFFICERS	66
DIRECTORS AND OFFICERS	66
CONFLICTS OF INTEREST	71
LEGAL PROCEEDINGS AND REGULATORY ACTIONS	72
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS	73
TRANSFER AGENTS AND REGISTRARS	74
MATERIAL CONTRACTS	75
INTERESTS OF EXPERTS	76
AUDIT COMMITTEE	77
ADDITIONAL INFORMATION	80
SCHEDULE A	I

Nautilus Minerals Inc – Annual Information Form 2014

Page 3

---

INTRODUCTORY NOTES

NOMENCLATURE

In this Annual Information Form, unless the context otherwise dictates, “we”, “Nautilus”, “Nautilus Minerals” or the “Company” refers to Nautilus Minerals Inc. and its subsidiaries.

TECHNICAL AND SCIENTIFIC INFORMATION

All information of a scientific or technical nature in this AIF has been reviewed and approved by James Jonathan Lowe, Vice President Strategic Development and Exploration of the Company and a qualified person under NI 43-101.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This document includes “forward-looking statements” or "forward looking information" (hereinafter referred to together as "forward-looking statements") under applicable securities laws, which include all statements other than statements of historical fact.

Forward-looking statements include, but are not limited to, statements with respect to the future price of copper, gold and other metals; the estimation of mineral resources; the realization of mineral resource estimates; plans for establishing or expanding mineral resource estimates on the Projects; the timing and amount of estimated future production; the construction and delivery of the PSV; the fulfillment of the obligations under the Tongling sales agreement and the timing and sustainability of such arrangements; costs of production; capital expenditures; costs and timing of the development of the Seafloor Production System; the Company’s SMS prospects (including Solwara 1) and new deposits; success of exploration and development activities; permitting time lines; currency fluctuations; requirements for additional capital; government regulation of exploration operations; the Company's financial position; business strategy; plans and objectives of management for future operations; the design and performance of the PSV and SPTs; and the procurement of the PSV. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the risk of failure to obtain required equity or debt funding; the risk that material assumptions listed in the paragraph below will not be borne out; changes in project parameters as plans continue to be refined; any additional permitting or licensing requirements associated with any modifications to the scope of the Solwara 1 Project; future prices of copper, gold and other metals being lower than expected; the over-arching risk that the Company will not commence production of mineralized material; possible variations in resources, grade or recovery rates; the risk of failure to conclude the investigation into the cyber-attack, the inability to reach agreement with MAC as to the deposit under the vessel charter agreement, the insolvency of MAC or the applicable shipyard and other events which may cause a delay to the delivery of the PSV; the risk that the obligations under the Tongling sales agreement are not fulfilled; late delivery of the PSV and SPTs or other equipment; variations in the cost of the PSV and SPTs or other equipment; variations in exchange rates; the failure to obtain regulatory approval for financings; changes in the cost of fuel and other inflationary factors; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities. Other risks are discussed in this document under "Risk Factors".

Nautilus Minerals Inc – Annual Information Form 2014

Page 4

---

Such forward-looking statements are current only as at the date of this AIF and are based on numerous material assumptions (that management believes were reasonable at the time they are made) regarding the Company's present and future business strategies and the environment in which the Company will operate in the future, including the Company's continued compliance with regulatory requirements, the proposed mine plan and the estimated cost and availability of funding for the continued exploration of the Company's tenements. The Company has also assumed that market fundamentals will result in sustained copper and gold demand and prices; that the proposed development of its mineral projects will be viable operationally and economically and proceed as expected; and that any additional financing needed will be available on reasonable terms. With respect to the arrangement with MAC, the Company is assuming that the parties will observe their obligations, that the investigation into the cyber-attack will reach a timely conclusion and that MAC and the Company can agree how to proceed in relation to the payment of the deposit under the vessel charter agreement. Other assumptions are discussed throughout this AIF and, in particular, under "Risk Factors".

Although the Company has attempted to identify important factors that could cause actual results to differ materially, the assumptions made may not prove to be correct or there may be unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Except as may be required by applicable laws, the Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

The reader is cautioned not to place undue reliance on forward-looking statements.

CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION

This Annual Information Form contains references to United States dollars, Canadian dollars, Great Britain pounds and Australian dollars. All dollar amounts referenced, unless otherwise indicated, are expressed in US dollars which are referred to as “US$”, with Canadian dollars referred to as "C$" or “Cdn$”, Great Britain pounds referred to as “GBP” and Australian dollars referred to as “A$”.

The closing, high, low and average exchange rates for the US dollar in terms of Canadian dollars for the three years ended December 31, 2014, 2013 and 2012, as reported by the Bank of Canada, were as follows:

_________________

(1)	Calculated as an average of the daily noon rates for the period.

Nautilus Minerals Inc – Annual Information Form 2014

Page 5

---

On March 30, 2015, the Bank of Canada noon rate of exchange was Cdn$1.00 = US$0.7881 or US$1.00 = Cdn$1.2689.

The closing, high, low and average exchange rates for the US dollar in terms of Great Britain pounds for the three years ended December 31, 2014, 2013 and 2012 as reported by the Bank of Canada, were as follows:

_________________

(1)	Calculated as an average of the daily noon rates for the period.

On March 30, 2015, the Bank of Canada noon rate of exchange was US$1.00 = GBP0.6762 or GBP1.00 = US$1.4789.

The closing, high, low and average exchange rates for the US dollar in terms of Australian dollars for the three years ended December 31, 2014, 2013 and 2012, as reported by the Bank of Canada, were as follows:

_________________

(1)	Calculated as an average of the daily noon rates for the period.

On March 30, 2015, the Bank of Canada noon rate of exchange was US$1.00 = A$1.3083 or A$1.00 = US$0.7644.

CAUTIONARY NOTE TO UNITED STATES INVESTORS

This AIF has been prepared in accordance with the requirements of securities laws in effect in Canada, which differ from the requirements of United States securities laws. In Canada, an issuer is required to provide technical information with respect to mineralization, including reserves and resources, if any, on its mineral exploration properties in accordance with Canadian requirements, which differ significantly from the requirements of the United States Securities and Exchange Commission (the "SEC") applicable to registration statements and reports filed by United States companies pursuant to the United States Securities Act of 1933, as amended, or the United States Securities Exchange Act of 1934, as amended (the "Exchange Act"). As such, information contained or incorporated by reference in this AIF concerning descriptions of mineralization under Canadian standards may not be comparable to similar information made public by United States companies subject to the reporting and disclosure requirements of the SEC.

Nautilus Minerals Inc – Annual Information Form 2014

Page 6

---

Mineral resource estimates included in this AIF and in any document incorporated by reference herein have been, or will be, prepared in accordance with NI 43-101 and the Canadian Institute of Mining and Metallurgy Classification System, as required by Canadian securities regulatory authorities. In particular, this AIF and any document incorporated by reference herein include or may include the terms "measured mineral resource", "indicated mineral resource" and "inferred mineral resource." While these terms are recognized and required by Canadian regulations (under NI 43-101), the SEC does not recognize them. In addition, this AIF or a document incorporated by reference in this AIF may include disclosure of "contained ounces" of mineralization. Although such disclosure is permitted under Canadian regulations, the SEC only permits issuers to report mineralization as in place tonnage and grade without reference to unit measures.

The definitions of proven and probable reserves used in NI 43-101 differ from the definitions in SEC Industry Guide 7. Under SEC Industry Guide 7 (under the Exchange Act), as interpreted by the staff of the SEC, mineralization may not be classified as a "reserve" for United States reporting purposes unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reserves under the SEC standards.

United States investors are cautioned not to assume that any part or all of the mineral deposits identified as a "measured mineral resource", "indicated mineral resource" or "inferred mineral resource" will ever be converted to reserves as defined in NI 43-101 or SEC Industry Guide 7. Further, "inferred mineral resources" have a great amount of uncertainty as to their existence and economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of "inferred mineral resources" may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that part or all of an inferred mineral resource exists, or is economically or legally mineable.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents of Nautilus are specifically incorporated by reference into, and form an integral part of, this Annual Information Form:

	1.	the technical report dated March 23, 2012 entitled "Mineral Resource Estimate, Solwara Project, Bismarck Sea, PNG" (the "Solwara 1 and 12 Report") prepared for the Company by Ian Lipton of Golder, along with the accompanying certificates of Qualified Persons (as defined in NI 43- 101); and
	2.	the technical report dated March 20, 2013 entitled "Updated NI 43-101 Technical Report, Clarion- Clipperton Zone Project, Pacific Ocean", (the "Updated CCZ Report") prepared for the Company by Matthew Nimmo of Golder, Davey Banning, an independent consulting geologist and Charles Morgan of Planning Solutions Inc., along with the accompanying certificates of Qualified Persons (as defined in NI 43-101).

Nautilus Minerals Inc – Annual Information Form 2014

Page 7

---

DEFINITIONS

“Ag”	Silver
“AIF” or “Annual Information Form”	this Annual Information Form of the Company in respect of the year ended December 31, 2014
“Anglo American”	Anglo American plc
“Au”	Gold
“A$” or “AUD”	Australian dollars, the lawful currency of Australia
“Board” or “Directors”	the directors of the Company as at the date of this document
“C$” or “CDN$”	Canadian dollars, the lawful currency of Canada
CEPA	Conservation Environmental Protection Agency of PNG, formally known as the DEC
“Common Shares”	the common shares without par value in the capital of Nautilus
“Cost Study”	The independent definition and cost study concerning the Company's Solwara 1 project prepared in accordance with NI 43-101 entitled "Offshore Production System Definition and Cost Study", dated June 21, 2010 and prepared by John Blackburn, Erich Heymann and Phil Jankowski of SRK; Peter Chwastiak formerly of Clough Limited; Andrew See of Ausenco Services Pty Ltd; Peter Munro of Mineralurgy Pty Ltd; and Ian Lipton of Golder Associates Pty Ltd, which cost study was filed on SEDAR on June 23, 2010 and is summarized in the Solwara 1 and 12 Report and referenced under the heading "Risk Factors – Cost Study"
“Cu”	Copper
“CCZ”	Clarion Clipperton Zone
“DEC”	Department of Environment and Conservation of Papua New Guinea
"DWP"	Dewatering plant
“EEZ”	Exclusive Economic Zone
“EIS”	Environmental Impact Statement
“EL”	Exploration Licences
“GE Hydril”	Hydril USA Distribution LLC
“GMC”	General Marine Contractors LLC
“Golder”	Golder Associates Pty Ltd
“Harren”	Harren & Partner Reederei GmbH & Co KG Holding and its affiliates
“ISA”	International Seabed Authority
“Joint Venture Agreement”	The agreement dated December 11, 2014 among Nautilus, a subsidiary of Nautilus and the State Nominee, in respect of the Solwara 1 Project
“MAC”	Marine Assets Corporation
“Metalloinvest”	Metalloinvest Holding (Cyprus) Limited

Nautilus Minerals Inc – Annual Information Form 2014

Page 8

---

"MB Holding"	MB Holding Company LLC, an oil and gas, mineral mining and processing group based in Muscat, Oman
"Mining Lease" or "ML 154"	The mining lease granted to the Company by the State of PNG in January 2011 in regards to the Solwara 1 Project for a period of 20 years
“ML”	Mining Lease
“Nautilus” or “Company”	Nautilus Minerals Inc., a company existing under the Business Corporations Act (British Columbia) and incorporated in British Columbia, Canada; references to "we", "our" and similar expressions are to Nautilus Minerals Inc.
“NI 43-101”	National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators
“NMN”	Nautilus Minerals Niugini Limited (formerly Nautilus Minerals Corporation Limited)
“NMO”	Nautilus Minerals Oceania Limited
"Petromin"	Petromin PNG Holdings Limited, a wholly owned company of the State, and which holds the State’s mining and petroleum assets
“Placer Dome”	Placer Dome Exploration Inc. and Placer Dome Oceania Limited (each being subsidiaries of Barrick Gold Corporation)
“PNG” or “the State of PNG” or   “the State”	Independent State of Papua New Guinea
"PNG Equity Agreement"	The agreement between the State and the Company dated April 24, 2014, as amended on October 31, 2014, under which the State has taken an initial 15% interest in the Solwara 1 Project
“PNG Licences”	the exploration licences and ML granted in the PNG Territory and (as the context may require) the further exploration licences applied for in the PNG Territory
“PNG Territory”	means sub-sea, seafloor and sub-seafloor within the coast waters, territorial waters, exclusive economic zone and continental shelf of PNG
“Projects” or “Tenements”	collectively, the tenements described in the Technical Report, the Solwara 1 and 12 Report and the Updated CCZ Report
"PSV"	Production Support Vessel
“RALS”	riser and lifting system
“RTO”	the series of transactions undertaken by the Company in May 2006 whereby it disposed of substantially all of its oil and gas business and assets and acquired NMN and NMO
"Rights Offering"	the offering by the Company, by way of short form prospectus, to raise gross proceeds of C$40,000,000 through the issuance of rights to subscribe for an aggregate of 200,000,000 Common Shares at a subscription price of C$0.20 per Common Share, which closed on June 11, 2013
“ROV”	remotely operated vehicle

Nautilus Minerals Inc – Annual Information Form 2014

Page 9

---

“Seafloor Production System”	the Company's seafloor production system described under "General Development of the Business of the Company – Overview of Business – Products, Services and Components"
“Shipbuilding Contract”	the contract between MAC and Fujian Mawei Shipbuilding Ltd. to design and construct the PSV in accordance with Nautilus' instructions
“SMD”	Soil Machine Dynamics Ltd of Newcastle upon Tyne, UK
“SMS”	seafloor massive sulphide
“Solwara 1" or “Solwara 1 Project”	a prospect within the Mining Lease, as described in this AIF and in the Solwara 1 and 12 Report
“Solwara 12”	a prospect within the exploration licence (EL1374) granted to NMN in the PNG Territory
"Solwara 1 and 12 Report"	the technical report dated March 23, 2012 entitled "Mineral Resource Estimate, Solwara Project, Bismarck Sea, PNG" prepared for the Company by Ian Lipton of Golder, along with the accompanying certificates of Qualified Persons (as defined in NI 43-101)
“SPTs” or "Seafloor Production  Tools"	the seafloor production tools described under "General Development of the Business of the Company – Overview of Business – Products, Services and Components"
“SRK”	SRK Consulting (Australasia) Pty Ltd
"SSLP"	subsea slurry lift pump
"State Equity Option Agreement"	the State Equity Option Agreement dated March 29, 2011 between Nautilus and the State of PNG
"State Nominee"	Eda Kopa (Solwara) Limited, a company incorporated under the laws of PNG, being a subsidiary of Petromin and the nominee of the State of PNG pursuant to the PNG Equity Agreement
“Technical Report”	the technical report dated March 23, 2012 entitled "NI 43-101 Technical Report 2011, PNG, Tonga, Fiji, Solomon Islands, New Zealand, Vanuatu and the ISA" prepared for the Company by Phil Jankowski of SRK, along with the accompanying certificate of Qualified Person (as defined in NI 43-101)
“TOML”	Tonga Offshore Mining Limited, a wholly-owned subsidiary of the Company
"Tongling"	Tongling Nonferrous Metals Group Co. Ltd
“TSX”	the Toronto Stock Exchange
“UK”	the United Kingdom of Great Britain and Northern Ireland
"Updated CCZ Report"	the technical report dated March 20, 2013 entitled "Updated NI 43-101 Technical Report, Clarion-Clipperton Zone Project, Pacific Ocean" prepared for the Company by Matthew Nimmo of Golder, Davey Banning, an independent consulting geologist and Charles Morgan of Planning Solutions Inc., along with the accompanying certificates of Qualified Persons (as defined in NI 43-101)
“US” or “USA”	the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia
“US$” or “USD”	US dollars, the lawful currency of the US

Nautilus Minerals Inc – Annual Information Form 2014

Page 10

---

CORPORATE STRUCTURE

NAME, ADDRESS AND INCORPORATION

Nautilus Minerals Inc. was incorporated under the laws of the Province of British Columbia, Canada, on January 26, 1987 under the name “Premier Gold Resources Inc.” On April 8, 1991, the Company changed its name to “Cryptic Ventures Inc.” The Company continued into the Yukon on November 21, 1996 under “Zen International Resources Ltd.”, continued to Alberta on March 27, 2002 under “Orca Petroleum Inc.” and then continued to British Columbia on April 27, 2006 under “Nautilus Minerals Inc.” where the Company continued under the provisions of the Business Corporations Act (British Columbia).

The Common Shares commenced trading on the TSX Venture Exchange (formerly the Vancouver Stock Exchange) on March 6, 1989 and on August 24, 2007 the Common Shares were listed on the Toronto Stock Exchange. The Common Shares commenced trading on OTCQX International on April 27, 2012.

The Company, as it is currently structured, was formed on May 8, 2006 when the Company completed the RTO. The Company’s principal business prior to the RTO was oil and gas exploration in Bolivia, which business was done through its wholly owned subsidiaries: Zen International Resources Limited, Orca Energy Corp., Orca International Corp., Compania Petrolera Orca S.A and Orca Petroleo S.A.

The Company is a seafloor resource exploration and development company and the first publicly listed company to commercially explore the ocean floor for copper, gold, silver and zinc SMS deposits and for manganese, nickel, copper and cobalt nodule deposits. The Company conducts its operations primarily through its direct and indirect wholly-owned subsidiaries. The Company’s registered and records office is located at 10^th Floor, 595 Howe Street, Vancouver, British Columbia, V6C 2T5 Canada.

INTERCORPORATE RELATIONSHIPS

NMN was organised under the laws of PNG on October 9, 1995. NMN has been reviewing research data on SMS deposits in PNG since 1997, and during 2005/2006 with Placer Dome conducted sampling work on the seafloor of the Bismarck Sea. All activities undertaken to date by the Company in PNG have been undertaken by NMN or other subsidiaries domiciled in PNG. Each of the PNG Licences are held by NMN or other subsidiaries domiciled in PNG and the applications for further exploration licences in PNG have been made in the name of NMN and the other subsidiaries domiciled in PNG.

NMO was incorporated under the laws of Vanuatu on June 17, 2002. NMO currently acts as a holding company for the various subsidiaries shown in the Company's structure below. These various subsidiaries have made applications and in some instances been granted prospecting licences within the 1887 Proclamation Area of the Kingdom of Tonga, Solomon Islands, Fiji, Vanuatu and New Zealand.

Nautilus Minerals Pacific Pty Ltd was incorporated in Australia on April 18, 2006 and provides various administrative services to the Company.

Tonga Offshore Mining Limited was incorporated under the laws of Tonga on March 7, 2008 and holds the Company’s exploration licences granted by the ISA in the CCZ.

Nautilus Minerals Inc – Annual Information Form 2014

Page 11

---

The following chart illustrates the Company’s corporate structure, as at the date of this Annual Information Form, listing each of its subsidiaries, together with the jurisdiction of incorporation of each subsidiary and the percentage of voting securities beneficially owned or over which control or direction is exercised by the Company.

Nautilus Minerals Inc – Annual Information Form 2014

Page 12

---

GENERAL DEVELOPMENT OF THE BUSINESS OF THE COMPANY

THREE YEAR HISTORY

2012

Bismarck Exploration Program completed
During Q1 and Q2 of 2012 Nautilus undertook a program of multibeam echo sounding (“MBES”), sub bottom profiling and seismic surveys over the Company’s extensive Bismarck Sea tenement package. The program was undertaken using the vessel MV Duke and was designed to map and test prospective sites within the Company’s large tenement package. The processing of the MBES, profiling and survey data was ongoing throughout quarter two.

Offtake Agreement for Solwara 1
In April 2012 Nautilus signed a binding heads of agreement with Tongling for the sale of product intended to be extracted from Solwara 1.

The agreement provides for the purchase by Tongling of 1.1 million tonnes per annum (subject to +/- 20% variation) of Solwara 1 material for a period of three years on a take or pay basis, commencing upon the first delivery of product from Solwara 1, with an option to agree an extension of the arrangement.

The agreement contemplates that material will be imported into China by Tongling and then processed through its facilities in the city of Tongling alongside the Yangtze River. The purchase price to be paid by Tongling will be based on the quality of the copper concentrate produced.

The agreement includes a mechanism for an early payment of 90% of the price upon loading of the export vessel in PNG. Final payment is based on the recovery of copper, gold and silver reporting to the copper concentrate with deductions for capped logistics and processing costs, smelter treatment and refining charges (TC/RCs), allowances for plant fixed capital recoveries and Tongling’s tolling fee on concentrator plant processing costs. TC/RCs are based on Asian International benchmarks with a premium payable for the achievement of target metal recoveries.

The price payable for all metals will be set by the London Metal Exchange for copper and London Bullion Market Association for silver and gold with the initial payment for all metals based on the average of the month preceding the shipment and final payment on a four month quotational period.

Value may also be realised through a 50%/50% profit sharing scheme based on incremental by-product revenue realised in China, including gold bearing pyrite. Material from the process can be roasted in China to produce gold and sulphuric acid and the remaining calcine may be sold to cement manufacturers or as iron ore fines. With minimal waste Tongling’s process brings significant benefits consistent with Nautilus’ commitment to minimise environmental impacts.

The Company will issue a bank guarantee to Tongling in three stages over nine months, which will not exceed approximately US$11.5 million, as a security for 50% of Tongling’s concentrator investment costs commencing at the first order of major equipment.

Nautilus Minerals Inc – Annual Information Form 2014

Page 13

---

Quoted on OTCQX
In April 2012, the Company began trading on OTCQX International. The quotation is expected to provide greater visibility and superior access to U.S. capital markets, and allow closer engagement with our U.S. investors who will be able to take advantage of the timely financial and trading information provided there.

Dispute Process and Arbitration with the State of PNG
On June 1, 2012 Nautilus announced that it was in dispute with the State of PNG as to the parties’ obligations to complete the State Equity Option Agreement and that it had initiated the dispute resolution process provided for in such agreement. Subsequently Nautilus announced that the State had issued Nautilus with a Notice of Arbitration in relation to the dispute.

Nautilus considered that the State has a contractual obligation to pay an amount of approximately US$23.5 million in respect of costs incurred in the development of the Solwara 1 Project up to January 2011 and to make pro-rata capital contributions in respect of subsequent Project development costs which, at the end of December 2012 totaled approximately US$61.2 million (excluding interest). The State disputed that it was required to meet such obligations at that time. In order to continue the construction of the Seafloor Production System, Nautilus was forced to carry the State's share of Project development costs.

Delay to Vessel Build
On June 1, 2012 Nautilus announced that there may be a delay in the finalisation of funding for the PSV to be used in connection with its Solwara 1 Project and a potential consequential delay to the program for the vessel build.

Nautilus and Harren had been negotiating the terms of third party financing related to the PSV. Harren advised Nautilus that it would no longer be able to contribute the full amount of the equity to the vessel joint venture contemplated by the agreement signed by the parties in April 2011. Nautilus indicated at that time that the change to Harren’s position may delay the finalisation of the terms of the third party funding and result in a consequential delay to the program for the vessel build.

Subsequently, in late August 2012, the shipyard proposed by Harren under the vessel joint venture made an application for insolvency and is undergoing an administration process. The shipyard had been advanced US$12.9 million for the placement of orders for long lead items. The Company has registered a claim with the administrator that has been accepted in full, however indications from the process are that unsecured creditors will likely receive a quota of between 1-3% of their claim. While the quota percentages have not been finalised, the Company has recognised an impairment charge of $12.5 million with respect to the amount prepaid to the shipyard, in line with the preliminary quota percentages. The administration of the shipyard is ongoing.

On November 13, 2012 Nautilus announced that it would discontinue discussions regarding an alternate vessel and funding solutions following the decision to terminate the construction of its Seafloor Production System. See "Equipment Build for Solwara 1 Project" below.

37.7 Million Shares Issued in Private Placement
Nautilus raised approximately C$34 million through a private placement of Common Shares to assist with the continued funding of its Seafloor Production System.

The placement involved the issue of approximately 37.7 million shares to a number of investors at a price of C$0.90 (US$0.91 at the time) per share.

Nautilus Minerals Inc – Annual Information Form 2014

Page 14

---

Existing Nautilus strategic shareholders, MB Holding, Metalloinvest and Anglo American participated in the private placement. MB Holding, through its subsidiary Mawarid Offshore Mining Ltd., subscribed for 20.0 million shares, increasing its stake to 16.9%, Metalloinvest subscribed for approximately 8.3 million shares to maintain its interest in Nautilus at 21% and Anglo American subscribed for approximately 4.4 million shares on the basis that its stake be maintained at 11.1% . Other large investors subscribed for the remaining 5 million shares issued.

Mohammed Al Barwani appointed director
As part of the private placement, MB Holding was granted the right to nominate a director of the Company for as long as it owns 15% or more of the Company's outstanding shares. Its nominee, Dr. Mohammed Al Barwani was appointed as a director following closing of the private placement on September 11, 2012. Dr. Al Barwani's background and experience are described under the heading "Directors and Officers".

NI 43-101 Resource Report for Polymetallic Nodules released
Tonga Offshore Mining Limited, a 100% owned subsidiary of Nautilus Minerals Inc., completed a maiden mineral resource estimate for its Clarion-Clipperton Fracture Zone polymetallic nodule project, located within the Central Pacific Ocean.

An independent technical report was prepared by Golder Associates Pty Ltd in accordance with NI 43-101 which included inferred mineral resources of approximately 410 million wet tonnes at 1.2% Ni, 1.1% Cu, 0.24% Co and 26.9% Mn at an average surface abundance of 9.4 wet kg/m2. Full details of the mineral resource calculations are disclosed in the Updated CCZ Report.

Project Development
Progress continued throughout 2012 on works related to the Solwara 1 Project, however progress was impacted by the Company's decision on November 13, 2012 to terminate the construction of the equipment for the Seafloor Production System to preserve the Company's cash position. See "Equipment Build for Solwara 1 Project" below.

Progress on the development of the SPTs advanced throughout the year. Fabrication progressed with some key sub-assemblies and associated components already delivered. A significant amount of externally sourced components were delivered to SMD including switchboards, transformers, variable frequency drives, submersible electric motors, dredge pumps and suction cutter head.

The LARS lift winches and A-frames were completed and placed in storage, along with the SPT umbilicals and lift wires completed earlier in the year.

Technip USA Inc. progressed development of the RALS until November 13, 2012. The subsea connectors were completed and placed in storage ready for incorporation in the pull-in skids. The surface pump systems were essentially complete when the contract was terminated.

GMC progressed the procurement of the rigid riser system with the 8” and 12” riser pipes delivered to the fabrication yard in Louisiana and the connector forgings were largely completed and ready for machining. Buoyancy manufacture in the UK was completed and the buoyancy and clamps were placed in storage.

Discovery of 2 high grade systems in Tonga
During September 2012, Nautilus staff participated in an 18 day marine scientific research cruise where samples were collected as part of a broader research effort in the NE Lau Basin, which included wholly owned exploration tenements in the territorial waters of the Kingdom of Tonga.

Nautilus Minerals Inc – Annual Information Form 2014

Page 15

---

Grab samples obtained from these discoveries assayed up to 11.9% copper, 59.8% zinc, 28.6 g/t gold and 673g/t silver, as further described in a news release dated November 1, 2012.

These discoveries will be added to the 17 SMS systems, as previously reported on our Tongan prospecting licenses, which are being considered for further evaluation.

Change of CEO
On October 31, 2012 the Company announced that Mr Mike Johnston, Nautilus' then Vice President for Strategic Development and Exploration had accepted the position of interim President and CEO. After more than four years as President and CEO, Mr Rogers decided to return interstate to be with his family, but remained a non-executive director of Nautilus until the expiry of his term in June of 2013.

Mr Johnston's appointment was subsequently made permanent in April of 2014.

Equipment Build for Solwara 1 Project
On November 13, 2012 the Company decided to preserve its cash position by terminating the construction of the equipment for its Seafloor Production System.

By November 2012, an agreed commercial resolution with the State had not been achieved and Nautilus concluded that the avenues for achieving such a resolution within the timeframe that Nautilus could reasonably continue to carry the total development costs for the Solwara 1 Project had been exhausted. In order to preserve capital, Management and the Board of Directors of Nautilus decided to terminate construction of its Seafloor Production System. The Company has since terminated a number of contracts relevant thereto but discussions continued with the suppliers of the critical equipment items including the SPTs, the RALs and the SSLP. All of the relevant supplier agreements contain provisions for termination without penalty. The Company was also forced to reduce staff numbers with approximately 60 positions made redundant.

Terminating the equipment build for the Seafloor Production System included discontinuing discussions regarding an alternative vessel and associated funding solution. This means there will be a considerable delay in any commencement of production operations and it may also result in an increase in the Solwara 1 Project cost.

The Company will need to source sufficient funds in order to recommence the build of the Seafloor Production System.

2013

C$40M Rights Offering completed
The Rights Offering was announced on March 28, 2013 and closed on June 11, 2013, with full proceeds received. Over 75% of the total Common Shares on offer were subscribed for under the Rights Offering and one of the Company's major shareholders, MB Holding, through a wholly owned subsidiary, fulfilled its obligations as Standby Purchaser in respect of the full offering and purchased the 49,377,527 unsubscribed shares.

The net proceeds from the offering are being used by the Company to continue funding its three key contracts related to the Seafloor Production System.

Nautilus Minerals Inc – Annual Information Form 2014

Page 16

---

Favourable Decision in Arbitration with the State of PNG
On October 3, 2013 Nautilus announced that the arbitrator had issued an award in Nautilus’ favour in respect of the issues that were the subject of the Notice of Arbitration initiated by the Independent State of Papua New Guinea. The arbitrator's award included an order that the State is required to comply with its obligations under the State Equity Option Agreement to complete the purchase of the 30% interest in the Solwara 1 project and pay 30% of all the project expenditure incurred to date within a reasonable time after the award. Nautilus issued the State with a notice requiring completion to occur on October 23, 2013.

Solwara 1 Project advanced
During 2013, the Company continued to advance the Solwara 1 Project and in particular, the three key equipment contracts, and maintained its focus on securing the vessel build contract.

Project Build Progressed
Progress on the development of the SPTs continued to advance.

Following the termination of some contracts during the final quarter of 2012, the Company made arrangements with some contractors to allow the resurrection of some of the terminated contracts in the event that construction is re-started following the execution of a vessel contract.

Vessel Activities
The project finalized the basic design of the vessel along with Classification Society interim approval of these basic arrangements and details. Using this information, various shipyards and other parties were engaged to provide budgetary quotations and deliveries.

Community Activities
During 2013, Nautilus conducted a wide range of community engagements and initiatives in Papua New Guinea. The engagements were mainly focused along the west coast of New Ireland Province particularly the Namatanai region which is closest to the Solwara 1 site. Nautilus also held two ‘Deep Sea Minerals Fairs’ for the communities of Kavieng and Namatanai in New Ireland Province.

These events provided the community with the opportunity to speak directly with Company employees about the Solwara 1 Project, Nautilus and generally about the deep sea minerals industry.

In partnership with Duke University and the University of Papua New Guinea, Nautilus held a Marine Science Short Course for university students from the South Pacific. Over 20 students from throughout the Pacific were offered a scholarship to attend this course which gave them the opportunity to learn state-of-the-art techniques from a representative from Duke University’s Marine Laboratory, one of the most highly respected marine laboratories in the world.

Clarion Clipperton Zone Nodule Exploration Program Completed
TOML completed a 54 day exploration cruise to its license area located in the Clarion Clipperton Zone, in the eastern Pacific Ocean. Work was completed by the oceanographic survey vessel ‘MV Mt Mitchell’, which departed from Seattle, Washington on August 22, 2013. The work program comprised 64,000km² of multibeam mapping and the collection of 2090 wet kilograms of polymetallic nodules. It is part of a two stage multi-beam and sampling program designed to upgrade a significant portion of the current 440 million tonne inferred resource to an indicated status, to allow for preliminary engineering, metallurgy and cost studies.

Nautilus Minerals Inc – Annual Information Form 2014

Page 17

---

Changes to the Board of Directors
On September 24, 2013 the Company announced changes to its board of directors with the appointment of Usama Barwani and Mark Horn, and the resignation of Matthew Hammond. Mr. Barwani was nominated by MB Holding and Mr. Horn was nominated by Metalloinvest. Accordingly, the appointment of Mr Barwani and Mr Horn to the Board recognizes the continued support of the Company’s two largest shareholders.

Options and Loan Shares issued
The Company granted 1,800,000 options and issued 400,000 loan shares to its non-executive directors as part of their remuneration for 2013. The Company also granted 450,000 options and issued 4,100,000 loan shares to its employees, including officers, as part of the Company's retention plan for employees.

The options and loan shares were granted under the Company's Stock Option Plan and Share Loan Plan which were approved by shareholders and limit the total number of shares under the two plans to a combined maximum of 10% of the Company's issued capital.

The options and loan shares were granted to the non-executive directors at an exercise price of C$0.22, vesting as to 20% commencing on January 1, 2014 and 20% every six months thereafter and expiring on July 1, 2016. The options and loan shares were granted to the employees, including officers, at an exercise price of C$0.24, vesting as to 40% on January 1, 2015 and 60% on January 1, 2016 and expiring on July 1, 2016.

2014

Nautilus confirms grade and extent of CCZ nodule deposit
On March 19, 2014, the Company announced that it had processed the data and received analytical results from the samples collected during the exploration program and that such data and results support the grade of elements reported in the Updated CCZ Report.

Nautilus and State of PNG resolve issues and sign agreement
On April 24, 2014, the Company announced that it and the State had signed the PNG Equity Agreement, enabling the Solwara 1 Project to move forward toward production with the full support of the State.

Under the PNG Equity Agreement, the State shall take an initial 15% interest in the Solwara 1 Project, with an option to take up to a further 15% interest within 12 months of the PNG Equity Agreement becoming unconditional. The State paid Nautilus a non-refundable deposit of US$7,000,000 relating to its acquisition of an initial 15% interest.

The PNG Equity Agreement was conditional upon the State, (through a subsidiary of Petromin), securing by 31 July 2014, the funding for the State's 15% share of the capital required to complete the development phase of the Project up to first production, being US$113,000,000 (excluding the deposit), to be placed in escrow until Nautilus satisfies the conditions for their release. The PNG Equity Agreement provided further that the funds would be released to Nautilus, and an unincorporated joint venture between the parties for the ongoing operation of the project formed, if within 6 months of the funds being placed in escrow Nautilus were to secure the charter of a Production Support Vessel and certain intellectual property rights. After first production, Petromin's subsidiary is required to contribute funds in proportion to its interest.

Nautilus Minerals Inc – Annual Information Form 2014

Page 18

---

State of PNG pays $113M into escrow
On May 9, 2014, the Company announced that the State’s nominee, Petromin, had placed US$113,000,000 into escrow, representing the balance of the funding for Petromin’s 15% share of the capital required to complete the development phase of the Solwara 1 Project up to first production.

Nautilus satisfies intellectual property condition precedent
On October 22, 2014, the Company announced that it had satisfied one of the conditions precedent to completion of the PNG Equity Agreement, by securing certain intellectual property rights.

Nautilus secures vessel charter
On November 6, 2014, the Company announced that it had entered into an agreement for the charter of a PSV to be first deployed for use at the Solwara 1 Project. MAC, a marine solutions company based in Dubai and specializing in the delivery of new build support vessels for the offshore industry, will own and provide the marine management of the vessel. The vessel will be chartered to Nautilus for a minimum period of five years at a rate of US$199,910 per day, with options to either extend the charter or purchase the vessel at the end of the five year period. The charter agreement with MAC was filed on SEDAR on November 18, 2014, and an amendment thereto was filed on February 10, 2015.

Under the terms of the arrangement, MAC entered into the Shipbuilding Contract with Fujian Mawei Shipbuilding Ltd. to design and construct the PSV in accordance with Nautilus' specifications and paid the first installment of the purchase price in accordance with the Shipbuilding Contract.

Completion of the PNG Equity Agreement
On December 11, 2014, the Company announced that in accordance with the PNG Equity Agreement, the sum of US$113 million was released from escrow to Nautilus and the unincorporated joint venture between Nautilus and the State Nominee in respect of the Solwara 1 Project was formed. The joint venture is governed by the Joint Venture Agreement among the parties to the PNG Equity Agreement, a copy of which is appended to the PNG Equity Agreement, which was filed on SEDAR on May 2, 2014.

Also in accordance with the PNG Equity Agreement, as a result of completion of the condition subsequent, the arbitration between the parties in respect of the State Equity Option Agreement was discontinued.

Recent Developments in 2015

Progress of Seafloor Production Tools
The assembly of the Bulk Cutter was completed in April 2014 with commissioning continuing. Assembly of the Collecting Machine and the Auxiliary Cutter commenced in Q2 2014 and they respectively entered commissioning in January and February 2015. Commissioning and factory acceptance testing of these three Seafloor Production Tools is anticipated to be complete in Q3 2015.

Pre-payment of charterer’s guarantee
On February 2, 2015, the Company announced that it and MAC had been victims of a cyber attack by an unknown third party. The Company has engaged a third party to investigate the cyber-attack that resulted in the Company paying a deposit of $10M owing to MAC under the vessel charter agreement to a bank account which the Company believed to be MAC’s, but which MAC has advised was not its account. In the circumstances, the Company has agreed to pre-pay US$10M of the charterer's guarantee on the basis that: (i) the remaining US$8M of the charterer's guarantee will be provided to MAC by the Company on the commencement of the charter of the vessel; and (ii) the parties have agreed to determine how to proceed in relation to the $10M deposit following the conclusion of the investigations, which may take some months.

Nautilus Minerals Inc – Annual Information Form 2014

Page 19

---

Procurement of major equipment packages for the PSV has commenced
The shipyard constructing the Company’s PSV, Fujian Mawei Shipbuilding Limited, has placed the order for the engines and thruster packages for the PSV with Rolls Royce Marine of Norway and the order for the cargo handling equipment with Bedeschi SPA, located in Italy.

Forward plans

During 2015, the Company will be focused on:

	•	Securing additional funding to allow it to continue to move forward with the Solwara 1 Project and to accelerate the development of additional assets
	•	Completing the assembly, commissioning and factory acceptance testing and finalising the scope of wet testing of the Seafloor Production Tools
	•	Completing the riser system (part of the RALS)
	•	Recommencing SSLP assembly
	•	Completing the basic PSV design and commencement of steel cutting
	•	Ensuring continued government and community support
	•	Maintaining all key licences and permits

Nautilus Minerals Inc – Annual Information Form 2014

Page 20

---

OVERVIEW OF BUSINESS

General

Nautilus, as it is currently structured, was formed on May 8, 2006 when the Company acquired all of the issued and outstanding shares of NMN (formerly Nautilus Minerals Corporation) and NMO, by issuing 30,519,541 Common Shares to the shareholders of NMN and NMO. Since the shareholders of NMN and NMO acquired in excess of 90% of the outstanding Common Shares, the transaction was accounted for as a reverse takeover.

The Company’s main geographic focus is the western and central Pacific Ocean where it has been granted or made application for Exploration Licences in PNG, the Solomon Islands, Tonga, Vanuatu, New Zealand, Fiji and the CCZ.

Summary

Nautilus is a seafloor resource exploration and development company and the first publicly listed company to commercially explore the ocean floor for copper, gold, silver and zinc rich seafloor massive sulphide deposits and for manganese, nickel, copper and cobalt nodule deposits. Nautilus holds tenement licences and exploration applications in various locations in the western and central Pacific Ocean and is establishing a pipeline of prospects for development. The Company’s goal is to develop a Seafloor Production System that can be used to extract resources from its seafloor prospects.

Nautilus' Seafloor Production System, once developed, has the potential to open a new frontier of resource development as land-based mineral deposits continue to be depleted and the cost of development and extraction continue to rise and grades continue to fall.

Nautilus has completed both an independent NI 43-101 resource estimate for its Solwara 1 Project and an independent NI 43-101 system definition and cost study for its Seafloor Production System (see "Risk Factors – No pre-feasibility study or feasibility study" and "Risk Factors – Cost Study"). The Company has received both the mining lease and environmental permit for its Solwara 1 Project from the State of PNG.

Nautilus has also released, through one of its 100% owned subsidiaries, Tonga Offshore Mining Limited, an independent NI 43-101 resource estimate in respect of its Clarion-Clipperton Fracture Zone polymetallic nodule project, located within the Central Pacific Ocean (“CCZ Project”).

Nautilus' Strategy

Nautilus' business model for the western Pacific prospects is based on the concept of ongoing resource accumulation from its prospective tenements and aggregation of numerous high grade SMS systems for sequential development using a vessel-based floating production system. The concept is in keeping with land-based volcanic hosted massive sulphide (VHMS) systems that occur in camps and has been supported by Nautilus' strong record of discovery of new SMS systems in the Bismarck Sea and the waters of Tonga.

In addition, Nautilus plans to undertake further exploration with a view to establishing an indicated mineral resource in respect of its CCZ Project.

Nautilus Minerals Inc – Annual Information Form 2014

Page 21

---

The Company has four key elements to its strategy:

	1)	Identify prospective exploration territory and secure licences;
	2)	Demonstrate that seafloor resource development is commercially viable and environmentally sustainable subject to the risks as described under "Risk Factors";
	3)	Undertake further exploration to identify additional mineral resources and create a project pipeline; and
	4)	Add value for shareholders by expanding operations and bringing on stream duplicated Seafloor Production Systems.

Development Plan for Bismarck Sea Prospects

Nautilus intends to develop its Bismarck Sea prospects, which includes the Solwara 1 Project.

The Solwara 1 deposit is situated in the Bismarck Sea off the coast of the New Ireland Province of PNG at latitude 3.789° S, longitude 152.094° E. The site is approximately 50 km north of the deepwater port of Rabaul (East New Britain Province), approximately 40 km west of the town of Namatanai (New Ireland Province), and approximately 30 km from the nearest coast at a water depth of approximately 1,600 m. The proposed project does not require large-scale site preparation or construction of complex support facilities on land, and there are no issues with respect to the surface rights of individual landowners or occupants. The area proposed for extraction operations is relatively small, approximately 0.1km² and the mineralized material sits exposed or under minimal cover on the seafloor.

Nautilus’ development plan involves the development of a Seafloor Production System that can be used for the Solwara 1 Project and can be relocated for production at other SMS systems. To achieve this, Nautilus intends to maximize the use of existing technology and leverage the expertise of contractors with market experience in the sector. Nautilus will prioritize work and cash spend on the development of the Seafloor Production System which involves the design, build, integration, commission and operation of the Seafloor Production System comprising the PSV, SPTs, RALS including a SSLP, and a dewatering plant.

Nautilus intends to extract mineralized material from the seafloor by using three remotely operated SPTs operating on the seafloor to cut rock, produce and pump a slurry. Mineralized material gathered by the SPTs is pumped to the PSV as slurry via the RALS. At the surface, the high grade slurry material will be dewatered on the PSV and shipped for final processing. The Solwara 1 Project's footprint at the sea surface will be limited to the presence of the PSV and attendant support vessels.

At steady state operations, Nautilus plans to produce mineralized material from the seafloor at an average annual rate of approximately 1.3 million tonnes (excluding ramp up and ramp downs).

In April 2011 the Company signed a binding heads of agreement with Tongling for the sale of the product extracted from the Solwara 1 deposit. The agreement provides for the purchase by Tongling of 1.1 million tonnes per annum (subject to +/- 20% variation) of Solwara 1 material for a period of three years on a take or pay basis, commencing upon the first delivery of product from Solwara 1, in accordance with a notification mechanism and includes an option to agree an extension of the arrangement.

Nautilus Minerals Inc – Annual Information Form 2014

Page 22

---

On November 6, 2014, the Company entered into an agreement with MAC for the charter of a PSV to be first deployed for use at the Solwara 1 Project and MAC subsequently entered into the Shipbuilding Contract.

The other main components of the Seafloor Production System are well underway with significant progress made in respect of the Seafloor Production Tools. The assembly of the Bulk Cutter was completed in April 2014 with commissioning continuing. Assembly of the Collecting Machine and the Auxiliary Cutter commenced in Q2 2014 and respectively entered commissioning in January and February 2015. Commissioning and factory acceptance testing of these three Seafloor Production Tools is anticipated to be complete in Q3 2015. Riser fabrication commenced in January 2015 following extensive engineering in support of weld procedure specifications and fatigue analysis. Delivery of the riser system (part of the RALS) is anticipated by end of Q4 2015. SSLP loop testing was finalized during 2014 and preparations are underway to commence SSLP assembly in July 2015. Major procurement packages are being placed for the PSV equipment with Rolls Royce being the provider of engines and thruster packages with Bedeschi for the cargo handling systems. It is anticipated that power generation and cranes will be awarded by end of Q1 2015.

On December 11, 2014, the Company announced that in accordance with the PNG Equity Agreement, the sum of US$113 million was released from escrow to Nautilus and the unincorporated joint venture between Nautilus and the State Nominee in respect of the Solwara 1 Project was formed. The joint venture is governed by the Joint Venture Agreement among the parties to the PNG Equity Agreement, a copy of which is appended to the PNG Equity Agreement, which was filed on SEDAR on May 2, 2014 (see "Three Year History – 2014 – Completion of the PNG Equity Agreement”) To continue the development of the Solwara 1 Project the Company will need to source sufficient funds to complete the build of the Seafloor Production System.

Business Strengths and Competitive Advantages

Specialized Skill and Knowledge

The Company is intent on applying the most current technical knowledge to the Solwara 1 Project, while ensuring that best practice is followed throughout the proposed mining method.

Our in-house technical team is highly motivated, forward-thinking and adds significant value to our operations. In addition, firms such as Soil Machine Dynamics, GE Hydril and Ocean Floor Geophysics Inc. are able to provide the Company with the expertise that the Company needs to remain at the forefront of seafloor exploration and production.

Competitive Conditions

The Company has undertaken studies including mine planning, materials handling, transportation, metallurgical testing and processing studies. These studies will assist the Company in finalising its capital and operating expenditure estimates and thereby assessing its competitive position in the marketplace.

First Mover Advantage

Nautilus is the first publicly listed company to commercially explore the ocean floor for copper, gold, silver and zinc rich SMS deposits. Management believes that it has a time and knowledge advantage over both current and future competitors. This advantage will exist in researching and identifying potential high grade resource targets, establishing relationships with key corporate and political partners that are necessary to explore and develop the seafloor properties, obtaining key permits and licences, and developing technologies, knowhow and experience in this emerging new industry.

Nautilus Minerals Inc – Annual Information Form 2014

Page 23

---

Use of Existing Technologies

The design of the Seafloor Production System is based on the adaption of technologies that exist in the offshore (deepwater) oil and gas, telecommunications, trenching, marine dredging and land based mining industries. While equipment will need to be customized, key elements of the equipment have an existing analogue within the above industries. Based on engineering work completed to date for the Company, and recent advances in subsea engineering, largely driven by the petroleum and telecommunications industries, Nautilus believes that it has, or can further develop over the course of time with adequate financing, the necessary equipment and technology to explore for, develop and extract SMS material economically.

Key Licences and Permits Secured

The Company has been successful in obtaining the key licences and permits required to commence production at the Solwara 1 Project. In 2009, Nautilus received the Environmental Permit for the development of the Solwara 1 Project from the CEPA of PNG for a term of 25 years. In January 2011, Nautilus received the Mining Lease which covers the Solwara 1 Project area and has an initial term of 20 years.

Commitment to Responsible Development

The Company is committed to responsible development and to continual improvement in its performance and efficient use of natural resources. The Company has developed and will continue to implement and maintain management systems for health, safety and environment that are consistent with internationally recognized standards. Nautilus believes that seafloor resource production offers advantages over typical land-based mining from health, safety, environmental and social points of view.

Opportunities to Grow Resources and Increase Value

Management believes that it will have opportunities through further exploration to expand its mineral resource base both at the Solwara 1 Project and on other properties where research and exploration support the presence of seafloor massive sulphides.

Experienced Management Team and Board

The Company has an experienced management team and Board with knowledge in areas that are relevant to the development of the world's first seafloor resource production project. See a description of the directors and executive officers below under "Directors and Officers".

For further detail relating to competitive conditions, refer to "Risk Factors – Competition".

New Products

No new products have been publicly announced.

Nautilus Minerals Inc – Annual Information Form 2014

Page 24

---

Products, Services and Components

Seafloor Production System

When Nautilus’ Seafloor Production System is ultimately developed, the Company intends to deploy it first at the Solwara 1 Project. The Seafloor Production System will comprise the following elements:

•	Seafloor Production Tools (SPTs)
•	Riser and Lifting System (RALS), including the Subsea Slurry Lift Pump (SSLP)
•	Production Support Vessel (PSV) with Dewatering Plant (DWP)
•	Load-out and transportation to a third party processing facility for toll treatment or direct sales

SPTs will be used to excavate the massive sulphide material from the seafloor. The excavated material will be pumped as slurry to the PSV via the RALS. The pumped slurry will be dewatered at surface and the solid material eventually offloaded into bulk carriers for transportation to a concentrator treatment plant for subsequent processing and/or direct sales. The following diagram provides a graphic of Nautilus' intended Seafloor Production System.

Nautilus Minerals Inc – Annual Information Form 2014

Page 25

---

Nautilus Minerals Inc – Annual Information Form 2014

Page 26

---

Seafloor Production Tools

The development of the SPTs is based on the consolidation of technologies that exist in the offshore (deepwater) oil and gas, telecommunications, trenching, marine dredging and mining industries. While the precise design of this equipment will be bespoke, each element of the equipment has an existing analogue within the above industries.

The current approach for SPTs is analogous to surface mining systems where it is common for a flexible and mobile machine to prepare the site which is usually followed by a separate dedicated bulk production system. Due to the topography of the site at the Solwara 1 Project and other typical terrain, three different SPTs are intended to be used, namely the auxiliary cutter, bulk cutter and collection machine.

Auxiliary Cutter

The auxiliary cutter is primarily designed to access and prepare level landing and work areas. It has a design length of 15.8 m, width of 6.0 m, a height of 7.6 m and a weight in air of 245 tons. The auxiliary cutter is designed to pump overburden away from the mine site and to pump cut materials to a central seabed location as required. A photograph of the auxiliary cutter, as assembled, is shown below.

Nautilus Minerals Inc – Annual Information Form 2014

Page 27

---

Bulk Cutter

The bulk cutter is designed to cut at higher productivities in the prepared areas. It has a design length of 14.2 m, width of 4.2 m, a height of 6.8 m and a weight in air of 310 tons. The bulk cutter is also designed to pump cut materials to a central seabed location as required. A photograph of the bulk cutter, as assembled, is shown below.

Collection Machine

The collection machine is designed to gather the cut material from the seafloor and pump it to the RALS. It has a design length of 16.5 m, width of 6.0 m, a height of 7.6 m and a weight in air of 175 tons. A photograph of the collection machine, as assembled, is shown below.

A contract is in place for the design and supply of the SPTs with Soil Machine Dynamics, a market leader in offshore / subsea trenching and remotely operated vehicles. The build of the equipment is nearing completion. An extensive period of trials and testing has been conducted during the design and early build stages of the Solwara 1 Project. Further proving trials will be carried out on completion of factory acceptance testing before on site commissioning commences.

Nautilus Minerals Inc – Annual Information Form 2014

Page 28

---

Riser and Lifting System (RALS)

The RALS is a critical component to the Solwara 1 Project development plan. Components and technology of the system will be adapted from the well established offshore oil and gas (drilling and production) industry. An engineering, procurement, construction management (EPCM) contract with Technip USA Inc. was put in place for the over-all system design (which contract has now been completed) and a supply contract with GE Hydril was put in place for the design and build of an SSLP.

Production Support Vessel (PSV)

The PSV will be the floating platform for the mobilization and remote operation of production machinery operating on the seafloor at water depths of approximately 1,700 meters and will provide on board storage for approximately 45,000 tonnes of material. The PSV is similar to vessels that service the large markets of subsea construction, drilling and production for the offshore oil and gas industry.

An image of the PSV, as it is designed, is shown below.

Dewatering Plant (DWP)

The DWP process design is based on well known and well established technology from the mineral processing industry. A design study for the DWP was performed originally by Parsons Brinkerhoff. A DWP detailed design has been completed by DRA Pacific, the Australian subsidiary of a South African materials handling and minerals processing specialist with experience in the offshore diamond mining industry. This design is now subject to review and revision to suit the final PSV layout and space availability. A further contract for this review and revision has been awarded to DRA Pacific. DRA will also provide construction management during the fabrication of the DWP.

The unit processes within the DWP flow sheet and the equipment selected are generally consistent with normal design practice.

Nautilus Minerals Inc – Annual Information Form 2014

Page 29

---

Intangible Properties

Tenements

Nautilus has approximately 223,000km² of granted tenements, and approximately 200,000km² of applications for tenements in the territorial waters and EEZ of Papua New Guinea (PNG), Tonga, Solomon Islands, Fiji, New Zealand, Vanuatu and an area comprising the Clarion-Clipperton Zone (CCZ) (refer to Table 1).

As at December 31, 2014, Nautilus held three (3) granted exploration licences and one (1) granted mining lease in Papua New Guinea, totaling 820km². Exploration licences in PNG are granted for two years and are renewable for a further two years if the Company complies with the Papua New Guinea Mining Act 1992. This compares with 28 granted exploration licences and one (1) granted mining lease, as at December 31, 2013, for a total area of approximately 10,800km². The reduction in tenement area in PNG during 2014 is as a result of ongoing rationalization.

As a result of the introduction of a revised upper area limited under the Tonga Seabed Minerals Act 2014, a number of the 16 tenements originally granted were split, so the Company now has 25 granted tenements in Tonga. These 25 granted tenements were also subject to statutory partial reduction, which took effect in late 2014.

Table 1: Current Tenements as at December 31, 2014

* Includes the mining lease in PNG, ML154

Nautilus considers the tenements, licences and mining lease to be very significant to its business. Nautilus has been successful in discovering SMS deposits on these tenements in the past.

Intellectual Property

Nautilus has made application in respect of certain patents relevant to its plan to mine SMS systems. There are 16 suites of patents in which the Company has an interest, filed in multiple jurisdictions relevant to the Company’s intended SMS operations and which are at varying stages of application and/or grant. The suites of patents are identified below.

Nautilus Minerals Inc – Annual Information Form 2014

Page 30

---

Cycles

The profitability of mining operations is significantly affected by changes in the market price of copper, gold, silver, zinc and other minerals and the cost of labour, steel, power, petroleum fuels and oil. The level of interest rates, the rate of inflation, world supply of these minerals and stability of exchange rates can all cause significant fluctuations in base metal, precious metal and oil prices. Such external economic factors are in turn influenced by changes in international investment patterns, monetary systems and political developments. The price of copper, gold, silver, zinc and other minerals, steel and oil has fluctuated widely in recent years.

Nautilus Minerals Inc – Annual Information Form 2014

Page 31

---

Economic Dependence

Nautilus’ current business plans include and are substantially dependent upon sourcing sufficient funds to complete the build of the Seafloor Production System. There is no one contract upon which the Company's business is substantially dependent.

Changes to Contracts

Under the PNG Equity Agreement, the State retains options to take up to a further 15% interest in the Solwara 1 Project by paying certain amounts that are the product of a formula. The options are exercisable in tranches of 5%, expiring six, nine and 12 months from the date of completion of the PNG Equity Agreement, being December 11, 2014. The Company is not aware of any other aspect of its business that the Company reasonably expects to be affected in the current financial year by renegotiation or termination of contracts or sub-contracts.

Environmental Protection

On December 29, 2009 the Environmental Permit for the Solwara 1 Project was approved by the DEC.

Prior to obtaining an Environment Permit, which is a permit that must be obtained before the grant of a Mining Lease, the Company must complete a rigorous process which has the following steps:

	1.	Submission and approval by the CEPA of the Environmental Inception Report;
	2.	Environmental Impact Assessment ("EIA");
	3.	Submission and approval by the CEPA of the Environmental Impact Statement ("EIS"); and
	4.	Submission and approval by the CEPA of the Environment Permit Application.

To enhance transparency, and provide access to information, Nautilus maintains its CARES ("Community Accountable, Responsible Environmentally and Safe") website. The website provides information on the EIS, including the full EIS report, supporting studies, background information and commonly asked questions and answers. In addition to this, the Company conducts regular community consultation programs and holds multi-stakeholder expert workshops.

The Company has an Environmental Policy supported by an Environmental Management System. The Company’s objective, as stated in the Environmental Policy, is to minimize the environmental impact of the Company’s activities whilst contributing positively to the sustainable future of the communities in which the Company intends to operate. The Company’s Environmental Management System provides a framework for continual environmental improvement and has been developed in line with the principles in the international standard for Environmental Management Systems, ISO 14001:2004.

See also "Social and Environmental Policies" below.

Employees

As at the end of the 2014 financial year, the total number of employees in the Nautilus group calculated on a full time equivalent basis was 61.

Nautilus Minerals Inc – Annual Information Form 2014

Page 32

---

Foreign Operations

The Company’s main geographic focus is in the western Pacific Ocean with the majority of work to date completed in the territorial waters and the EEZ of Papua New Guinea and Tonga.

In 1997, Papua New Guinea became the first country in the world to grant exploration licenses, or tenements, for the exploration of SMS deposits. The tenements are either known to host or are considered prospective for base and precious metal SMS mineralization.

As at December 31, 2014 Nautilus had approximately 223,000 km² of granted tenements in PNG, Tonga, Vanuatu, Fiji, the Solomon Islands and the CCZ, and approximately 200,000 km² of tenements and applications in the territorial waters and EEZ of Papua New Guinea, Tonga, New Zealand and Vanuatu constituting, in the aggregate, 100% of the Company's tenements.

Social and Environmental Policies

Nautilus is committed to responsible development. Health, safety, environment and community responsibilities are integral to the way we do business. The Company is committed to continual improvement in its performance and efficient use of natural resources.

Wherever the Company operates, its goal is to develop, implement and maintain management systems for health, safety, environment and the community that are consistent with internationally recognized standards and enable it to:

	•	develop its people and provide resources to meet its targets;
	•	identify, assess and manage risks to employees, contractors, the environment and communities;
	•	strive to achieve leading industry practice;
	•	provide written procedures and instructions to ensure safe systems of work;
	•	meet and, where appropriate, exceed applicable legal and other requirements;
	•	set and achieve targets that include reducing and preventing pollution;
	•	support the fundamental human rights of employees, contractors and the communities in which Nautilus operates;
	•	respect the traditional rights of indigenous peoples;
	•	care for the environment and value cultural heritage; and
	•	provide information, instruction, training and supervision where appropriate to employees, clients, visitors and contractors to ensure their safety.

Nautilus Minerals Inc – Annual Information Form 2014

Page 33

---

Environmental Impact and Social Footprint

Nautilus intends to develop SMS deposits in the Bismarck Sea and elsewhere using methods that are socially acceptable, environmentally responsible, technologically achievable and economically viable. Nautilus has adopted a corporate and social responsibility policy. Nautilus intends that the Solwara 1 Project will implement the PNG resource development policy in a manner consistent with current PNG legislation and national goals and Nautilus' own policies and standards.

Seafloor resource production presents a potential new source of income and growth for PNG from a resource that has yet to be utilised. The Solwara 1 Project will bring benefits in the form of royalties and improvements in PNG's balance of trade and potential will be generated for new industrial development that can have positive social and economic effects within PNG. It should be noted that these benefits could be maintained, not just for the nominal project life, but for many years to come, as this new industry of seafloor resource production unfolds.

Extraction of resources from the seafloor opens new concepts in technology and environmental management practices. The location of mineralized material on (or immediately below) the seafloor avoids the need for large scale pre-stripping or land clearance activities and the associated handling of large volumes of overburden normally involved in land-based mining. The technologies proposed for the recovery of material and its transfer to the surface support vessel are proven in other offshore (deepwater) oil and gas, telecommunications, trenching, marine dredging and mining industries and, upon completion, all seafloor and surface production infrastructure can simply be relocated to other areas.

The Seafloor Production System has been carefully designed to not expose coastal reefs or fisheries to material from seafloor operations. Nautilus has completed extensive scientific research of the area, and the results of such research shows the seafloor at the Solwara 1 Project to be dynamic, and that the geothermal energy responsible for forming the SMS deposits cannot be extinguished by extraction operations.

Observations from the Company's own research (see "Environmental Impact Statement and Permit" below) showed venting and new chimney lattice structures starting to reform shortly after disturbance, and subsequent colonisation by animals, which could present opportunities for both natural and enhanced recovery of worked areas. Being the proponent of the first seafloor resource production of its kind, Nautilus has, with the assistance of the scientists involved, committed to a number of mitigation measures aimed to ensure the protection of biodiversity and to demonstrate the ecological acceptability of the operation.

Furthermore, all of Nautilus' operations are expected to occur at sea beyond the horizon, minimizing any direct impact to local land-based communities.

Environmental Impact Statement and Permit

The Solwara 1 Project is a 'Level 3' activity under the PNG Environment Act 2000, (Section 53) which requires that an EIS be submitted to the PNG CEPA. Nautilus appointed Coffey Environments (formerly Coffey Natural Systems (Australia)) as the lead consultant for the EIA / EIS process.

The Solwara 1 Project environmental footprint consists mainly of a single PSV (with attendant support vessels) and precision production machinery operating on an area proposed for extraction of approximately no more than 0.1km ². There are no issues with respect to the surface rights of individual landowners or occupants.

Nautilus Minerals Inc – Annual Information Form 2014

Page 34

---

In the EIS, Nautilus has proposed to discharge water from dewatering operations close to its point of origin at depths between 25 to 50 m above the seafloor to avoid any direct exposure or impacts on surface ecosystems. Nautilus’ extensive work indicates that the processes of extraction and dewatering will therefore not affect the pelagic tuna, tuna fisheries or near-shore coral reefs.

Potential impacts to surface pelagic animals are considered to be minor, and may result from the presence of the surface vessels and their normal operations, including lighting, underwater noise and routine discharges (in compliance with relevant maritime acts and regulations). These impacts are similar to shipping generally and to the exploration surveys already completed.

In an effort to enhance scientific knowledge while meeting the needs of the EIA process, Nautilus engaged international scientific experts to design and conduct a number of environmental studies for the Solwara 1 Project, which are outlined in the EIS, available on SEDAR.

The main objectives of the EIS were to understand the existing environment, potential impacts due to the proposed extraction and how to mitigate significant impacts.

In August 2009, the CEPA granted 'Approval in Principle' for the Solwara 1 Environmental Impact Statement. The Approval signalled the completion of internal and independent external reviews of the EIS by the CEPA. The Solwara 1 Project Environmental Permit was granted on December 29, 2009 for a term of 25 years. The next steps for Nautilus are to prepare the project Environmental Management Plan for submission and approval by the CEPA three months prior to project commissioning. As part of this process Nautilus is currently completing a number of additional studies in order to further understand the natural variation in environmental conditions in the Project area, and to determine any long term trends in environmental data from monitoring data collected since the EIS was completed. In keeping with Nautilus’ commitment to transparency and the advancement of scientific knowledge, these studies will be made publicly available following their finalisation.

Stakeholder Consultation

Unlike other mining projects in PNG, the Solwara 1 Project does not impact individual landowners or occupants. Initial investigation of the social environment revealed that no customary land ownership exists at any of the proposed project locations.

Under PNG law, the Solwara 1 deposit is owned by the State of PNG. Social awareness and general acceptance of the Solwara 1 Project is important for its successful operation. To this end Nautilus currently maintains regular contact with regional stakeholders and government agencies through stakeholder awareness programs which aim to keep all parties informed of project development progress and to understand any new concerns.

Nautilus has also followed (and continues to undertake) a public consultation process that involves extensive interactions with stakeholder groups. Consultation with communities in New Ireland and East New Britain Provinces and other provinces in PNG, NGOs, the international scientific community and other stakeholders has included formal meetings, presentations and workshops. Over 20,000 community members have attended the Company’s community engagement meetings in PNG in relation to the Solwara 1 Project. Additionally, there has been ongoing regular consultation with the national and provincial governments of PNG.

Nautilus Minerals Inc – Annual Information Form 2014

Page 35

---

Environmental Impact and Social Footprint Highlights

Nautilus notes that seafloor resource production offers advantages over typical land-based mining from health, safety, environmental and social points of view. Nautilus believes the benefits of seafloor resource production include but are not limited to:

•	Limited social disturbance: seafloor operations do not require the social dislocation common to land-based operations with the resulting impact on culture or disturbance of traditional lands
•	Reusable infrastructure: Operations will be limited to a PSV and SPTs which can be re-used for future projects unlike many aspects of land-based operations
•	Minimal overburden or stripping: the mineralization generally occurs directly on the seafloor and will not require large pre-strips or overburden removal common to many land based mining operations where commonly up to 75% of the material moved is waste
•	Minimal footprint: the high-grade of material that will be extracted, along with the minimal amount of overburden, will result in a very small physical footprint
•	Limited processing waste: the high-grade material and gold-bearing pyrite by-products present in the material stream mean there will be limited, if any, mineral processing waste
•	Increased worker safety: the operation is controlled remotely from the PSV, not requiring operators to be exposed at the cutting face

Nautilus Minerals Inc – Annual Information Form 2014

Page 36

---

MINERAL PROJECTS

Solwara Project

In accordance with Section 5.4 of Form 51-102F2, the following is a reproduction of the summary from the Solwara 1 and 12 Report, which summary has been updated and conformed to be consistent with other disclosure within this Annual Information Form.

The Solwara 1 and 12 Report is available on SEDAR under Nautilus' profile at www.sedar.com and is incorporated by reference in this Annual Information Form (see "Documents Incorporated by Reference").

Summary of the Solwara 1 and 12 Report

The Solwara 1 Seafloor Massive Sulphide (SMS) deposit is located in the Bismarck Sea Property (Figure 1), at latitude 3.789° S and longitude 152.094° E, approximately 50km N of Rabaul (Figure 1). The Solwara 12 SMS deposit is located at latitude 3.708° S and longitude 151.882° E, approximately 65km NW of Rabaul (Figure 1). The deposits contain significant resources of massive base metal sulphides, Au and Ag.

Nautilus Minerals Inc – Annual Information Form 2014

Page 37

---

Nautilus Minerals Niugini Ltd (a wholly owned subsidiary of the Company holds title over the Solwara 1 deposit through ML154 (granted in January 2011). EL1196 has been held since 1997.

The Solwara 1 deposit is a stratabound SMS that occurs on the flank and crest of a sub-sea volcanic mound which extends about 150m to 200m above the surrounding seafloor. The average depth of the deposit is about 1550m below sea level. The slopes of the mound are relatively steep and interrogation of a coarse DTM (Digital Terrain Model) indicates slopes are generally in the range of 15º to 30º but can be locally steeper. There are some flatter areas near the crests of the ridges where much of the deposit is located.

The sub-surface geological sequence at Solwara 1, from the top down, may be summarized as:

Unconsolidated sedimentary rocks (lithology code SS). These typically comprise of dark grey clays and silts ranging in thickness from 0 to 5.62m, with an average of about 1.94m in the core holes. Due to the softness and low cohesiveness of this material, drilling recovery is commonly low in this domain;

Consolidated sedimentary rocks (lithology code SC). These typically comprise a layer of pale to dark grey, lithified volcanic sandstone varying from 0 - 4m thick and averaging 1.54m thick.

Mineralised and sulfate altered sedimentary rock (lithology code PT). A distinctive layer of pale to dark grey, fine to medium grained consolidated volcaniclastic sands with an average thickness of 1.1m but locally can be up to 6m thick. The sediments are interpreted to have been flooded by hydrothermal fluids that have precipitated a cement of opaline silica, sulfide and sulfate minerals.

Nautilus Minerals Inc – Annual Information Form 2014

Page 38

---

Sulfide-dominant rocks (lithology code RI) and conduit facies (lithology code CF). This is the main mineralisation horizon and it varies in thickness from 0 – 29m in the holes drilled to date. It consists mainly of pyrite and chalcopyrite, with variable amounts of anhydrite and barite.

Clay and sulfate-dominant rocks (lithology code RC and RA). The footwall to the mineralisation commonly consists of altered volcanic rocks in which most of the primary minerals and textures have been altered to clays, anhydrite, barite and disseminated sulfide. These rocks are commonly weak and core recovery is commonly low in this domain.

Local variations occur in this sequence. In addition, areas of relatively fresh lava rock form the lateral boundaries or locally overlie small areas of the mineralised domains.

Sulfide-rich chimneys are generally up to 10m in height, but have been recorded up to 15m high, and occur on the surface of the deposit. The majority of chimneys occur in several discrete chimney 'fields' separated by unconsolidated sediments (and locally by volcanic flows). Scattered chimneys occur between the main fields.

There is localised hydrothermal activity at Solwara 1. The location of venting chimneys has been identified from video footage and this venting has been shown to be episodic.

The Solwara 12 prospect is located in EL1374, 25 km NW of Solwara 1 and was discovered by Nautilus during the Fugro Solstice Target Generation and Target Testing program in 2009. In addition to the size of the mapped chimney field, an ROV based geophysical survey indicated both an electromagnetic and a self-potential anomaly within this area. High base and precious metal grades were returned from assayed chimney samples.

The Solwara projects have been explored by ROV dive videos, bathymetric surveys, geophysical techniques, surface sampling and by core drilling. In order to establish the extent and nature of deeper mineralisation at Solwara 1, Nautilus completed four drilling programs between 2006 and 2011.

In 2006, diamond core holes were drilled from the DP Hunter vessel from the surface at 35 locations. Core recovery was generally poor. Although the samples were generally not of sufficient quality for resource estimation, the drillholes demonstrated the presence of widespread massive sulfide mineralisation. In addition to the core drilling data, chimney samples were collected from the seafloor. These demonstrated high grade Cu, Au, Zn and Ag mineralisation. Downhole geophysics conducted at the time confirmed that the Cu-rich mineralisation is very conductive and could be expected to respond well to electromagnetic methods (EM).

In 2007 Nautilus conducted a six month field campaign over Solwara 1 during which further chimney sampling and a comprehensive diamond drilling program was completed. Two ROV operated drill systems were deployed, which significantly improved drill core recovery and efficiency. The ROV drills utilised a conventional drilling system and reached depths up to 18 m below the seafloor. At completion of the drilling campaign, 111 holes for a total drilling length of 1084 m were completed, from which 1432 samples were sent for assay (including quality control samples). A total of 362 geotechnical tests and over 680 density measurements on drill core samples, and 86 density measurement on chimney samples were conducted on the ship. A further 90 geotechnical tests were also conducted within onshore laboratories. This data was supplemented by a high resolution 20cm x 20cm bathymetric survey, and the world’s first underwater mineral delineation electromagnetic (EM) campaign. Detailed environmental monitoring and sampling was also carried out to provide input into environmental assessment studies, and the companies Environmental Impact Statement (EIS) to support the mining lease application.

Nautilus Minerals Inc – Annual Information Form 2014

Page 39

---

The core recovery in the massive sulfide domain was much improved and the drilling results clearly demonstrated the continuity of sulfide mineralisation across the Solwara 1 deposit. In addition over 80 chimney samples were collected. An extensive geotechnical testing program on drill core and chimney samples provided confidence on average density and geotechnical parameters of the mineralisation at Solwara 1. Independent audit of the logging confirmed the widespread occurrence of significant chalcopyrite mineralisation in the chimneys and drill core, broadly consistent with the Cu geochemical analyses.

The 2007 core and chimney samples were placed in sample bags which were then sealed and packed into large plastic boxes using tamperproof numbered cable ties. The boxes were dispatched to ALS Laboratory Group, an independent NATA certified, commercial laboratory, in Australia for customs and quarantine clearance, and geochemical analysis. Some consignments of the boxes were opened and inspected at ALS in Townsville by Golder staff. The samples were examined for any evidence of contamination of the sample bags or tampering; none was observed. Thereafter, the samples remained in the custody of ALS during preparation and analysis.

Cu, Ag, Pb and Zn were measured by ore-grade analysis using inductively coupled plasma atomic emission spectrophotometry (ICP-AES) following an aqua regia digest. Au was analysed by fire assay using a 30g charge and an atomic absorption spectrophotometry finish. Due to the high sulfide content, the fire assay charges were reduced for many samples.

In addition to ALS internal quality control procedures, Nautilus carried out its own checks on laboratory performance by inserting duplicates, blanks, certified reference materials (CRM) and matrix-matched secondary reference material (SRM) into each batch of samples.

There were some sporadic instances of minor contamination of samples during sample preparation but there was no evidence of systematic problems. The contamination levels and frequency pose only a minor risk to the resource estimate. The results of the duplicate sampling showed that the mineralisation is relatively inhomogeneous, which is consistent with the coarse grain size of the sulfide mineralisation and the irregular nature of anhydrite distribution. The results of analysis of CRM samples show that the analytical data is adequate for estimation of Inferred and Indicated Resources of Cu, Au, Ag and Zn. The results of the analysis of the SRM supported the CRM results. In the author’s opinion the sampling, sample preparation, security and analytical procedures were satisfactory for mineral resource estimation.

Over 680 dry bulk density measurements were made on core samples from the 2007 drilling program. A caliper method and a water displacement method based on Archimedes Principle were used. Analysis of the paired results from the two methods showed that there was no significant difference between the results produced by the two methods. Dry bulk density values were measured for 9 rock types. Nautilus measured the dry bulk density of 86 samples from 49 individual chimneys using a simple water displacement method, and checked these results with duplicate measurements using a second water displacement method based on Archimedes principal.

A program to drill and obtain representative samples for metallurgical assessment was designed. In all 24 holes were drilled for metallurgical assessment at sites chosen to provide a representative selection of material types. In addition, 28 chimney samples spread across the deposit, totalling 100 kg, were collected. The drill core and chimney samples were cleaned in fresh water, dried, vacuum sealed, placed in a nitrogen purged container, and shipped to Ammtec Laboratories (Ammtec) in Perth, Australia.

Nautilus Minerals Inc – Annual Information Form 2014

Page 40

---

During the 2007 campaign, Nautilus successfully trialled and then deployed an ocean floor electromagnetic (OFEM) system over Solwara 1. The system is a controlled source method that measures electromagnetic fields associated with induced subsurface electrical currents. It was designed and built for the purpose of delineating areas of near-surface Cu rich massive sulfides on the seafloor. The survey delineated a conductivity anomaly that correlates extremely well with the 2007 drillhole data and was used to aid the interpretation of the geology.

The exploration work in 2006 and 2007 enabled a 3-D geological model of the Solwara 1 deposit to be constructed. Geological modelling was carried in two stages: (1) sectional interpretation followed by wireframing to form triangulated surfaces of the sub-chimney lithology; and (2) a floating circle approach to model the base of chimneys.

To resolve differences between the drillhole collars and the final bathymetric surface, the drillholes were registered to the bathymetric surface prior to sectional interpretation.

Block grade estimation employed unfolding techniques and hard boundaries between stratigraphic domains. Due to the amount of core loss and the irregular sampling intervals compositing was not undertaken. However, to account for the variable sample lengths, samples were length-weighted during block grade estimation. Drillhole data used for resource estimation was capped at variable Cu, Au, Ag and Zn grades appropriate for the stratigraphic domain. Downhole and omni-planar correlograms were used to determine three-dimensional continuity of mineralisation. Cu, Au, Ag and Zn grades for 10 x 10 x 0.5m blocks were estimated by ordinary block kriging (OK).

Validation of the resource block model included: (1) on-screen visual comparisons with the drillhole data; (2) statistical checks between declustered data and OK estimates; and (3) an alternative inverse distance weighting estimate. No obvious errors or inconsistencies were observed. Vertical discontinuities that were observed were related to the interpreted stratigraphic contacts that were used as a hard boundaries during block grade estimation.

The modelling work resulted in a maiden resource estimate, as at December 22, 2007, for Solwara 1 of over 2 million tonnes at a 4% Cu cut-off grade (Lipton, 2008).

In 2008 a scout drilling campaign was carried out at the Solwara 1, 4, 5, 6, 7, 8 and 10 prospects, completing an additional 31 diamond holes for a total advance of 176m. During this campaign, Nautilus also discovered buried mineralisation at the Solwara 1 North Zone while drill testing ocean floor EM anomalies proximal to the Solwara 1 outcrop. The limited number of drill holes at Solwara 1 was not sufficient to materially alter the mineral resource estimate.

Additional work carried out in 2009/2010 included relogging of the remaining drill core, and factor analysis of the geochemical data which enabled better differentiation of the main rock types.

The 2010/11 drilling program, conducted from the MV REM Etive, primarily focused on deeper drilling because many of the 2007 and 2008 drill holes at Solwara 1 had ended in high grade mineralisation. Other improvements included a larger diameter drill core to improve sample size; a wire-line drill string to drill deeper holes more efficiently; an improved casing capability to enable deeper holes; and an improved landing system to handle the rugged terrain better.

Nautilus Minerals Inc – Annual Information Form 2014

Page 41

---

SGS Australia Pty Ltd managed and ran an independent onboard sample preparation facility for the 2010/11 REM Etive drilling program. No aspect of sample preparation was conducted by an employee, officer, director or associate of Nautilus. All core samples underwent a sample preparation process similar to that used in 2007 and 2008. Under a documented chain of custody, sealed boxes of pulps were transferred to shore in Kokopo, PNG, and were then sent via TNT Air Cargo to SGS’s analysis facility in Garbutt (Townsville), Australia. Sample assaying was completed by NATA accredited laboratories of SGS Australia Pty Ltd.

Cu, Ag, Pb and Zn were measured by ore-grade analysis using inductively coupled plasma optical emission spectrophotometry (ICP-OES) following an aqua regia digest. Au was analysed by fire assay using a 30g charge and an atomic absorption spectrophotometry finish.

In addition to SGS internal quality control procedures, Nautilus carried out its own checks on laboratory performance by inserting duplicates and CRMs into each batch of samples. The results of the quality control checks were similar to the 2007 program. In the author’s opinion the sampling, sample preparation, security and analytical procedures were satisfactory for mineral resource estimation.

The 2010/11 drilling program has increased the available geological knowledge at Solwara 1 and demonstrated continuity of high grade mineralisation in the North Zone and at Solwara 12.

The additional core data obtained for Solwara 1 enabled the resource model to be updated and a maiden resource estimate for Solwara 12 to be made. The resource modelling and estimation techniques used for the Solwara 1 resource estimate in 2007 were used for the new Solwara 1 and Solwara 12 resource estimates. Table 1 and Table 2 show the results of the resource estimation for the Solwara 1 (including the North Zone) and Solwara 12 deposits as of 25^th November 2011. The results are declared using a 2.6% Cu equivalent cut-off.

The mineralisation classified as Indicated Mineral Resource was tested by drillholes spaced from less than 10m to a maximum of approximately 50m. Within the Indicated Mineral Resource, most of the blocks were estimated in the first estimation pass and the core recovery in the intercepts used to estimate the blocks was generally greater than 70%. In the area classified as Inferred Mineral Resource the drillhole spacing ranges up to 200m, but is generally less than 100m, and the core recovery was more variable. At the present time chimney material, where estimated, has been classified as Inferred Resource. The main criteria for this lower classification is that chimney sampling was limited to pieces of chimney that could be broken off from the mounds and that the internal grades have not been suitably tested.

Table 1: Mineral resource estimate for Solwara 1 and 1 North at 2.6% Cu equivalent cut off

Area	Class	Domain	Tonnes (kt)	Cu (%)	Au (g/t)	Ag (g/t)	Zn (%)
1	Indicated	Sulfide dominant	1030	7.2	5.0	23	0.4
		Chimney	80	11.0	17.0	170	6.0
	Inferred	Consolidated Sediment	27	4.1	4.5	49	1.4
		Sulfide dominant	1330	8.1	5.8	25	0.6
		Inferred Total	1440	8.2	6.4	34	0.9
1 North		Consolidated Sediment	14	2.8	9.1	81	3.4
	Inferred	Sulfide dominant	65	7.8	7.5	49	1.3
		Upper footwall	21	2.8	1.1	5	0.2
		Inferred Total	100	6.0	6.3	43	1.3

Nautilus Minerals Inc – Annual Information Form 2014

Page 42

---

Note: rounding may result in errors in reproducing the totals from the individual components shown in this table. Solwara 1 and 1 North estimated using OK.
Cu Equivalent CuEq = 0.915*Cu + 0.254*Au + 0.00598*Ag

Table 2: Mineral resource estimate for Solwara 12 at 2.6% Cu equivalent cut off

Note: rounding may result in errors in reproducing the totals from the individual components shown in this table. Solwara 12 estimated using OK. Cu Equivalent CuEq = 0.915*Cu + 0.254*Au + 0.00598*Ag

Golder considers that the following risks may materially influence the resource estimate:

	•	Several drillholes at Solwara 1 ended in massive sulfide material. In such instances, and where no adjacent drillhole information was available from which the true thickness could be reasonably interpreted, the base of the drillhole was interpreted to be the base of the massive sulfides. The massive sulfide resource is therefore open at depth in some areas.
	•	Drillhole intercepts in the unconsolidated sediment suggested that this domain contains some material above cut-off grade. Whilst this may be likely in the form of chimney rubble or interstitial sulfide precipitation, this material has been excluded from the resource estimate at Solwara 1.
	•	Few drillholes were located on the exposed chimney mounds due to difficulty in landing on these structures. Consequently, the block grade estimates for interpreted massive sulfide material below these mounds is based on holes drilled adjacent to these mounds. It is possible that the massive sulfide material beneath the chimney mounds may have a different mineralogical composition being closer to the interpreted mineralising fluid source.
	•	Core loss in the massive sulfide domain could result in estimation bias if the core loss was preferentially related to low or high grade material. Close-spaced (<5m) drilling for metallurgical and geotechnical samples suggests that the probability of such preferential core loss is low.
	•	Significant lateral extrapolation of massive sulfide mineralisation to the boundaries of the EM anomaly was supported by all holes drilled in 2007. However, drilling in 2010/11 of the EM anomaly in part of the eastern zone failed to intersect significant thickness of sulfide mineralisation. A proportion of the Inferred Resource relies on the EM anomaly in areas that have not been tested by drilling. Furthermore, it is not possible to determine the thickness of the conductor sulfide material from the EM data, thus, the interpreted thickness of massive sulfide in areas distant to drilling is of low confidence.
	•	The higher-grade chimney mounds have only essentially been surface sampled by breaking off protruding chimney pieces. The interpreted depth of the chimney mounds is based on an automated algorithm that produces a truncated bathymetry that is considered geologically reasonable. However, until these mounds are tested by drilling their grade, density and depth should be considered of low confidence. If the chimney mound/massive sulfide interface is not correctly positioned then the risk to the contained metal is considered to be low to moderate as the higher grade/lower density chimney material would most likely be substituted by lower grade/higher density massive sulfide material.

Nautilus Minerals Inc – Annual Information Form 2014

Page 43

---

	•	The work to date at Solwara 1 and Solwara 12 has demonstrated the presence of massive sulfide mineralisation and has been sufficient to define Indicated and Inferred Resources. There remains potential for the discovery of additional resources in feeder zones extending down the main hydrothermal pathways or in buried (stacked) lenses. Subject to further mine planning and economic evaluation, the qualified person is of the opinion that the following work is warranted:
	•	Infill drilling with the aim of converting Inferred Resources into Indicated Resources at Solwara 1 and Solwara 12. Further work to improve the core recovery is required.
	•	Deeper drilling in the areas in which the sulfide dominant domain still remains open at depth, with the aim of identifying additional, deeper resources or improving confidence.
	•	If higher confidence and the definition of Measured Resources are required, further investigation of methods of geochemical analysis and reassaying of sample pulps may be necessary in order to improve the accuracy and precision of the Ag and Zn analyses and estimates.
	•	Metallurgical testwork on samples from Solwara 12.

Clarion-Clipperton Zone Project

In accordance with Section 5.4 of Form 51-102F2, the following is a reproduction of the summary from the Updated CCZ Report, which summary has been updated and conformed to be consistent with other disclosure within this Annual Information Form.

The Updated CCZ Report is available on SEDAR under Nautilus' profile at www.sedar.com and is incorporated by reference in this Annual Information Form (see "Documents Incorporated by Reference").

Summary of the Updated CCZ Report

The CCZ is a large, extensive deposit of polymetallic nodules in the tropical north Pacific. The nodules are located on the seafloor at depths of 4 000 to 6 000 m and have significant grades of Mn, Ni, Cu, and Co as well as lower grades of a range of other metals of interest.

Since the CCZ deposit is situated within international waters, exploration and development of the deposit is regulated by the ISA. The ISA is an autonomous international organization established under the 1982 United Nations Convention on the Law of the Sea and the 1994 Agreement relating to the implementation of Part XI of the United Nations Convention on the Law of the Sea.

Exploration and development efforts in the CCZ started in the 1960s by state sponsored groups from Russia, France, Japan, Eastern Europe, China, Korea and Germany. Several commercial consortia also explored between the 1960s and the 1980s and in some instances their descendants are still involved to the present day. No commercial operations have yet been established in the CCZ.

Nautilus Minerals Inc – Annual Information Form 2014

Page 44

---

However, a variety of collectors, pickup systems, and metallurgical processing flow sheets were tested, and an integrated “demonstration scale” system operated in the CCZ for several months in the late 1970s.

The Law of the Sea and ISA regulations require “pioneer contractors” to return 50% of their initial Exploration Areas (of equal value) along with key exploration data to become part of the “reserved blocks”. A developing nation or their sponsored companies may then apply for an “Exploration Area” from these “reserved blocks” (up to 75 000 km2). Tonga Offshore Mining Ltd (TOML), a 100% owned subsidiary of Nautilus Minerals Inc., is sponsored by the Kingdom of Tonga and has obtained an Exploration Area under a “contract for exploration of polymetallic nodules” (74 713 km2; executed 11th of January 2012). The Exploration Area consists of six separate areas (termed Areas A to F) scattered across the CCZ (Figure 1-1).

Sea state is an important consideration in the location of the deposit. The climate is largely warm, and equatorial surface currents vary by season but are not very strong. Wave-heights and frequencies are often moderate (for the open ocean). Storms are significant for part of the year as a major tropical cyclone belt covers the southern side of the CCZ. The deposit is away from major existing sea routes used by commercial transport vessels.

The worldwide nature of polymetallic nodules has been known since the late 1800s. They form by the precipitation of metals either directly from ocean waters or via decomposing microorganisms and/or their waste matter in the benthic sediments. The specific conditions of the CCZ (water depth, latitude and seafloor sediment type) are the key controls on the formation of what is believed to be the largest and highest Ni-Cu-Co grade nodules deposit in the world. Nodules grow on 0.1 to 1 cm ‘seeds’ (e.g. shark’s teeth, pieces of pumice and older broken nodules) and are typically 4 to 6 cm and up to 10 cm in diameter.

Nautilus Minerals Inc – Annual Information Form 2014

Page 45

---

Unlike most land deposits, exploration groups working within the CCZ term the quantity of nodules at a given sampling station as ”abundance” measured in units of wet kg/m2. This is because both the primary exploration method (surface sampling) and likely recovery method (surface collectors or rakes) are unlikely to work at any significant depth below the seafloor (i.e. 0 to 30 cm). Abundances are typically reported as wet weights due to the practicalities of handling the nodule samples, the wet density of studied nodules is around 2 g/cm3 irrespective of the nodule size. Studies show nodules to contain around 15% free water and 25% water of crystallisation (incorporated into the complex manganese and iron oxy-hydroxide minerals of formation).

Some of the exploration data from the pioneer contractors is of sufficient quality to allow Golder to estimate an Inferred Mineral Resource for Areas A to D, 4 of the 6 areas that comprise the TOML Exploration Area. Within these areas the data were collected by pioneer contractors representing Japan, Russia and France. The data were obtained directly from the ISA and were not supplied with quality assurance or quality control data. However, verification is possible by cross comparison between all of the six pioneer contractors (also Korea, Germany and an eastern European consortium) who have so far supplied the ISA with data across what is effectively a single large deposit. The TOML Mineral Resource estimate also compares very well with a subset of an ISA sponsored integrated Mineral Resource estimate that uses a much larger multisource database from across the entire CCZ.

The key data behind the Mineral Resource estimate are surface samples obtained by free-fall grab samplers, although a few results from box corers were also included. Free-fall grab samplers are believed to underestimate the actual abundance, as smaller nodules may escape some grabs during ascent and larger nodules around the edge of the sampler may be knocked or fall out during the sampling process. Despite this, they are the standard sampling method as they are the most productive and proven tool available, because several can be deployed at any one time independently of the survey vessel (from deployment to recovery is several hours).

Many of the sampling procedures used by the pioneer contractors were not available to the Qualified Persons, but it is likely that all of the pioneer contractors followed similar procedures. Nodule abundance (wet kg/m2) is derived by dividing the weight of recovered nodules by the surface area covered by the open jaws of the sampler or corer (typically 0.25 to 0.5 m2). A split of the nodules was dried, crushed and ground to enable grade determination via standard analytical methods (typically atomic absorption spectrometry and X-ray fluorescence) either on the vessel or back on shore. Specific nodule chemical standards, provided by the U.S. Geological Survey were used for instrument calibration.

Analysis of the data reveals that, as a consequence of their origin, nodule grades vary only slightly across the CCZ, with spatial continuity of the Ni, Co and Cu grades often ranging up to the order of several tens of kilometres. Nodule abundance is less continuous, with ranges up to the order of several kilometres, as they are also subject to local changes in net sedimentation (a consequence of seafloor slope, slumping, erosion and local currents).

Estimation of tonnage and grade for the TOML Exploration Area within the CCZ was undertaken using only sample data within the TOML Exploration Area. Datamine Studio mining software version 3.20.6140.0 was used for the modelling. The modelling methodology used for estimating the Mineral Resource was determined through careful consideration of the scale of deposit, mechanism of nodule formation, geological controls and nature of the sampling method. The approach involved estimating nodule abundance and grades into a two-dimensional block model with abundance in kg/m2 used for calculating tonnage. Grades were estimated using Ordinary Kriging (OK) and Inverse Distance Weighting (IDW) while abundance was only estimated using IDW.

Nautilus Minerals Inc – Annual Information Form 2014

Page 46

---

The modelling methodology is similar to the method applied by the ISA (2010) for their global estimate (not NI 43-101 compliant) which was produced by a multi-disciplinary effort that involved several world authorities.

The occurrence of manganese nodules within the CCZ is controlled by two large scale geological features: the boundary of the CCZ deposit and the presence of sea mounts.

The boundary limits of the CCZ defining the region where nodules have been found to occur is on a continental scale bracketed by the Clarion and Clipperton Fracture Zones to the north and south respectively. The deposit extends to the west and east in a channel between the two fracture zones. The limits to the CCZ occur well outside the boundaries of the TOML Exploration Area. Consequently, 100% of the TOML Exploration Area falls within the CCZ deposit. Internally within the CCZ deposit the continuity of the distribution of nodules can be reasonably assumed since the mechanism for the formation of nodules is continental in scale.

Bathymetric features are likely to play a role in local distribution of nodules through variations in net sedimentation rates via erosion and deposition. There are principally two bathymetric domains:

	•	Sea mount ranges
	•	Abyssal hill province.

Based on interpretation of GEBCO bathymetry data, less than 2% of the TOML Exploration Area contains isolated sea mounts. Essentially, the entire TOML Exploration Area falls within the abyssal hill domain.

The Inferred Mineral Resource estimate was made using a 2D model and ordinary kriging estimation for grade and inverse distance estimation for abundance, and is summarised at a range of cut-offs in Table 1-1. The Mineral Resource estimate at an abundance cut-off of 4 wet kg/m2 is the selected base case scenario considering a non-selective bulk mining operation.

Table 1-1: Inferred Mineral Resource Estimate for the TOML Exploration Areas A-D within the CCZ at a series of Nodule Abundance cut-offs.

The available information regarding mining and processing of the manganese nodules has been assessed and there are reasonable prospects for economic extraction.

This Mineral Resource estimate is based upon and accurately reflects data compiled or supervised by Mr. Matthew Nimmo, Principal Geologist, who is a Member of the Australian Institute of Geoscientists and a full time employee of Golder Associates Pty Ltd. Mr. Nimmo has sufficient experience in resource estimation to qualify as a Qualified Person under NI 43-101 and is the lead author of the Updated CCZ Report.

Nautilus Minerals Inc – Annual Information Form 2014

Page 47

---

Dr Charles Morgan, Member of the Australian Institute of Geoscientists and Registered Member of the Society for Mining, Metallurgy, and Exploration, a full-time employee of Planning Solutions Inc., is a Professional Marine Scientist and the Qualified Person responsible for Items 6, 9, 10, 11 and 12 of the Updated CCZ Report. He has visited the CCZ as part of a regional study by an independent multinational consortium called Ocean Minerals Company. Dr Morgan has been intermittently involved with evaluation of nodule resources over the past 30 years, and has produced various geological summaries and statements for the International Seabed Authority and other parties.

Davey Banning, Member of the Australian Institute of Geoscientists and consultant to Golder, is an independent consultant and the Qualified Person responsible for Items 7 and 8 of the Updated CCZ Report. He visited the site as part of the last (1980s) exploration cruises known over the TOML Exploration Area with Ocean Minerals Company.

Exploration information (samples collected by the Korean and German state-supported pioneer contractors) indicates nodule potential additional to the Inferred Mineral Resource in TOML Exploration Areas E and F, which comprise approximately 30% of the total TOML Exploration Area and for which no resource estimate has been completed. Also some or all of the nodules may contain elevated levels of rare-earth elements based on results released by an adjacent licence claimant.

TOML has not yet done any detailed recovery planning or equipment design for the nodule project, but a large and growing body of work, by a variety of organisations over the past 30 plus years, indicates that recovery of the nodules is possible. Nautilus is currently building the world’s first deep seafloor resource production system for its Solwara 1 massive sulphide deposit.

TOML has not done any mineral processing or metallurgical test-work on the seafloor nodules from the TOML licences. However, considerable historical work has been done at both laboratory scale and pilot plant scale that indicates that processing of the nodules is technically feasible.

Recommended future work on the TOML Exploration Area focuses on determining an Inferred Mineral Resource estimate for Areas E and F and increasing the resource classification for parts of the other areas to Indicated or Measured Mineral Resource. Additionally, key modifying factors will be constrained to a point where a Mineral Reserve may potentially be estimated. Recommendations for future work also includes: detailed bathymetric and sonar surveys; additional sampling with assaying of all samples collected for additional elements; density and moisture studies; environmental, engineering and metallurgical studies and design work; and preliminary economic and commercial studies.

Nautilus Minerals Inc – Annual Information Form 2014

Page 48

---

RISK FACTORS

Our operations are speculative due to the high-risk nature of business related to the exploration and acquisition of rights to potential mineable deposits of metals. These risk factors could materially affect the Company’s future results and could cause actual events to differ materially from those described in forward-looking statements relating to our company.

Exploration, Development and Operating Risks

Financial resources

Substantial expenditures are required to discover and establish sufficient resources and to develop the mining and processing facilities and infrastructure at any site chosen for mining. There can be no assurance that the Company will be able to raise sufficient funding to facilitate this development. The Company's funds as at the date of this AIF will not be sufficient to complete the construction of the Seafloor Production System or to bring the Solwara 1 Project into production, and there can be no assurance that additional sources of finance will be available to the Company.

Future funding requirements and risk

The Company has no producing mines and has no source of operating cash flow other than through debt and/or equity financing. Furthermore, there is no precedent for the Projects, so debt financing may not be available on commercially reasonable terms, or at all. There is, therefore, no assurance that additional funding will be available to allow the Company to proceed with development of the Projects. Failure to obtain additional financing on a timely basis could cause the Company to reduce or terminate its proposed operations.

Exploration risk

Exploration risk exists in the discovery, location, drilling and definition of the SMS deposits. The majority of exploration companies fail to ever locate an economic deposit and given that no economic SMS deposit has ever been proven such risks are especially significant to the Company. The model for SMS deposits has never been tested by closed spaced drilling and/or production for the purpose of establishing resource tonnage. Drilling may be affected by the availability of suitable vessels and equipment, prevailing sea conditions, currents close to the seafloor and recovery of material drilled and lack of experience in drilling SMS deposits or unsuitability of equipment for drilling such material in the prevailing conditions. Exploration risk also exists in the surface and near-surface geophysical definition of active or inactive SMS deposits. Commercial exploration for SMS deposits is in its infancy and techniques and equipment have yet to be developed or adapted to locate, test and drill such SMS deposits efficiently and there is a risk that such techniques or equipment may not be developed or, if developed, may not be commercially viable.

Mining and recovery risk

SMS deposits have never been mined and there is a risk that mining and sulphide material recovery methods and equipment may not be able to be developed to allow for economic development of SMS deposits. Technologies have not been fully proven in such sub-sea conditions and for this specific material and application. Disturbing the seafloor may cause issues with visibility that could interfere with operations. Failure to adapt existing equipment or to develop suitable equipment or recovery and development techniques suitable for the prevailing material and seafloor conditions would have a material adverse effect on the Company's business, results of operations and financial condition. The Tenements are located in an active tectonic and volcanic setting and volcanic activity, including earthquakes, could hinder operations or damage or destroy equipment and there is a risk that volcanic activity could result in volcanic material, such as lava, covering any SMS deposit found, rendering it uneconomic.

Nautilus Minerals Inc – Annual Information Form 2014

Page 49

---

Estimates of grades from samples

The prospective grades of SMS deposits included in this AIF and in the technical reports incorporated by reference herein are estimates. They are imprecise and may prove to be inaccurate. The nature of estimating grades from samples means that there can be no guarantee that SMS deposits of such grade will be available for extraction. Actual grades may vary from these estimates and consequently impact upon the estimated potential of future revenues, cash flows, royalties and development and operating expenditure. Such variances may be material.

No production history

As an exploration company that has no production history, the Company expects to incur losses in the future. The Company has never had mineral producing properties and cannot be certain that commercial quantities or grades of minerals will ever be recovered.

No pre-feasibility study or feasibility study

Nautilus does not intend to complete a pre-feasibility study or feasibility study or define a large, long life resource or reserve before proceeding with the construction of equipment and commencement of production at the Solwara 1 Project. Management considers the Company's best interests would be served by first demonstrating that existing offshore technologies could be adapted to cut and recover high grade seafloor massive sulphides from the deep ocean. Furthermore, the cost estimates in the Cost Study are not current as of the date of the Technical Report, the Solwara 1 and 12 Report or this AIF and should not be relied on as reflecting the current costs associated with Nautilus’ present production plans. The Technical Report and the Solwara 1 and 12 Report do not update the cost estimates in the Cost Study. Accordingly, no independent Qualified Person has confirmed the amount of these costs or recommended that these costs be incurred. There is significant risk with this approach and no assurance can be given that the proposed production at the Solwara 1 deposit will successfully demonstrate that seafloor resource development is commercially viable.

Inability to find a suitable site for the concentrator or a toll concentrator

The Company has signed a binding heads of agreement with Tongling for the sale of the product extracted from the Solwara 1 deposit. Nautilus' future mining plans regarding other deposits may require construction of an appropriately located land-based concentrator together with a port facility and selected infrastructure in order to produce any gold rich copper concentrate for dispatch to smelters or may involve the sale of mineralized material directly to a third party. There is a risk that Nautilus will be unable to secure a site for the concentrator or access to an existing toll concentrator in a suitable location or to find a purchaser of its mineralized material, in each case, upon suitable terms. If the Company is unable to find a suitable site for the concentrator or access to an existing toll concentrator or is unable to reach an agreement upon suitable terms to sell the mineralized material directly, this would have a material adverse effect on the Company's business, its strategic plans, its results of operations and its financial condition.

Nautilus Minerals Inc – Annual Information Form 2014

Page 50

---

Dependence on a small number of projects

The Company is only involved in a small number of projects, and exploration or operational problems relating to any one of them would have a materially adverse effect on the Company.

Reliance on strategic relationships

In conducting its business, the Company relies on continuing existing strategic relationships and has been forming new relationships with other entities in the mineral exploration and mining industry, including alliance partners, third party contractors, the marine scientific research community and certain regulatory and governmental departments. There can be no assurance that existing relationships will continue to be maintained or that new ones will be successfully formed and the Company could be materially adversely affected by changes to such relationships or difficulties in forming new ones.

Default by partners and counterparties

The Company could be materially adversely affected by changes to relationships with its partners and counterparties or by the default of a partner or counterparty.

Litigation

Legal proceedings may arise from time to time in the course of the Company's business. There have been a number of cases where the rights and privileges of mining companies have been subject to litigation. The Directors cannot preclude that such litigation may be brought against the Company in the future from time to time or that it may be subject to any other form of litigation.

Grade, tonnage and resources

The exact form of mineral occurrence, grade and tonnage across the Company’s tenements are not yet known and these need to be determined from drilling, mapping and analysis of samples. The Company has no SMS resources, except for the Solwara 1 Project and an Inferred Resource at Solwara 12, 25km to the northwest of Solwara 1, and no other SMS deposit has even been sufficiently sampled or drilled to determine a resource, and there is a risk that techniques and equipment may not be suitable or cannot be developed to allow a further resource to be determined. There is a risk of poor recovery from such drilling, making it difficult to accurately quantify tonnage and grade of identified SMS deposits. It is possible that if a deposit is located it will be unable to be treated as a mineral resource or mineral reserve according to the definitions of a mineral resource and mineral reserve under applicable securities laws. The inability to classify a deposit as a resource or reserve may impact the valuation of the Tenements, the price of the Common Shares and the ability of the Company to raise additional funds.

Nautilus Minerals Inc – Annual Information Form 2014

Page 51

---

Metallurgy and treatment

The mineralized material that may be recovered by the Company may comprise a mixture of base and precious metals in varying proportions. This may create a requirement for specialised treatment by a mineral processing plant or smelters. No SMS deposit has been mined and treated for recovery of metal products and there is a risk that SMS deposits may not be economically treatable and that they may contain elements or compounds that may render them unsuitable for treatment by a mineral processing plant or smelter. The actual percentage recovery of metals to a concentrate may vary significantly from SMS deposit to SMS deposit and the Company has yet to complete detailed metallurgical test work on all of its discoveries or determine if there are any deleterious elements or minerals in the material that may render the mineralized material unsaleable, untreatable or uneconomic or susceptible to monetary penalties from purchasers of the concentrates or material or generally of a nature that is not commercially viable.

Some metallurgical test work has been completed on the Solwara 1 deposit (refer to “General Development of the Business of the Company – Mineral Projects"). Whilst every effort has been made by the Company and its consultants to ensure the mineralized material tested was representative of the mineral deposit types, and handled appropriately, given this is the world’s first SMS deposit to be potentially mined and processed, there can be no guarantee on mining that the various specifications are achieved, and/or that the mineralised material performs exactly as predicted.

Operational costs

Operational costs risk exists to the extent that future sub-sea engineering and recovery systems have yet to be determined, designed and tested and the specific requirements of the Company have yet to be determined. Performance, availability, reliability, maintenance, wear and life of equipment are unknown. There can be no guarantee that sub-sea engineering and recovery systems can be developed or if developed, will be employable in a commercially-viable manner. In addition, the deepwater port of Rabaul, which the Company may utilize for the transportation of supplies and crew to and from the PSV for the Solwara 1 Project and other future Bismarck Sea developments, has been impacted in the past by nearby volcanic activity. In the event of any future volcanic activity, access to the port could be disrupted, which could have a material adverse impact on the Company’s operating costs.

Cost Study

The Cost Study is not an economic assessment of the Solwara 1 Project as a whole and does not confirm the Solwara 1 Project's economic viability. Investors are cautioned not to use the Cost Study for that purpose and that a study of all costs, planned execution times, rates of recovery and reasonable revenue projections is necessary before any assessment of economic viability can be made.

The Cost Study was developed from a preliminary mine plan that includes Inferred mineral resources. Investors are cautioned that Inferred resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorised as mineral reserves, and there is no certainty that the costs relating to the Seafloor Production System set forth in the Cost Study will not increase and any such increases may be material. Certain of the costs included in the Cost Study are subject to the inflationary trends (including in respect of fuel costs and other inputs) affecting the mining industry as a whole. In addition, the indicated mineral resources included in the mine plan are not mineral reserves and do not have demonstrated economic viability.

Nautilus Minerals Inc – Annual Information Form 2014

Page 52

---

The Cost Study continues to be relevant, but only as a presentation of the production system and as a costs estimate as of the dates specified in the Cost Study and not as of the date of the Solwara 1 and 12 Report, nor this AIF.

Disruption from non-governmental organisations

As is the case with many businesses which operate in the mining industry, Nautilus may become subject to pressure and lobbying from non-governmental organisations. There is a risk that the demands and actions of non-governmental organisations may cause significant disruption to the Company's business which may have a material adverse effect on its operations and financial condition.

Safety at sea

Occupational health and safety at marine-based operating sites is an on-going risk for contractors engaged by the Company and the personnel employed by the Company to manage the contractors.

Maritime piracy

Maritime piracy involving criminal acts of violence, detention, or depredation may be directed on the high seas against the Nautilus PSV, or a vessel carrying Nautilus' cargo.

Equipment risk

The Company will use high value equipment for coring and bulk sampling and for mining and materials handling. Such equipment, and particularly sub-sea mining equipment, has yet to be finally constructed and/or tested and may not be technically feasible, may not perform the tasks designed for, may prove uneconomic, unreliable or may not be delivered on a timely basis, which could materially delay or prevent exploration and mining. Any equipment downtime may also have standby and breakdown rates which will be additional liabilities for the Company. Any delayed mobilisation of equipment may also impact the Company's operations, within suitable weather windows. Patents may protect technology that the Company may require for any operation, including exploration, and availability of such technology may be restricted or at a licence fee that impacts the economics of the Solwara 1 Project. There is a risk that operations of the Company may infringe patents or licences that could result in significant penalties or accounting of profits, should such a case be found against the Company.

Renewal of Tenements and Tenement applications

Any renewal of the Tenements is at the discretion of the relevant country’s government. Failure to gain such renewal of the Tenements would have a material adverse effect on the Company’s business, results of operations, and financial condition. In addition, there can be no assurance that the Company's tenement applications will be granted on a timely basis or at all.

Tenements

The majority of the Tenements are at an early stage of exploration. Any further development of these properties will only follow upon obtaining satisfactory exploration results and the scrutiny of technical and other geological reports. Substantial expenditures are required to discover and establish sufficient ore reserves and to develop the mining and processing facilities and infrastructure at any site chosen for mining. There can be no assurance that the Company will be able to raise sufficient financing to facilitate this development.

Nautilus Minerals Inc – Annual Information Form 2014

Page 53

---

Dependence on the Directors and officers

The Company's future success is dependent on the ability of the Directors and the officers of the Company to deal effectively with complex risks and relationships and to execute the Company's exploration plan. The success of the Company is, and will continue to be, to a significant extent dependent on the expertise and experience of its Directors and officers and the loss of one or more of the Directors or officers could have a material adverse effect on the Company. The success of the Company will depend on the ability of its Directors and officers to interpret market and geological data correctly and to interpret and respond to economic, market and other conditions in order to locate and adopt appropriate investment opportunities, monitor such investments and ultimately, if required, successfully divest such investments.

Dependence on key personnel

The Company has a small management team and the loss of a key individual or its inability to attract suitably qualified persons in the future could have a material adverse effect on the Company.

Dependence on other contractors

The Company will be heavily dependent on third party contractors. The Company will be dependent on contractors for developing a workable system for mining the SMS deposits and for constructing and delivering a marine vessel on a timely basis. The Company will also depend on contractors for the construction of the land-based concentrator, associated port facility and related infrastructure. A failure of a contractor or disputes with a contractor could have a material adverse effect on the Company, its business, the results of operations and its financial condition. See "General Development of the Business of the Company – Overview of Business – Changes to Contracts".

Increases in capital and operating costs

The actual capital costs and operating costs could be significantly higher than the estimates, particularly if there are delays to the Solwara 1 Project or significant movements in inflationary factors. There can be no assurance that actual capital costs and operating costs will be as estimated in the Cost Study, which has not been updated since the date of the Cost Study.

Ability to exploit successful discoveries

It may not always be possible for the Company to participate in the exploitation of successful discoveries. Such exploitation may involve the need to obtain licences or clearances from the relevant authorities, which may require conditions to be satisfied and/or the exercise of discretion by such authorities. It may or may not be possible for such conditions to be satisfied. Furthermore, the decision to proceed to further exploitation may require the participation of other companies whose interests and objectives may not be consistent with those of the Company. Such further exploitation may also require the Company to meet or commit to financial obligations which it may not have anticipated or may not be able to commit to due to a lack of funds or an inability to raise funds.

Nautilus Minerals Inc – Annual Information Form 2014

Page 54

---

Insurance risk

Any insurance coverage the Company currently has, or may obtain, may not cover all potential losses. The mining industry is subject to significant risks that could result in damage to, or destruction of, mineral properties or producing facilities, personal injury or death, environmental damage, delays in mining, monetary losses and possible legal liability. Where considered practical to do so, the Company maintains insurance in amounts it believes to be reasonable, including insurance for workers' compensation, theft, general liability, destruction of property, autos and mobile equipment. Such insurance, however, contains exclusions and limitations on coverage. Accordingly, the Company's insurance policies may not provide coverage for all losses related to its business (for example, the total extent of, amongst other things, environmental liabilities and losses). The occurrence of losses, liabilities or damage not covered by such insurance policies could have a material adverse effect on the Company's results of operations and financial condition. The Company cannot be certain that insurance will be available, or that it will be available on terms and conditions acceptable. In some cases, coverage is not available or considered too expensive relative to the perceived risk.

Political instability

The Company's mineral exploration activities could be affected in varying degrees by political instability and changes in government regulation relating to foreign investment and the mining business, including expropriation. Operations may also be affected in varying degrees by possible terrorism, military conflict, crime, fluctuations in currency rates and high inflation. In addition, from time to time governments may nationalise private businesses including mining companies. There can be no assurance that the governments of countries where the Company operates will not nationalise mining companies and their assets in the future.

Several of the nations in which the Company operates or may operate, including but not limited to PNG, Solomon Islands, Fiji and Tonga, have experienced political and social unrest (including military coups) and protestors have at times targeted foreign firms in the mining sector. The Company's projects could suffer delays and losses due to insurgent activities which could disrupt operations.

Information Technology Risk

The Company is dependent on information technology systems, which are subject to certain risks. The Company depends upon information technology systems in a variety of ways throughout its operations. Any significant breakdown of those systems, whether through virus, cyber-attack, security breach, theft, or other destruction, invasion or interruption, or unauthorized access to our systems, could negatively impact the Company's business and operations. To the extent that such invasion, cyber-attack or similar security breach results in disruption to our operations, misappropriation of funds, loss or disclosure of, or damage to, our data including our confidential or proprietary information, our reputation, business, results of operations and financial condition could be materially adversely affected. The Company's systems, internal controls and insurance for protecting against such cyber security risks may be insufficient. The Company may be required to expend significant additional resources to continue to modify and enhance its protective measures or to investigate, restore or remediate any information technology security vulnerabilities. See "General Development of the Business of the Company – Three Year History – Recent Developments in 2015 – Pre-payment of charterer's guarantee".

Nautilus Minerals Inc – Annual Information Form 2014

Page 55

---

Management of growth

The ability of Nautilus to implement its strategy requires effective planning and management control systems. Nautilus' plans may place a significant strain on the Company's management, operational, financial and personnel resources. The Company's future growth and prospects will depend on its ability to manage this growth and to continue to expand and improve operational, financial and management information and quality control systems on a timely basis, whilst at the same time maintaining effective cost controls. Any failure to expand and improve operational, financial and management information and quality control systems in line with the Company's growth could have a material adverse effect on the Company's business, financial condition and results of operations.

Labour and employment matters

While the Company has good relations with its employees, these relations may be impacted by changes in the scheme of labour relations which may be introduced by the relevant governmental authorities. Adverse changes in such legislation may have a material adverse effect on the Company's business, results of operations and financial condition.

Currency risk

The Company's operations incur most expenditures in US dollars, British pounds and Australian dollars but also incur expenditure in the local currencies of PNG, Vanuatu, Fiji, Tonga and Canada. As a result of the use of these different currencies, the Company is subject to foreign currency fluctuations which may materially affect its business, results of operations and financial condition.

Lack of recognition of risks

There is a risk that management of the Company may not be skilled or knowledgeable enough to foresee, recognise, contemplate or quantify the risk factors or take any steps to mitigate or lessen the impact of any risks.

Conflicts of interest

Certain Directors and officers of the Company are, and may continue to be, involved in the mining and mineral exploration industry through their direct and indirect participation in corporations, partnerships or joint ventures which are potential competitors of the Company. Situations may arise in connection with potential acquisitions in investments where the other interests of these Directors and officers may conflict with the interests of the Company. Directors and officers of the Company with conflicts of interest will be subject to and will follow the procedures set out in applicable corporate and securities legislation, regulations, rules and policies.

Risks Relating to the Mining Industry

The exploration for and development of mineral deposits involves significant risks, which even a combination of careful evaluation, experience and knowledge may not eliminate.

Nautilus Minerals Inc – Annual Information Form 2014

Page 56

---

Market risk

Whether a mineral deposit will be commercially viable depends on a number of factors. Factors may include: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices, which are highly cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Company not receiving an adequate return on invested capital.

Commodity prices

The profitability of mining operations is significantly affected by changes in the market price of copper, gold and other metals and the cost of labour, power, petroleum fuels and oil. The level of interest rates, the rate of inflation, world supply of these minerals and stability of exchange rates can all cause significant fluctuations in base metal, precious metal and oil prices.

Such external economic factors are in turn influenced by changes in international investment patterns, monetary systems and political developments. The price of copper, gold and other metals and oil has fluctuated widely in recent years. Depending on the price of copper, gold and other metals, and the cost of power, petroleum fuels and oil, cash flow from mining operations may not be sufficient to cover the Company's operating costs or costs of servicing debt.

The Company is not currently party to any commodity hedging contracts as the Company has no production. The Company expects that in connection with any debt financing facility that may be required for the business of the Company, mandatory hedging will be required for a portion of estimated annual production. To the extent that the Company participates in any option and spot-deferred contracts for metals, the realisation of any gain by the Company as a result of increased metal prices may be limited. As there is no precedent for the Projects, debt financing may not be available on commercially reasonable terms, or at all.

Economic operations

While the discovery of a mineralised body may result in substantial rewards, few properties which are explored are ultimately developed into production. Major expenses may be required to establish ore reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible to ensure that the current exploration programs planned by the Company will result in the discovery of a mineralised body or a profitable commercial mining operation, and on an industry statistical basis it is unlikely that an economic operation will be developed.

Competition

The mining industry is very competitive. The competition, to the extent that it will affect the Company, relates to competition from new players in the search for SMS deposits, for the availability of marine exploration and drilling vessels, related marine equipment and specialised personnel. There is a risk that competitors may find substitutes for the metals for which the Company is exploring, or find lower cost sources of, or more efficient processes to extract, these metals (either on the seafloor or on land).

Nautilus Minerals Inc – Annual Information Form 2014

Page 57

---

Vessel and equipment availability

Vessel and equipment utilisation rates are subject to changing market forces. Whilst the Company is building relationships with its major suppliers for the construction and delivery of specialised mining equipment and a vessel for use on the Solwara 1 Project, the Company may nevertheless need to compete for the availability of suitable vessels and equipment. There is a risk that vessels may be under long-term charter and suitable vessels may not available to the Company in a timely manner or at all.

Weather and sea conditions

There is a risk that adverse weather and sea conditions may affect exploration and any potential mining activities by reducing the time available for productive exploration and mining, or increasing the operating and capital costs to a level that a project may not be economic. Weather, volcanic eruptions, storms, cyclones, tsunamis and sea conditions may also damage or destroy equipment, or contribute to injury or loss of life.

Government regulation

The exploration activities of the Company are subject to various international, state and local laws governing prospecting, development, production, taxes, labour standards and occupational health, mine safety, toxic substances and other matters. The Company operates in some jurisdictions with limited or no mining history and therefore the mining related legislation has not been exhaustively tested in some of these jurisdictions. Although the Company believes that its exploration activities are currently carried out in accordance with all applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail production or development. Amendments to current laws and regulations governing operations and activities of exploration and mining, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases in exploration expenses, capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties.

By imposing a condition on any and all exploration licences issued under the PNG Mining Act 1992, the PNG Government reserves the right to elect at any time prior to the commencement of mining, to make a single purchase up to a 30 per cent equitable interest in any mineral discovery arising from any such licence, at a price pro rata to the accumulated exploration expenditure and then to contribute to further exploration and development in relation to the lease on a pro rata basis. The State of PNG has forfeited this right in respect of the Mining Lease following the Company’s termination of the State Equity Option Agreement but may exercise it in relation to other of the Company's tenements. If this happens, then any return on investment and profitability of the Company may be significantly affected. Other governments in areas where we operate may enact similar legislation.

Permits and licences

The exploitation and development of the Company's mineral properties will require the Company to obtain regulatory or other permits and licenses (including mining leases) from various governmental licensing bodies. While the Company has received the Mining Lease for its Solwara 1 Project, there can be no assurance that the Company will be able to obtain all necessary operating permits and licenses that may be required to carry out development, mining and processing operations on its Solwara 1 Project.

Nautilus Minerals Inc – Annual Information Form 2014

Page 58

---

Further, there can be no assurance that the Company will be able to obtain all permits and licenses that may be required to carry out exploration, development, mining and processing operations on its other properties. There can be no assurance that the Company's interest in its Tenements is free from defects or that licences or other contractual arrangements between the Company and entities owned or controlled by foreign governments will not be unilaterally altered or revoked.

Environmental risks and hazards

All phases of the Company's mineral exploration operations are subject to environmental regulation in the various jurisdictions in which Nautilus operates. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the Company's operations or results. Further, while Company studies have indicated a low likelihood of risk to the aquatic environment from mining activities, the actual impact of any SMS mining operations on the environment has yet to be determined.

Government approvals and permits are currently, and may in the future be, required in connection with the Company's operations. To the extent such approvals are required and not yet obtained, the Company may be curtailed or prohibited from proceeding with planned exploration or development of mineral properties.

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

Global Financial Conditions

Following the onset of the credit crisis in 2008, global financial conditions were characterized by extreme volatility and several major financial institutions either went into bankruptcy or were rescued by governmental authorities. While global financial conditions subsequently stabilized, there remains considerable risk in the system given the extraordinary measures adopted by government authorities to achieve that stability. The deteriorating financial condition of certain government authorities has significantly increased the potential for sovereign defaults in a number of jurisdictions, including within the member states of the European Union. Global financial conditions could suddenly and rapidly destabilize in response to future economic shocks, as government authorities may have limited resources to respond to future crises. Future economic shocks may be precipitated by a number of causes, including changes in commodity prices, geopolitical instability and natural disasters.

Global financial conditions continue to be subject to increased volatility. Many industries, including the mining industry, are impacted by global market conditions. Some of the key impacts of financial market turmoil can include contraction in credit markets resulting in a widening of credit risk, devaluations and high volatility in global and specifically mining equity markets, commodity, foreign exchange and precious metal markets, and a lack of market liquidity. A slowdown in the financial markets or other economic conditions, including but not limited to, reduced consumer spending, increased unemployment rates, deteriorating business conditions, inflation, deflation, volatile fuel and energy costs, increased consumer debt levels, lack of available credit, lack of future financing, changes in interest rates and tax rates may adversely affect Nautilus' operations and business plans. Any of these factors may impact the ability of Nautilus and its joint venture partners or potential partners to obtain equity or debt financing in the future and, if obtained, on favourable terms. Additionally, any such occurrence could cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses.

Nautilus Minerals Inc – Annual Information Form 2014

Page 59

---

Canadian Corruption of Foreign Public Officials Act and similar worldwide anti-bribery laws

The Canadian Corruption of Foreign Public Officials Act, the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and anti-bribery laws in other jurisdictions, generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business or other commercial advantage. Nautilus' policies mandate compliance with these anti-bribery laws, which often carry substantial penalties. Nautilus operates in jurisdictions that have experienced governmental and private sector corruption to some degree, and, in certain circumstances, strict compliance with anti-bribery laws may conflict with certain local customs and practices. There can be no assurance that Nautilus' internal control policies and procedures will always protect it from reckless or other inappropriate acts committed by the Company's affiliates, employees or agents. Violations of these laws, or allegations of such violations, could have a material adverse effect on Nautilus' business, financial position and results of operations and could cause the market value of the Common Shares to decline.

Risks Relating to our Common Shares and the Trading Market

The Company's largest shareholders and their respective affiliates, in the aggregate, beneficially own a substantial amount of the Company's outstanding Common Shares

As a result, these shareholders may be able to influence matters requiring approval by shareholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. They may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests.

Sale of substantial amounts of Common Shares in the public market

The Company is unable to predict whether a large number of its Common Shares will be sold in the open market. Any future sales of substantial amounts of Common Shares in the public market by any significant shareholder or a block of shareholders, or even the perception that such sales could occur, may decrease the market price of the Common Shares.

Market price volatility

The market price of the Common Shares may be volatile and subject to wide fluctuations. The market price of the Common Shares may fluctuate as a result of a variety of factors, including but not limited to period-to-period variations in operating results or changes in turnover or profit estimates by the Company, industry participants or financial analysts.

The market price could also be adversely affected by developments unrelated to the Company’s operating performance, such as: the operating and share price performance of other companies that investors may consider comparable to the Company; speculation about the Company in the press or the investment community; strategic actions by competitors, such as acquisitions and restructurings; changes in market conditions; and regulatory changes.

Nautilus Minerals Inc – Annual Information Form 2014

Page 60

---

Further issues of Common Shares

It is likely that the Company will issue additional Common Shares to fund its growth plans. Any such issue could dilute the interests of Shareholders and impact the price of the Common Shares. Any such Common Shares may be issued at market price or a discount to the market price.

Nautilus has not and does not plan to pay dividends

The Company has never declared or paid any dividends on its Common Shares and does not currently intend to pay dividends in the future. Earnings, if any, will be retained to finance further growth and development of the Company’s business.

There will be dilution upon exercise of convertible securities

As at the date of this AIF, in the event that all of the Company’s stock options and loan shares are exercised, there will be an additional 16,270,000 Common Shares outstanding. Such increase in the number of Common Shares would result in the dilution of the voting power of the Company’s existing shareholders.

Nautilus Minerals Inc – Annual Information Form 2014

Page 61

---

DIVIDENDS

The Company has not paid dividends in the past and does not expect to have the ability to pay dividends in the near future. If the Company generates earnings in the future, it expects that they will be retained to finance further growth and, when appropriate, retire debt. The Company’s directors will determine if and when dividends should be declared and paid in the future based on the Company’s financial position at the relevant time. All holders of the Common Shares are entitled to an equal share in any dividends declared and paid on the Common Shares.

Under the Business Corporations Act (British Columbia), the Company is unable to declare or pay a dividend if there are reasonable grounds for believing that: (a) the Company is insolvent; or (b) the payment of the dividend would render the Company insolvent.

Nautilus Minerals Inc – Annual Information Form 2014

Page 62

---

DESCRIPTION OF CAPITAL STRUCTURE

Authorized Capital

The Company is authorized to issue an unlimited number of Common Shares without par value and an unlimited number of preference shares issuable in series, of which it has 445,302,865 Common Shares and no preference shares issued and outstanding as of the date hereof. The Company's issued and outstanding Common Shares includes 11,325,000 Common Shares which have been issued under, and remain subject to the terms and conditions of, the Company's Share Loan Plan (see "Escrowed Securities and Securities Subject to Contractual Restriction on Resale").

Common Shares

The Common Shares entitle the holder thereof to receive notice of any meetings of shareholders of Nautilus, and to attend and cast one vote per common share at all such meetings. Holders of the Common Shares do not have cumulative voting rights with respect to the election of directors and, accordingly, holders of a majority of the Common Shares entitled to vote in any election of directors may elect all directors standing for election.

Holders of Common Shares are entitled to receive on a pro-rata basis such dividends, if any, as and when declared by the board of directors at its discretion from funds legally available therefor and, upon the liquidation, dissolution or winding up of Nautilus, are entitled to receive on a pro-rata basis the net assets of the company after payment of debts and other liabilities, in each case subject to the rights, privileges, restrictions and conditions attaching to any other series or class of shares ranking senior in priority to, or on an equal basis with, the holders of Common Shares with respect to dividends or liquidation.

The Common Shares do not carry any pre-emptive, subscription, redemption or conversion rights, nor do they contain any sinking or purchase fund provisions.

Nautilus Minerals Inc – Annual Information Form 2014

Page 63

---

MARKET FOR SECURITIES

Price Range and Trading Volume

Common shares

The Common Shares are listed and posted for trading on the TSX under the symbol “NUS”. The following table sets forth information relating to the monthly trading of the Common Shares on the TSX for the fiscal year ended December 31, 2014.

In addition, the Common Shares were quoted under the symbol “NUSMF” on OTCQX International effective as at April 27, 2012.

Nautilus Minerals Inc – Annual Information Form 2014

Page 64

---

ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER

To the knowledge of the Company, as at December 31, 2014 no securities of any class of the Company were held in escrow or were subject to a contractual restriction on transfer, other than as follows:

Note:

(1)

The Company has an equity compensation plan, known as the "Share Loan Plan" or the "SLP" that it uses to attract, retain and motivate its Australian resident directors, officers, employees and service providers. The SLP is described in the management information circular of the Company dated May 8, 2014 and filed on SEDAR on May 20, 2014. Common Shares issued under the SLP are held by Computershare Trust Company of Canada, as administrative agent, for the benefit of the SLP participants. Such shares are released to the participant at such time as the loan for the purchase price is repaid, if at all, during the term of the loan. If the loan is not repaid during its term, the applicable Common Shares are returned to treasury for cancellation.

Nautilus Minerals Inc – Annual Information Form 2014

Page 65

---

DIRECTORS AND OFFICERS

The following table sets forth the name, province/state, country of residence, nationality, position held with the Company, principal occupation, business or employment of each of our directors and executive officers and the period(s) during which each has served as a director of the Company. All directors hold office until the next annual meeting of the Company’s shareholders or until their successors are elected or appointed.

Name, Province/State, Country and				Principal Occupation, Business
Nationality		Position with the Company		or Employment
A. Geoffrey Loudon(1)(2) Christchurch, New Zealand Australian		Chairman and Director since May 4, 2006		Director, Auriferous Mining Limited
Russell Debney(1)(2) NSW, Australia Australian		Director since May 4, 2006		CEO, Direct Nickel Limited
Cynthia Thomas(1)(2) Paris, France Canadian		Director since June 23, 2010		Principal of Conseil Advisory Services Inc.
Mohammed Al Barwani Muscat, Oman Omani		Director since September 11, 2012		Chairman, MB Holding Co. LLC
Usama Al Barwani Muscat, Oman Omani		Director since September 20, 2013		Managing Director, United Engineering Services
Mark Horn Lincolnshire, U.K. English		Director since September 20, 2013		CEO, M. Horn & Co. Ltd
Michael Johnston Queensland, Australia New Zealander		President & CEO since 31 October 2012. VP Strategic Development and Exploration from June 4, 2006 to 30 October 2012.		President & Chief Executive Officer, Nautilus
Shontel Norgate Queensland, Australia Australian		Chief Financial Officer since September 6, 2006		Chief Financial Officer, Nautilus
Kevin Cain Queensland, Australia Australian		Vice President – Projects since February 9, 2012		Vice President – Projects, Nautilus
Adam Wright Queensland, Australia Australian		Vice President – PNG Operations since August 1, 2014		Vice President – PNG Operations, Nautilus
Jonathan Lowe Queensland, Australia Australian		Vice President - Strategic Development and Exploration since January 15, 2013		Vice President - Strategic Development and Exploration, Nautilus
Karen Hauff Queensland, Australia Australian		Company Secretary since July 26, 2011		General Counsel/Company Secretary, Nautilus

Nautilus Minerals Inc – Annual Information Form 2014

Page 66

---

(1)	Current member of the Audit Committee.
(2)	Current member of the Nomination and Remuneration Committee.

The principal occupations, businesses or employments of each of the directors and executive officers during the past five years are disclosed in the brief biographies set forth below.

Geoffrey Loudon (Chairman and Director)
Mr. Loudon is a New Zealand based resource professional with qualifications in geology and engineering. His extensive international experience covers resource exploration, development and production as well as investment banking. Mr. Loudon has worked worldwide including Australasia, Asia, the Americas and Europe.

Mr. Loudon is Executive Chairman of the private New Zealand based L&M Group of minerals and energy companies. He is a director of the Papua New Guinea based PNG City Mission. Mr. Loudon was founder and Chairman of Niugini Mining Limited, discoverer of the Lihir gold deposit in PNG which was developed by Rio Tinto in 1995. Mr Loudon was a founding director of Lihir Gold Limited from inception in 1995 until it was taken over in 2010. Professional affiliations include Fellow of the Society of Economic Geologists, Fellow of the Australasian Institute of Mining and Metallurgy, Member of the Canadian Institute of Mining and Member of the American Institute of Mining and Exploration.

Russell Debney (Director)
Mr. Debney was Chairman of the Board of Directors of Nautilus Minerals Niugini Limited and Nautilus Minerals Oceania Limited prior to the acquisition of those companies by Nautilus. He has been actively involved in Nautilus' development strategy, almost since inception. He is based in Sydney, Australia and is a commercial and corporate lawyer as well as a Director of a number of companies in the mining and resources industry.

Mr. Debney has extensive experience in the management, financing and structuring of resource projects, particularly in the offshore environment. He was a Director and Senior Vice President of the Global Engineering Group, a world leading offshore oil and gas engineering company for almost 15 years. Mr Debney is currently Managing Director and Chief Executive Officer of Direct Nickel Limited, an ASX-listed mining company with a revolutionary new hydrometallurgical process for treating nickel laterites.

Cynthia Thomas (Director)
Ms. Thomas joined the Board of Directors in June 2010. She has over 30 years of banking and mine finance experience, and currently acts as Principal of Conseil Advisory Services Inc., an independent financial advisory firm specialising in the natural resource industry which she founded in 2000. Prior to founding Conseil, Ms. Thomas worked with Bank of Montreal, Scotiabank and ScotiaMcLeod in the corporate and investment banking divisions. Ms. Thomas holds a Bachelor of Commerce degree from the University of Toronto and a Masters in Business Administration from the University of Western Ontario.

Ms. Thomas was formerly a Director of PolyMet Mining Corp. and a Director and Chair of the Audit Committee for Ferrinov Inc., a pigment development and manufacturing company. She is currently a Director and Chair of Victory Nickel Inc., and a Director of KWG Resources Inc.

Mohammed Al Barwani (Director)
Dr Al Barwani joined the Board of Directors of the Company in September 2012. Dr Al Barwani is founder and Chairman of MB Holding, has a Bachelor’s Degree in Science from Miami University, Ohio, USA and was awarded a Master’s Degree and PhD in Petroleum Engineering from Heriot-Watt University, Edinburgh, UK. MB Holding is the parent company of a number of companies with wide ranging interests in oil and gas, mining, marine and engineering services. MB Holding also has investments in financial services and in hospitality development. MB Group has operations in more than 20 countries, and employs more than 6,000 employees.

Nautilus Minerals Inc – Annual Information Form 2014

Page 67

---

Dr. Barwani is a non-executive Director of a number of publicly traded and joint stock companies, Oman Air, Al Madina Insurance co. SAOG, Al Madina Investments SAOG (Muscat Stock Market) and UCL Resources. Dr. Barwani was formerly a non-executive director of National Bank of Oman, Shell Oman Marketing Company, Transgulf Holding and Taageer Leasing Company, Oman.

Usama Al Barwani (Director)
Mr Barwani is the Director (Business Development) and a shareholder of MB Holding Company LLC, Nautilus' largest shareholder. He is also Managing Director of United Engineering Services, the MB group's manufacturing and engineering arm and holds board positions for a number of companies including Ahli Bank Oman, one of the fastest growing banks in Oman. He has a Bachelor of Science in Engineering from the University of Tulsa (USA) and a Master of Science in Energy, Trade and Finance from Cass Business School (UK).

Mark Horn (Director)
Mr Horn has worked as an international fund manager, financial analyst and corporate financier, and has extensive international experience in the natural resources and high technology sectors. He started his career at the Co-operative Insurance Society, then moved to Globe Investment Trust, before joining Rockefeller and Co. He subsequently worked for Kleinwort Benson Investment Management, before becoming Head of Research at Canaccord Capital (Europe). Thereafter he established his own FCA authorised corporate finance advisory firm.

Mr Horn holds an ALM, (Harvard University, USA); BA, BA(Hons)(First Class), MA, (Rhodes University, South Africa); BSc, BSc(Hons)(Geosciences), B.Eng(Hons), (Open University, UK); LLB(Hons), LLM, MBA(Banking) (London University, UK); Dip.B.Admin (Manchester Business School, UK). Mr Horn has been called to the Bar of England and Wales as a Barrister of the Honourable Society of Lincoln’s Inn.

Mr Horn was nominated by Metalloinvest, which is Nautilus' second largest shareholder.

Michael Johnston (President & Chief Executive Officer)
Mr. Michael Johnston, Nautilus’ CEO joined the Company just prior to its TSX listing in 2006 as Vice President for Strategic Development and Exploration. He was initially appointed interim President and CEO in October 2012, and confirmed as President and CEO in April 2014 on the successful resolution of the dispute with the State of PNG. He has more than 30 years' experience in the mining industry and over 10 years' experience in deep sea mining and exploration.

During his time at Nautilus he was instrumental in developing the Company’s extensive land position in the South West Pacific, obtaining the first licence granted to a publicly listed company by the International Seabed Authority and developing the first commercial exploration and resource evaluation programs for deep sea minerals, including the delivery of the world’s first NI 43-101 resource, mine plan and Environmental Impact Statement, for seafloor massive sulphides. He has also been a key figure for the Company in establishing and improving critical government, supplier and investor relationships.

Prior to joining Nautilus, Mr. Johnston spent over 11 years in senior management positions with Placer Dome, including General Manager Exploration Asia-Pacific and Technical Services Manager for the Porgera Gold Mine in Papua New Guinea, where he led a large multidisciplinary team providing the technical management and design for the 210,000 tpd open pit and 6,000 tpd underground mines and related facilities.

Nautilus Minerals Inc – Annual Information Form 2014

Page 68

---

Shontel Norgate (Chief Financial Officer)
Ms. Norgate joined Nautilus in 2006 as Chief Financial Officer. Prior to this, Ms. Norgate was the financial controller of Macarthur Coal Ltd., which is a publicly-listed coal mining company on the Australian Securities Exchange. Before joining Macarthur, Ms. Norgate was the financial controller of a listed exploration company for seven years and commenced her career as an auditor with a predecessor firm of PricewaterhouseCoopers in Australia.

Ms. Norgate is a qualified Chartered Accountant and a member of the Chartered Secretaries of Australia. Ms. Norgate has over 15 years commercial experience in the resources industry including debt and equity finance, financial reporting, project management, corporate governance, commercial negotiations and business analysis.

Kevin Cain (Vice President – Projects)
Mr Cain joined Nautilus as Project Director for the Solwara 1 Project in May 2010. Mr Cain has over 35 years' experience in the offshore oil and gas industry with experience in the North Sea, Middle East, South East Asia and Australasia.

Mr Cain’s experience covers shallow and deep water projects and FEED to development of offshore projects. Prior to joining Nautilus, Mr Cain was the Vice President Marine Construction and Fabrication for Clough Limited with assets located in the Gulf of Mexico, Thailand, Australia and South East Asia. Prior to joining Clough, Mr Cain was Project Director for Technip Oceania Pty Ltd.

Adam Wright (Vice President – PNG Operations)
Mr Wright has over 30 years' experience in the copper and gold mining industries, having worked on projects in Europe, North America, Latin America, South East Asia, Australasia and Africa. He has been responsible for the exploration, project development, construction and operational phases of mine development, as well as working on acquisition and development opportunities in the gold and base metals sectors.

Mr Wright was General Manager of the Hidden Valley gold mine in PNG, taking the project from exploration, through construction and in to operation. He was also responsible for the successful ramp up of operations at the Lumwana copper mine in Zambia. In both cases Mr Wright played a significant role in the key areas of stakeholder engagement and corporate social responsibility. Mr Wright has a Masters of Engineering degree in Mineral Process Engineering from Imperial College London.

Jonathan Lowe (Vice President - Strategic Development and Exploration)
Mr Lowe joined Nautilus in January 2007 as Chief Geophysicist. He was appointed as Exploration Manager in September 2008 and Interim VP of Strategic Development in January 2013. Prior to joining Nautilus, Jonathan worked for BHP Billiton where he gained 12 years of global exploration experience, initially as a geophysicist and then as a business development manager.

Karen Hauff (General Counsel/Company Secretary)
Prior to joining Nautilus in 2010, Ms Hauff was the General Counsel and Company Secretary of then ASX listed mineral sands mining company, Bemax Resources Limited, after having spent 6 years at international legal firm, Norton Rose (formerly Deacons) as a Senior Associate in its Commercial Dispute Resolution group.

Nautilus Minerals Inc – Annual Information Form 2014

Page 69

---

Ms Hauff is a qualified solicitor of the Supreme Court of Queensland and the High Court of Australia with 15 years' experience in legal practice, including in the areas of risk management, compliance and corporate governance. In addition to her legal qualifications, Ms Hauff holds a Bachelor of Commerce (Accounting) and serves as Deputy Chairman on the Board of charitable organisation, CHI.L.D. - The Association for Childhood Language and Related Disorders.

Common Shares Beneficially Owned or Controlled

As of the date hereof, our directors and executive officers, as a group, beneficially owned or controlled, or directed, directly or indirectly 10,280,475 Common Shares (including 4,900,000 shares owned pursuant to the Share Loan Plan, as described above under the heading "Escrowed Securities and Securities Subject to Contractual Restriction on Transfer"), representing approximately 2.3% of the Company’s total number of issued and outstanding Common Shares.

To the knowledge of the Company, no director or executive officer of the Company is or was within 10 years prior to the date hereof, a director, chief executive officer or chief financial officer of any company (including the Company) that:

(a) was subject to an order that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or

(b) was subject to an order that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

For the purposes of the disclosure immediately above, “order” means: (a) a cease trade order, including a management cease trade order; (b) an order similar to a cease trade order; or (c) an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days.

To the knowledge of the Company, no director or executive officer of the Company or any shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company:

(a) is, as at the date hereof, or has been within the 10 years before the date hereof, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets;

(b) has, within the 10 years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder; or

(c) has been subject to:

(i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or

(ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

Nautilus Minerals Inc – Annual Information Form 2014

Page 70

---

CONFLICTS OF INTEREST

To the Company’s knowledge, and other than as disclosed herein, there are no known existing or potential conflicts of interest among Nautilus, or any of its subsidiaries, and any of its directors or officers, except that certain of the Company’s directors and officers serve as directors, officers, promoters and members of management of other public companies and therefore it is possible that a conflict may arise between their duties as a director and/or officer of Nautilus and their duties as a director, officer, promoter or member of management of such other companies. See “Directors and Officers”.

Certain of the Company’s directors serve as directors of companies that may enter into contracts with Nautilus in the future. In the event this occurs, a conflict of interest will exist. In accordance with the Business Corporations Act (British Columbia), directors are required to act honestly and in good faith with a view to the best interests of Nautilus. In addition, directors in a conflict of interest position are required to disclose certain conflicts to the Company and to abstain from voting in connection with the matter.

The Company’s directors and officers have been advised of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosures by directors of conflicts of interest, and the Company will rely upon such laws in respect of any directors’ and officers’ conflicts of interest or in respect of any breaches of duty by any of the Company’s directors or officers. All such conflicts are required to be disclosed by such directors or officers in accordance with the Business Corporations Act (British Columbia) and they are required to govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed upon them by law.

Nautilus Minerals Inc – Annual Information Form 2014

Page 71

---

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

The Company was a respondent to arbitration proceedings commenced by the State of PNG on June 19, 2012 in relation to the parties’ obligations under an agreement dated March 29, 2011 (the “Proceedings”). The Proceedings were part heard on 2 and 3 September 2013 in Sydney, Australia under the UNCITRAL Arbitration Rules 2010 before the appointed arbitrator, former Chief Justice of the High Court of Australia, the Honourable Murray Gleeson AC QC (the “Arbitrator”). On 2 October 2013, Mr Gleeson issued an interim award in Nautilus’ favour.

In the Proceedings the Company was seeking damages of a value yet to be determined against the State of PNG arising from the termination of the agreement dated March 29, 2011, which claim was to be heard by the Arbitrator on a date to be fixed.

On April 24, 2014, the Company announced that it had resolved the Proceedings in accordance with the PNG Equity Agreement. On December 11, 2014, the Company announced the completion of the PNG Equity Agreement, which resulted in the Proceedings being terminated. See "General Development of the Business of the Company – Three Year History – 2012 – Dispute Process and Arbitration with the State of PNG", "General Development of the Business of the Company – Three Year History – 2013 – Favourable Decision in Arbitration with the State of PNG" and "General Development of the Business of the Company – Three Year History – 2014 – Nautilus and State of PNG resolve issues and sign agreement" and "Completion of the PNG Equity Agreement".

Other than the Proceedings, the Company was not a party to any material legal proceedings or regulatory actions during the year ended December 31, 2014, and the Company is not aware of any material proceedings contemplated.

Nautilus Minerals Inc – Annual Information Form 2014

Page 72

---

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Other than as disclosed herein, none of the directors, executive officers or principal shareholders and no associate or affiliate of the foregoing persons has or has had any material interest, direct or indirect, in any transaction within the past three years or in any proposed transaction that has materially affected or will materially affect the Company or any of its subsidiaries.

As a result of their participation in equity financings of the Company, including those described under the headings "General Development of the Business of the Company – Three Year History – 2012 – 37.7 Million Shares Issued in Private Placement" and "General Development of the Business of the Company – Three Year History – 2013 – C$40M Rights Offering completed”, Metalloinvest has the right to nominate one member of the Company's board of directors and MB Holding has the right to nominate two members of the Company's board of directors. Metalloinvest's current nominee is Mark Horn and MB's current nominees are Mohammed Al Barwani and Usama Al Barwani.

Nautilus Minerals Inc – Annual Information Form 2014

Page 73

---

TRANSFER AGENTS AND REGISTRARS

The transfer agent and registrar for the Common Shares is Computershare Trust Company of Canada at its offices in Vancouver, British Columbia and Toronto, Ontario, Canada.

Nautilus Minerals Inc – Annual Information Form 2014

Page 74

---

MATERIAL CONTRACTS

Nautilus is not a party to a material contract that was not entered into in the ordinary course of its business or that is otherwise required to be filed under section 12.2 of National Instrument 51-102 ("NI 51-102") at the time this AIF is filed or would be required to be filed under section 12.2 of NI 51-102 at the time this AIF is filed but for the fact that it was previously filed, other than:

	1.	the offtake agreement with Tongling dated April 21, 2012 and described under "General Development of the Business of the Company – Three Year History – 2012 – Offtake Agreement for Solwara 1";
	2.	the charter agreement with MAC dated 6 November 2014, as amended, and described under "General Development of the Business of the Company – Three Year History – 2014 – Nautilus secures vessel charter"; and
	3.	the PNG Equity Agreement and the Joint Venture Agreement, each described under "General Development of the Business of the Company – Three Year History – 2014 – Nautilus and State of PNG resolve issues and sign agreement" and "Completion of the PNG Equity Agreement".

Nautilus Minerals Inc – Annual Information Form 2014

Page 75

---

INTERESTS OF EXPERTS

Ian Lipton, Peter Munro, Phil Jankowski and James Jonathan Lowe, each of whom is a "qualified person" for the purposes of NI 43-101, are responsible for the preparation of the Solwara 1 and 12 Report. Mr. Lipton is a Principal Geologist at AMC Consultants, Mr. Munro is a Senior Principal Consulting Engineer with Mineralurgy Pty Ltd, Mr. Jankowski is an Associate Consultant to SRK and Mr. Lowe is the Vice President – Strategic Development & Exploration of the Company.

Matthew Nimmo, Charles Morgan and Davey Banning, each of whom is a "qualified person" for the purposes of NI 43-101, are responsible for the preparation of the Updated CCZ Report. Mr. Nimmo is an independent Consulting Geologist, Dr. Morgan is a Professional Marine Scientist with Planning Solutions Inc. of Honolulu, Hawaii, and Mr. Banning is an independent Consulting Geologist.

Mr. Jankowski is responsible for the preparation of the Technical Report.

To the knowledge of the Company, none of the persons listed above, at the time of preparing the reports, held or has received or will receive any registered or beneficial interests, direct or indirect, in any securities or other property of the Company or of one of the Company's associates or affiliates or is expected to be elected, appointed or employed as a director, officer or employee of the Company or of any associate or affiliate of the Company, other than Mr. Lowe, the Company’s Vice President – Strategic Development & Exploration, who holds, directly or indirectly, less than 1% of the issued and outstanding Common Shares.

PricewaterhouseCoopers LLP, Chartered Accountants, are the Company’s auditors and have prepared an opinion with respect to the Company’s consolidated financial statements as at and for the year ended December 31, 2014. PricewaterhouseCoopers LLP has advised that they are independent with respect to the Company within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of British Columbia.

Nautilus Minerals Inc – Annual Information Form 2014

Page 76

---

AUDIT COMMITTEE

The Audit Committee is responsible for monitoring the Company’s systems and procedures for financial reporting and internal control, reviewing certain public disclosure documents and monitoring the performance and independence of our external auditors. The committee is also responsible for reviewing the Company’s annual audited financial statements, unaudited quarterly financial statements and management’s discussion and analysis of financial results of operations for both annual and interim financial statements and review of related operations prior to their approval by the full Board of Directors.

The Audit Committee’s charter sets out its responsibilities and duties, qualifications for membership, procedures for committee member removal and appointment and reporting to the Board of Directors. A copy of the charter is attached hereto as Schedule “A”.

The Audit Committee is comprised of three directors, all of whom are independent directors.

From January 1, 2014 to December 31, 2014 the Audit Committee comprised: Russell Debney, Geoff Loudon and Cynthia Thomas. All members of the Company’s Audit Committee must meet the “independence” tests under National Instrument 52-110, “Audit Committees” in that their directors’ fees and committee member fees are the only compensation they, or their firms, receive from us and that they do not otherwise have a material relationship with the Company. Each member of the Audit Committee is financially literate within the meaning of National Instrument 52-110.

The following table sets forth the number of meetings of the Audit Committee during 2014 and the attendance at such meetings during such part of 2014 that each member held such office.

Relevant Education and Experience

Set out below is a description of the education and experience of each Audit Committee member that is relevant to the performance of his or her responsibilities as an Audit Committee member.

Russell Debney – Mr Debney is a qualified commercial and corporate lawyer as well as a director of a number of companies in the mining and resources industry. Mr Debney has approximately 40 years' experience as a legal practitioner specializing in commercial and corporate law, including three years as CEO managing a major national law firm that acted as counsel to two international accounting firms in Australia. Mr Debney led a team that was responsible for the overview of work that included advising on the development and interpretation of accounting standards and auditor duties and responsibilities. Mr Debney has extensive experience in the management, financing and structuring of resource projects, particularly in the offshore environment. For almost 15 years he was a director and Senior Vice President of the Global Engineering Group which grew to be a world leader as an offshore oil and gas engineering consultant and project manager. Mr Debney was a founding Director of Nautilus.

Nautilus Minerals Inc – Annual Information Form 2014

Page 77

---

Cynthia Thomas – Ms. Thomas holds a Bachelor of Commerce degree from the University of Toronto and a Masters in Business Administration from the University of Western Ontario. She has over 30 years of banking and mine finance experience and currently acts as Principal of Conseil Advisory Services Inc., an independent financial advisory firm specialising in the natural resource industry which she founded in 2000. Prior to founding Conseil, Ms. Thomas worked with Bank of Montreal, Scotiabank and ScotiaMcLeod in the corporate and investment banking divisions. Ms. Thomas was formerly a Director of PolyMet Mining Corp. and is currently a Director and Chair of Victory Nickel Inc., Director of KWG Resources Inc. and a Director and Chair of the Audit Committee for Ferrinov Inc., a pigment development and manufacturing company.

Geoffrey Loudon – Mr. Loudon is a New Zealand based resource professional with extensive international experience, including in investment banking. Mr. Loudon is Executive Chairman of the private New Zealand based L&M Group of minerals and energy companies. Mr Loudon was a founding director of Lihir Gold Limited from inception in 1995 until it was taken over in 2010 and is a Fellow of the Society of Economic Geologists.

Pre-Approval Policies and Procedures

The Audit Committee’s charter sets out responsibilities regarding the provision of non-audit services by the Company’s external auditors and requires the Committee to develop and implement a policy on the supply of non-audit services. This policy encourages consideration of whether the provision of services other than audit services is compatible with maintaining the auditor’s independence and requires Audit Committee pre-approval of permitted non-audit and audit-related services.

External Auditor Service Fees

The aggregate fees billed by the Company's external auditors in each of the last two fiscal years for audit and other fees are as follows:

Audit Fees

The aggregate global audit fees billed by the Company’s auditors for the year ended December 31, 2014 were US$229,931 (December 31, 2013 – US$217,705). These fees related to the audit of the Company’s consolidated financial statements for the period ended December 31, 2014.

Audit Related Fees

The aggregate audit-related fees billed by the Company’s external auditors for the year ended December 31, 2014 were US$45,826 (December 31, 2013 – US$63,745). These fees relate to the review of the Company's interim consolidated financial statements and are not reported under "Audit Fees".

Nautilus Minerals Inc – Annual Information Form 2014

Page 78

---

Tax Fees

Tax fees in respect of tax compliance, tax advice and tax planning billed by the Company’s auditors for the year ended December 31, 2014 were US$28,308 (December 31, 2013 – US$44,796).

All Other Fees

Other fees billed by the Company’s external auditors for the year ended December 31, 2014 were US$ Nil (December 31, 2013 – US$Nil).

Nautilus Minerals Inc – Annual Information Form 2014

Page 79

---

ADDITIONAL INFORMATION

Additional information relating to the Company may be found on SEDAR at www.sedar.com.

Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company's securities and securities authorized for issuance under equity compensation plans, as applicable, is contained in our Management Information Circular dated May 8, 2014. Additional financial information is provided in our financial statements and managements’ discussion and analysis for the fiscal year ended December 31, 2014, which can also be found on SEDAR at www.sedar.com.

Unless otherwise stated, information contained herein is as at December 31, 2014.

Nautilus Minerals Inc – Annual Information Form 2014

Page 80

---

SCHEDULE A

TERMS OF REFERENCE OF THE AUDIT COMMITTEE
(THE "COMMITTEE")
(approved at a meeting of the board of directors held on 6 December 2013)

1.	Mandate
1.1	The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities with respect to:
	(a)	the Company’s financial reporting and continuous disclosure;
	(b)	the Company’s systems of internal controls and financial reporting processes; and
	(c)	the review and appraisal of the performance and independence of the Company’s external auditors.
2.	Membership
2.1	The members of the Committee shall be appointed by the Board, on the recommendation of the Nomination Committee. The Committee shall be made up of at least three members.
2.2	Subject to National Instrument 52-110 of the Canadian Securities Administrators ("NI 52- 110"), all members of the Committee shall be independent non-executive directors and shall be financially literate. "Independent" and "financially literate" have the meanings given such terms in NI 52-110. The Chairman of the Board shall not be the Chairman of the Committee.
2.3	The Board shall appoint the Committee Chairman who shall be an independent non- executive director.
2.4	Committee members may serve on the committee for consecutive terms.
3.	Secretary
3.1	The Chief Financial Officer or his or her nominee shall act as the Secretary of the Committee.
4.	Meetings
4.1	Frequency: The Committee shall meet at least twice a year at appropriate times in the reporting and audit cycle and otherwise as required.
4.2	Right to attend: Only members of the Committee have the right to attend committee meetings. However, other individuals such as the Chairman of the Board, Chief Executive Officer and Chief Financial Officer may be invited to attend all or part of any meeting as and when appropriate. The external auditors will be invited to attend meetings of the Committee on a regular basis.

Nautilus Minerals Inc – Annual Information Form 2014

Page i

---

4.3	Notice: Meetings of the Committee shall be called by the Secretary of the Committee at the request of any of its members or at the request of external or internal auditors if the committee considers it necessary. Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda of items to be discussed, shall be forwarded to each member of the Committee and any other person invited to attend, no fewer than five working days prior to the date of the meeting. Supporting papers shall be sent to Committee members and to other attendees as appropriate, at the same time.
4.4	Remote or in person: The Committee may meet either in person, by teleconference, or by videoconference, as determined by the Chairman.
4.5	Quorum: The quorum necessary for the transaction of business shall be two. A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.
4.6	Chairman: In the absence of the appointed chairman of the Committee and/or an appointed deputy, the remaining members shall elect one of their number to chair the meeting.
4.7	Minutes: The Secretary shall minute the proceedings and resolutions of all meetings of the Committee, including recording the names of those present and in attendance. Minutes of Committee meetings shall be filed in the Company's minute book and distributed to members of the Board.
5.	Annual General Meeting

The Chairman of the Committee shall attend the Annual General Meeting prepared to respond to any shareholder questions on the Committee's activities.

6.

Duties

The Committee should carry out the duties below for the Company, major subsidiaries and the group as a whole, as appropriate.

6.1	Financial Reporting

With respect to the Company’s financial reporting and continuous disclosure, the Committee shall:

	(a)	review the Company’s financial statements, MD&A and Annual Information Form prior to dissemination to ensure their appropriateness;
	(b)	review reports and findings of the external auditors and resolve any pending issues;
	(c)	review the certification by the CFO and CEO and ensure that it is in line with regulatory requirements; and
	(d)	review any letters received from regulatory authorities in relation to financial matters and responses thereon.

Nautilus Minerals Inc – Annual Information Form 2014

Page ii

---

6.2	Internal Controls and Risk Management Systems

With respect to the Company’s internal controls over financial reporting, the Committee shall:

	(a)	review the adequacy and effectiveness of the financial reporting system and internal control policies and procedures with the external auditors and management and monitor new regulations in this regard;
	(b)	review with management and the external auditors any reportable condition and material weaknesses affecting internal controls;
	(c)	review with management and make recommendations to the Board in respect of the adequacy and effectiveness of the Company's financial risk management systems; and
	(d)	review any significant related-party transactions.

6.3	Whistleblowing

The Committee shall establish and review the Company's arrangements for: (a) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal controls or auditing matters; and (b) the confidential, anonymous submission by employees of the issuer of concerns regarding questionable accounting or auditing matters. The Committee shall ensure that these arrangements allow proportionate and independent investigation of such matters and appropriate follow up action.

6.4	Internal Audit

The Committee shall review annually the need or otherwise for an internal audit function.

6.5	External Audit
	(a)	The Committee shall:
		(i)	consider and make recommendations to the Board, to be put to shareholders at the Annual General Meeting, in relation to the appointment, re-appointment and removal of the Company's external auditor. The Committee shall oversee the selection process for new auditors and if an auditor resigns the Committee shall investigate the issues leading to this and decide whether any action is required.
		(ii)	oversee the relationship with and the work of the external auditor including (but not limited to):
			(A)	recommendation to the Board of its remuneration, whether fees for audit or non audit services and that the level of fees is appropriate to enable an adequate audit to be conducted;
			(B)	pre-approving any non-audit services to be provided to the Company or its subsidiaries (which pre-approval may be delegated to one or more independent members of the Committee, provided that in such event the pre-approval must be presented to the Committee at its first scheduled meeting following such pre-approval);

Nautilus Minerals Inc – Annual Information Form 2014

Page iii

---

	(C)	approval of its terms of engagement, including any engagement letter issued at the start of each audit and the scope of the audit;
	(D)	assessing annually its independence and objectivity taking into account relevant professional and regulatory requirements and the relationship with the auditor as a whole, including the provision of any non audit services;
	(E)	satisfying itself that there are no relationships (such as family, employment, investment, financial or business) between the auditor and the Company (other than in the ordinary course of business);
	(F)	agreeing with the Board a policy on the employment of former employees of the Company's auditor and monitoring the implementation of this policy;
	(G)	monitoring the auditor's compliance with relevant ethical and professional guidance on the rotation of audit partners, the level of fees paid by the Company compared to the overall fee income of the firm, office and partner and other related requirements;
	(H)	review and approve the Company's hiring policies regarding partners, employees and former partners and employees of the present and former external auditor; and
	(I)	assessing annually the auditor's qualifications, expertise and resources and the effectiveness of the audit process which shall include a report from the external auditor on its own internal quality procedures;

	(iii)	meet regularly with the external auditor, including once at the planning stage before the audit and once after the audit at the reporting stage. The Committee shall meet the external auditor at least once a year, without management being present, to discuss its remit and any issues arising from the audit;
	(iv)	review and approve the annual audit plan and ensure that it is consistent with the scope of the audit engagement;
	(v)	review the findings of the audit with the external auditor. This shall include, but not be limited to, the following;

	(A)	a discussion of any major issues which arose during the audit;
	(B)	any accounting and audit judgements; and

Nautilus Minerals Inc – Annual Information Form 2014

Page iv

---

(C)

levels of errors identified during the audit.

(b)

The Committee shall also review the effectiveness of the audit and shall:

	(i)	review any representation letter(s) requested by the external auditor before they are signed by management;
	(ii)	review the management letter and management's response to the auditor's findings and recommendations; and
	(iii)	develop and implement a policy on the supply of non audit services by the external auditor, taking into account any relevant ethical guidance on the matter.

6.6	Reporting Responsibilities
	(a)	The Committee Chairman shall report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities.
	(b)	The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.

6.7	Other Matters

The Committee shall:

	(a)	have access to sufficient resources in order to carry out its duties, including access to the Company's employees for assistance as required;
	(b)	be provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members;
	(c)	give due consideration to applicable laws and regulations, and the requirements of the stock exchanges on which its securities are listed; and
	(d)	at least once a year, review its own performance, constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.

7.	Authority
7.1	The Committee is authorised:

	(a)	to seek any information it requires from any employee or advisers of the Company in order to perform its duties;
	(b)	to obtain, at the Company's expense, outside legal or other professional advice on any matters within its authority when the Committee reasonably believes it necessary to do so; and
	(c)	to call any member of staff to be questioned at a meeting of the Committee as and when required.

Nautilus Minerals Inc – Annual Information Form 2014

Page v

---

---

Nautilus Minerals Inc.

(an exploration stage company)

Consolidated Financial Statements

For the years ended December 31, 2014 and

December 31, 2013

(Expressed in US Dollars)

 

---

MANAGEMENT’S RESPONSIBIILTY FOR FINANCIAL REPORTING

The preparation and presentation of the accompanying consolidated financial statements, Management Discussion and Analysis (“MD&A”) and all financial information in the Annual Report are the responsibility of management and have been approved by the Board of Directors.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”). Financial statements, by nature, are not precise since they include certain amounts based upon estimates and judgements. When alternative methods exist, management has chosen those it deems to be the most appropriate in the circumstances.

Management, under the supervision of and the participation of the President and Chief Financial Officer, have a process in place to evaluate disclosure controls and procedures and internal control over financial reporting as required by Canadian securities regulations. We, as President and Chief Financial Officer, will certify our annual filings with the CSA as required in Canada by National Instrument 52-109.

The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the consolidated financial statements. The Board carries out this responsibility principally through its Audit Committee which is independent from management.

The Audit Committee is appointed by the Board of Directors and reviews the consolidated financial statements and MD&A; considers the report of the external auditors; examines the fees and expense for audit services; and recommends to the Board the independent auditors for appointment by the shareholders. The independent auditors have full and free access to the Audit Committee and meet with the Audit Committee to discuss their audit work, the Company’s internal control over financial reporting and financial reporting matters. The Audit Committee reports its findings to the Board for consideration when approving the consolidated financial statements for issuance to the shareholders.

Signed: “Michael Johnston”	Signed: “Shontel Norgate”
President and Chief Executive Officer	Chief Financial Officer

---

March 30, 2015

Independent Auditor’s Report

To the Shareholders of Nautilus Minerals Inc.

We have audited the accompanying consolidated financial statements of Nautilus Minerals Inc., which comprise the consolidated statements of financial position as at December 31, 2014 and December 31, 2013 and the consolidated statements of loss and comprehensive loss, cash flows and changes in equity for the years then ended, and the related notes, which comprise a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform our audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Nautilus Minerals Inc. as at December 31, 2014 and December 31, 2013 and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

signed “PricewaterhouseCoopers LLP”

Chartered Accountants

PricewaterhouseCoopers LLP
PricewaterhouseCoopers Place, 250 Howe Street, Suite 700, Vancouver, British Columbia Canada V6C 3S7
T: +1 604 806 7000, F: +1 604 806 7806, www.pwc.com/ca

“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

---

Nautilus Minerals Inc.

Consolidated Statements of Financial Position

(expressed in US Dollars)

		December 31,			December 31,
		2014			2013
		$			$
ASSETS
Current assets
Cash and cash equivalents (Note 5)		118,770,134			40,617,963
Prepaid expenses and advances		766,226			558,677
		119,536,360			41,176,640
Non-current assets
Restricted cash (Note 9)		595,952			658,323
Property, plant and equipment (Note 11)		177,699,461			198,533,059
Exploration and evaluation assets (Note 10)		41,735,818			43,448,448
		220,031,231			242,639,830
TOTAL ASSETS		339,567,591			283,816,470
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities (Note 6)		7,414,236			5,117,410
Project partner contribution (Note 7)		10,733,912			-
Provision for employee entitlements		743,035			-
		18,891,183			5,117,410
Non-current liabilities
Accounts payable and accrued liabilities (Note 6)		4,570,655			8,896,457
Project partner contribution (Note 7)		60,172,942			-
Joint venture contribution		-			1,797,081
Provision for employee entitlements		402,480			-
		65,146,077			10,693,538
TOTAL LIABILITIES		84,037,260			15,810,948
Equity
Share Capital (Note 13)		514,149,818			514,123,985
Contributed Surplus		48,896,679			47,647,463
Deficit		(307,516,166	)		(293,765,926	)
Total Equity		255,530,331			268,005,522
TOTAL LIABILITIES AND EQUITY		339,567,591			283,816,470

Approved by the Board of Directors

Signed: “Russell Debney”		Signed: “Cynthia Thomas”
Russell Debney		Cynthia Thomas

The accompanying notes are an integral part of these consolidated financial statements

1

---

Nautilus Minerals Inc.

Consolidated Statements of Loss and Comprehensive Loss

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

		December 31,			December 31,
		2014			2013
		$			$
Operating expenses
Exploration (Note 15)		3,581,282			4,884,141
General and administration (Note 16)		11,351,167			13,062,673
Corporate social responsibility		974,949			1,433,424
Technology		313,759			341,945
Development		2,764,730			796,656
Foreign exchange (gains)/losses		9,355			2,810,639
Operating loss		18,995,242			23,329,478
Security Deposit Expensed (Note 17)		10,000,000			-
Interest income		(207,049	)		(404,909	)
Rent and other income (Note 18)		(15,037,953	)		(584,895	)
Loss and comprehensive loss for the year		13,750,240			22,339,674
Weighted average number of shares outstanding, basic and diluted		442,263,742			350,074,988
Loss per share
Basic and diluted		0.03			0.06

The accompanying notes are an integral part of these consolidated financial statements.

2

---

Nautilus Minerals Inc.

Consolidated Statements of Cash Flows

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

		December 31,			December 31,
		2014			2013
		$			$
Operating activities
Loss for the year		(13,750,240	)		(22,339,674	)
Adjustments for:
Depreciation and amortization		1,194,460			1,187,050
Unrealized foreign exchange losses/(gains)		39,425			2,801,167
Share-based payments		1,259,192			1,109,669
Security deposit expensed (Note 17)		10,000,000			-
Changes in non-cash working capital
Prepaid expenses and advances		(207,549	)		117,314
Accounts payable and accrued liabilities		(208,062	)		1,200,324
Net cash used in operating activities		(1,672,774	)		(15,924,150	)
Investing activities
Restricted cash		62,371			1,661,340
Purchase of plant and equipment		(12,235,806	)		(34,155,001	)
Exploration and evaluation assets		(3,169,800	)		(2,679,591	)
Joint Venture contribution (Note 12)		35,772,992			-
Security deposit expensed (Note 17)		(10,000,000	)		-
Net cash generated from (used) in investing activities		10,429,757			(35,173,252	)
Financing activities
Prepaid joint venture contribution		69,418,756			-
Issuance of shares for cash - net of issue costs		15,857			36,710,066
Net cash generated from financing activities		69,434,613			36,710,066
Effect of exchange rate changes on cash and cash equivalents		(39,425	)		(2,801,166	)
Increase in cash and cash equivalents		78,152,171			(17,188,502	)
Cash and cash equivalents - Beginning of year		40,617,963			57,806,465
Cash and cash equivalents - End of year (Note 5)		118,770,134			40,617,963

The accompanying notes are an integral part of these consolidated financial statements.

3

---

Nautilus Minerals Inc.

Consolidated Statements of Changes in Equity

(expressed in US Dollars)

The accompanying notes are an integral part of these consolidated financial statements.

4

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

1	Corporate Information

Nature of Operations

Nautilus Minerals Inc. (the “Company”, “Nautilus” or “NMI”) is a company whose common shares are listed on the Toronto Stock Exchange and quoted on OTCQX International.

Nautilus is engaged in the exploration and development of the ocean floor for copper and gold rich seafloor massive sulphide deposits and for manganese, nickel, copper and cobalt nodule deposits. To date the Company has not earned any revenues from operations and is considered to be in the exploration stage. The Company has one segment being mineral property exploration in Australasia. The exploration activity involves the search for deepwater copper and gold rich seafloor massive sulphides in the western Pacific Ocean and nodule deposits in the eastern Pacific Ocean. The Company’s main focus is to create shareholder value by demonstrating the seafloor production system and establishing a pipeline of development projects to maximize the value of mineral licenses and exploration applications that Nautilus holds in various locations in the Pacific Ocean. The Company's principal project is the Solwara 1 Project in Papua New Guinea (PNG) in the Bismarck Sea. The proposed principal operations of the Company subject to permitting will be the extraction of copper, zinc, gold and silver deposits where there are economically viable discoveries.

The Company’s consolidated financial statements and those of its controlled subsidiaries (“consolidated financial statements”) are presented in US Dollars.

Nautilus is a company incorporated in British Columbia, Canada. The registered office, head office and principal offices of the Company are located at:

	Registered Office (Vancouver, Canada)	Head Office (Vancouver, Canada)
	Nautilus Minerals Inc.	Nautilus Minerals Inc.
	Floor 10	Suite 1400
	595 Howe St	400 Burrard Street
	Vancouver, BC, V6C 2T5	Vancouver, BC, V6C 3A6
	Canada	Canada
	Corporate Office (Toronto, Canada)	Operations (Brisbane, Australia)
	Nautilus Minerals Inc.	Nautilus Minerals Inc.
	Suite 1702, 141 Adelaide Street West	Level 7, 303 Coronation Drive
	Toronto, Ontario M5H 3L5	Milton Queensland, Australia 4064
	Canada

2	State of PNG’s participation in Solwara 1 Project and Liquidity Risk

State of PNG Participation in Solwara 1 Project

On April 24, 2014, the Company announced that it and the Independent State of Papua New Guinea (State) had signed the PNG Equity Agreement, enabling the Solwara 1 Project to move forward toward production with the full support of the State.

5

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

Under the PNG Equity Agreement, the State has taken an initial 15% interest in the Solwara 1 Project, with an option to take up to a further 15% interest within 12 months of the PNG Equity Agreement becoming unconditional. On April 24, 2014, the State paid Nautilus a non-refundable deposit for its initial 15% interest of US$7,000,000 on the date the PNG Equity Agreement was executed.

The PNG Equity Agreement was conditional upon the State, (through its nominee Eda Kopa (Solwara) Limited (“Eda Kopa”), a subsidiary of Petromin PNG Holdings Limited), securing by July 31, 2014, the funding for the State nominee’s15% share of the capital required to complete the development phase of the project up to first production, being US$113,000,000 (excluding the non-refundable deposit), and was to be placed in escrow until Nautilus satisfied the conditions for their release. The PNG Equity Agreement provided further that the funds would be released to Nautilus, and an unincorporated joint venture between the parties for the ongoing operation of the project formed, if within 6 months of the funds being placed in escrow Nautilus secured the charter of a Production Support Vessel and certain intellectual property rights. After first production, the State’s nominee is required to contribute funds in proportion to its interest.

On May 9, 2014, the State’s nominee, Eda Kopa, placed US$113,000,000 into escrow, representing the balance of the funding for Eda Kopa’s 15% share of the capital required to complete the development phase of the Solwara 1 Project up to first production.

On October 22, 2014, the Company satisfied one of the conditions precedent to completion of the PNG Equity Agreement, by securing certain intellectual property rights.

On November 6, 2014, the Company entered into an agreement for the charter of a Production Support Vessel (“PSV”) to be first deployed for use at the Solwara 1 Project. Marine Assets Corporation (“MAC”), a marine solutions company based in Dubai specializing in the delivery of new build support vessels for the offshore industry, will own and provide the marine management of the vessel. The vessel will be chartered to Nautilus for a minimum period of five years at a rate of US$199,910 per day, with options to either extend the charter or purchase the vessel at the end of the five year period.

Under the terms of the arrangement, MAC entered into a shipbuilding contract (the “Shipbuilding Contract”) with Fujian Mawei Shipbuilding Ltd. to design and construct the PSV in accordance with Nautilus' specifications and paid the first installment of the purchase price in November 2014, in accordance with the Shipbuilding Contract.

On December 11, 2014, in accordance with the PNG Equity Agreement, the sum of US$113,000,000 million was released from escrow to Nautilus and the unincorporated joint venture between Nautilus and the State’s Nominee (Eda Kopa) in respect of the Solwara 1 Project was formed (the “Solwara 1 JV”). The Solwara 1 JV is governed by the Joint Venture Agreement among the parties to the PNG Equity Agreement.

Also in accordance with the PNG Equity Agreement, as a result of completion of the condition subsequent, the arbitration between the parties in respect of the State Equity Option Agreement dated March 29, 2014 was terminated.

Liquidity Risk

These financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business.

The Company has no source of revenue and has significant cash requirements to be able to meet its administrative overhead and maintain its property interests. In order to be able to complete the ongoing sub-sea equipment construction contracts and advance the development of its mineral property interests, the Company will need to raise additional funding. Until that time, certain discretionary expenditures may be deferred and measures to reduce operating costs may be taken in order to preserve working capital. The last capital raise completed by the Company was a rights offering for net proceeds of $36.7 million which was completed on June 11, 2013.

6

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

3	Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

3.1	Basis of measurement

The consolidated financial statements of Nautilus Minerals Inc. have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The consolidated financial statements have been prepared under the historical cost convention, as modified by the financial assets and financial liabilities at fair value through profit or loss.

The policies applied in these consolidated financial statements are based on IFRS issued and outstanding as at December 31, 2014, and were approved as of March 30, 2015, the date the Board of Directors approved the statements.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3.16.

3.2	Consolidation

The financial statements of the Company consolidate the accounts of Nautilus Minerals Inc and its subsidiaries. All intercompany transactions, balances and any unrealized gains and losses from intercompany transactions are eliminated on consolidation.

Subsidiaries are all entities (including structured entities) over which Nautilus Minerals Inc has control. We control an entity when we are exposed to, or have rights to, variable returns from its involvement with the entity and have the ability to affect those returns through our power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date which control is transferred to us until the date that control ceases. All intercompany transactions and balances have been eliminated on consolidation.

These consolidated financial statements include the accounts of the Company which is incorporated in Canada and all of its subsidiaries. The Company’s significant subsidiaries include Nautilus Minerals Niugini Limited (Papua New Guinea), Nautilus Minerals Pacific Proprietary Limited (Australia), Nautilus Minerals (Tonga) #1 Limited, Tonga Offshore Mining Limited (Tonga), Nautilus Minerals Singapore Limited and Koloa Moana Resources Inc (Canada), all of which are wholly owned subsidiaries.

7

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

3.3	Foreign currency translation

a)

Functional and presentational currency

The consolidated financial statements are presented in United States Dollars, which is the functional and presentational currency of Nautilus Minerals Inc. Items included in the financial statements of each consolidated entity in the Nautilus Minerals group are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The functional currency for all significant entities within the consolidated group is United States Dollars.

b)

Transactions and balances

Foreign currency transactions are accounted for at the rates of exchange at the date of the transaction. Monetary assets and liabilities are translated at year-end exchange rates. Gains and losses arising on settlement of such transactions and from the translation of foreign currency monetary assets and liabilities are recognized in the statement of loss.

3.4	Cash and cash equivalents

The Company considers cash and cash equivalents to comprise amounts held in banks and highly liquid investments with maturities at time of purchase of 90 days or less.

3.5	Financial assets

a)

Classification

The Company classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. All of the Company’s financial assets are currently classified as loans and receivables.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Company’s loans and receivables comprise restricted cash and cash and cash equivalents. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

b)

Impairment of financial assets

At each reporting date, the Company assesses whether there is objective evidence that a financial asset is impaired. If such evidence exists, the Company recognises an impairment loss as the difference between the amortized cost of the loan or receivable and the present value of the estimated future cash flows, discounted using the instrument’s original effective interest rate. The carrying amount of the asset is reduced by this amount either directly or indirectly through the use of an allowance account.

3.6	Property, plant and equipment

Equipment is recorded at cost less accumulated depreciation. The Company allocates the amount initially recognized in respect of an item of property, plant and equipment to its significant parts and depreciates separately each such part. Residual values, method of depreciation and useful lives of the assets are reviewed annually and adjusted if appropriate.

8

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

Depreciation is calculated over the estimated useful life of the assets on a straight-line basis as follows:

		Estimated useful life
		(in years)
	Leasehold improvements	3
	Plant and equipment	3 – 15
	Office equipment	1 – 20
	Motor vehicles	6 - 8

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset.

3.7	Exploration and evaluation assets

All costs directly related to the acquisition of rights to explore for minerals are capitalized.

Once the right to explore has been obtained, the Company will incur exploration and evaluation expenditures to advance an area of interest. Such expenditures include:

The Company expenses all exploration and evaluation expenditures until management conclude that a future economic benefit is more likely than not to be realized. In evaluating if expenditures meet this criterion to be capitalized, management considers the following:

Once the Company considers that a future economic benefit is more likely than not to be realized from an area of interest, all subsequent costs directly relating to the advancement of the related area of interest are capitalized. Capitalized costs are considered to be tangible assets as they form part of the underlying mineral property and are recorded within ‘exploration and development assets’ at cost less impairment charges, if applicable. No amortization is charged during the exploration and evaluation phase because the asset is not available for use. When the Company considers that the technical feasibility and commercial viability of extracting a mineral resource are demonstrable, capitalized exploration and evaluation costs are reclassified to mineral properties.

9

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

3.8	Joint Arrangements

Under IFRS 11 Joint Arrangements, investments in joint arrangements are typically classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement.

Under the terms of the unincorporated joint venture agreement between the Company and the State Nominee, Nautilus and the State Nominee each beneficially own, 85% and 15% respectively, of the Solwara 1 project and the subsea equipment tools. They are tenants in common in proportion to their ownership interest.

Accordingly, the Company records its 85% interest in the assets and liabilities and income and expenses of the unincorporated joint venture in the consolidated financial statements. The impact of this is similar to proportionate consolidation.

3.9	Impairment of non-financial assets

Property, plant and equipment, and mineral properties are considered for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. If an impairment indicator is identified, the asset’s recoverable amount is calculated and compared to the carrying amount. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units or “CGUs”). The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.

Fair value is determined as the amount that would be obtained by the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. Fair value of mineral assets is generally determined as the present value of the estimated cash flows expected to arise from the continued use of the asset, including any expansion projects.

Value in use is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset in its present form and from its ultimate disposal.

Impairment is normally assessed at the level of CGUs, which are identified as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets.

Non-financial assets that have been impaired are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed. When a reversal of a previous impairment is recorded, the reversal amount is adjusted for depreciation that would have been recorded had the impairment not taken place.

3.10	Share based payments

The cost of equity-settled and cash settled transactions with employees is measured by reference to the fair value at the date at which they are granted and is recognised as an expense over the relevant vesting period.

The company grants either stock options or loan shares as remuneration for directors and as a part of a long term incentive plan for certain employees. Where the shared based payment is for remuneration they generally vest over 2.5 years (20% every six months) and expire after three years. Each tranche in an award is considered a separate award with its own vesting period and grant date fair value. Where the share based payment is as part of a long term incentive plan they generally vest in a single tranche 2.5 years from issue and expire after 3.5 years. In both instances the fair value of each tranche is measured at the date of grant using the Black-Scholes option pricing model.

10

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

At each period end, before vesting, the cumulative expense is calculated based on management’s best estimate of the number of equity instruments that will ultimately vest. The movement in this cumulative expense is recognised in the income statement, with a corresponding entry in equity.

The proceeds from the exercise of stock options in addition to the carrying value attributable to those options exercised are recorded as share capital.

3.11	Employee Benefits

a)

Annual Leave

The liability for accrued annual leave is recognised in respect of employees’ services up to the end of the reporting period and is measured at the amounts expected to be paid when the liability is settled. All liabilities recognised in respect of annual leave are classified as current given the Company does not have an unconditional right to defer settlement of these amounts.

b)

Long Service Leave

The provision for long service leave is measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using an appropriate risk-free rate at the end of the reporting period, giving consideration to the terms and currencies that match, as closely as possible to the estimated future cash outflows. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit and loss.

Where the Company does not have an unconditional right to defer settlement for at least the next twelve months, regardless of when the actual settlement is to occur, the liability is recognised as current, with all other amounts recognised as non-current.

3.12	Provisions

Provisions for environmental restoration, restructuring costs and legal claims are recognised when: the group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

3.13	Income tax

Deferred income tax is provided, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is measured at tax rates that are expected to apply in periods in which the temporary differences reverse based on tax rates and law enacted or substantively enacted at the balance sheet date.

11

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

3.14	Share capital

Incremental external costs directly attributable to the issue of new common shares are deducted from share capital.

3.15	Loss per share

Basic loss per share is computed by dividing loss attributable to common shareholders by the weighted average number of common shares outstanding during the period. The computation of diluted loss per share assumes the conversion or exercise of securities only when such conversion or exercise would have a dilutive effect on earnings per share. The dilutive effect of outstanding stock options and their equivalents is reflected in diluted earnings per share by application of the treasury stock method which assumes that any proceeds from the exercise of share options would be used to purchase common shares at the average market price during the period. During years when the Company has generated a loss, the potential shares to be issued from the assumed exercise of options are not included in the computation of diluted per share amounts because the result would be anti-dilutive.

3.16	Significant accounting judgements and estimates

The preparation of the financial statements in conformity of IFRS requires the use of judgements and estimates that affect the amount reported and disclosed in the consolidated financial statements and related notes. These judgements and estimates are based on management’s best knowledge of the relevant facts and circumstances, having regard to previous experience, but actual results may differ materially from the amounts included in the financial statements. Information about such judgements and estimates is contained in the accounting policies and notes to the financial statements.

The area of judgement that has the most significant effect on the amounts recognised in these consolidated financial statements is the review of asset carrying values and impairment assessment.

In considering whether any impairment indicators occurred in respect of the Company’s long lived assets as at December 31, 2014, management took into account a number of factors such as metal prices, projected costs to operate equipment, availability and costs of finance, cost and state of completion of subsea equipment construction, exploration successes in other areas, the existence and terms of binding off-take agreements and the Company’s market capitalization compared to its net asset value. Management has concluded, based on this analysis that no impairment was required to be recognized at December 31, 2014 in respect of the Solwara 1 project and the subsea equipment currently under construction.

4	Changes in accounting policy and disclosures

New and amended standards adopted by the Company

There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after January 1, 2014 that would be expected to have a material impact on the Company.

12

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

IAS 36, ‘Impairment of assets’ was amended to clarify disclosure requirements when a recoverable amount is determined based on FVLCTD. The amendment was effective for annual periods beginning on January 1, 2014 and we have adopted the amendment and it did not have any material impact on the financial statements.

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after July 1, 2014. The company has reviewed the disclosure requirements of changes in IFRS 8 ‘Operating Segments’, IFRS 9 ‘Financial Instruments: Classification and Measurement’ (effective January 1, 2018) and IFRS 7 ‘Financial Instruments: Disclosure’ (effective January 1, 2018), however this does not currently require any changes to disclosures within the financial statements of the Company.

There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on our consolidated financial statements.

5	Cash and cash equivalents

			December 31,			December 31,
			2014			2013
			$			$
	Cash		70,901,963			2,191,787
	Term Deposits		47,868,171			38,426,176
			118,770,134			40,617,963

6	Accounts payable and accrued liabilities

			December 31,			December 31,
			2014			2013
			$			$
	Current
	Accounts Payable		963,995			297,500
	Accrued Liabilities		2,323,975			4,031,457
	Retention Payable		4,126,266			-
			7,414,236			5,117,410

			December 31,			December 31,
			2014			2013
			$			$
	Non-current
	Retention Payable		4,570,655			8,896,457
			4,570,655			8,896,457

13

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

The non-current creditor of $4,570,655 (2013 - $8,896,457) represents the contractual retention from payments to Soil Machine Dynamics to be paid on completion of the contract. These amounts are considered non-current as payment is not due within the next 12 months.

7	Project Partner Contribution

Following the signing of the PNG Equity Agreement between the Company and the State on April 24, 2014, the Company received cash proceeds of $120,000,000 by way of a $7,000,000 non-refundable deposit received on signing and $113,000,000 released from escrow on December 11, 2014 in relation to the agreement to form the joint venture with the State Nominee. The project partner contribution liability is the unearned portion of the purchase price of the State’s initial 15% interest as at December 31, 2014 totalling $70,906,854, with $10,733,912 recorded as a current liability, being 15% of the approved project budget for the next 12 months, with the balance recorded as non-current (Note 12).

8	Income Tax

a)

A reconciliation of income taxes at statutory rates with the reported taxes is as follows:

			December 31,			December 31,
			2014			2013
			$			$
	Loss before income taxes		(13,750,240	)		(22,339.673	)
	Canadian statutory tax rate		26.00%			25.50%
	Income tax recovery based on the above rates		(3,575,062	)		(5,696,617	)
	Increase/(decrease) due to:
	Non-deductible expenses and other		9,607,982			4,447,281
	Effect of change in Canadian and foreign future tax rates		1,617,512			(812,631	)
	Tax effect of tax losses and temporary differences not recognized		(7,650,432	)		2,061,967
	Income tax expense/(recovery)		-			-

b)

The significant components of the Company’s future income tax assets and liabilities are as follows:

			December 31,			December 31,
			2014			2013
			$			$
	Future income tax assets
	Non-capital losses		33,799,763			32,071,075
	Capital losses		2,885,746			3,560,661
	Unamortized share issue costs		405,947			710,174
	Unrealized foreign exchange losses and other		8,285,783			10,845,992
	Mineral properties and property, plant and equipment		35,042,663			40,882,432
	Total future income tax assets		80,419,902			88,070,334
	Less: Tax benefits not utilised		(80,419,902	)		(88,070,334	)
	Net future income tax assets/(liabilities)		-			-

14

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

c)

The Company has non-capital loss carry forwards of $124,005,740 that may be available for tax purposes. The loss carry forwards expire as follows:

						Australia,
						Singapore
						and
			Canada			Tonga
			$			$
	2018		-			-
	2019		-			-
	2020		-			-
	2021		-			-
	2022		-			-
	2023		205,855			-
	2024		310,062			-
	2025		176,095			-
	2026		2,301,574			-
	2027		4,436,216			-
	2028		-			-
	2029		5,092,609			-
	2030		5,179,193			-
	2031		4,851,134			-
	2032		1,592,744			-
	2033		2,663,714			-
	2034		2,836,699			-
	Not limited		-			94,359,845
	Total non-capital losses		29,645,895			94,359,845

9	Restricted cash
	$595,952 (December 31, 2013 - $658,323) has been provided as security for leases, tenements held in Papua New Guinea and Fiji.
10	Exploration and evaluation assets
	In 2006, the Company through its 100% owned subsidiary Nautilus Minerals Niugini Ltd acquired a 100% interest in certain PNG subsea exploration licenses by issuing common shares with an estimated historical fair value of $12,213,367 to Barrick Gold Inc., following its acquisition on of Placer Dome.
	Following the grant of the mining lease (ML154) for the Solwara 1 deposit on January 13, 2011 the Company determined that an economic benefit is more likely than not to be recovered from the Solwara 1 deposit and, accordingly, has commenced capitalizing exploration and evaluation costs associated with the Solwara 1 deposit.
	With the formation of the joint venture between the Company and the State Nominee on December 11, 2014, the agreed amount of $33.1 million (Note 12) was transferred as part of the joint venture assets.

15

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

			December 31,			December 31,
			2014			2013
			$			$
	Opening balance		43,448,448			40,778,662
	Boat charter and fuel		-			-
	Engineering services		735,650			498,168
	Environmental consulting		230,302			15,958
	Project management and oversight		2,220,764			2,037,129
	Geological services and field expenses		32,400			90,380
	Mineral property fees		28,371			28,151
	Disposal to joint venture (Note 12)		(4,960,117	)		-
			(1,712,630	)		2,669,786
	Closing balance		41,735,818			43,448,448

The disposal of the joint venture of $4,960,117 represents the recovery, under the terms of the PNG Equity Agreement, of 15% of the costs, as defined, previously capitalised to the Solwara 1 project that are attributable to the State Nominee (Note 12).

Although the Company has taken steps to verify title to exploration and evaluation assets in which it has an interest, these procedures do not guarantee a clear title. Property title may be subject to unregistered prior agreements and regulatory requirements. The Company is not aware of any disputed claim of title.

11	Property, plant and equipment

16

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

The disposal amount of $30,812,875 relating to the subsea equipment under construction represents the recovery, under the terms of the PNG Equity Agreement , of 15% of the costs, as defined, previously capitalised to the equipment that are attributable to the State Nominee (Note 12).

12	Joint Arrangements

On December 11, 2014, the Company announced that all terms of the PNG Equity Agreement had been met and the unincorporated joint venture between Nautilus and the State Nominee in respect of the Solwara 1 Project was formed. The table below presents the carrying value of the project assets on this date that were transferred on formation of the joint venture.

						Nautilus			State Nominee
			100%			85%			15%
	Assets Under Construction		205,419,165			174,606,290			30,812,875
	Mineral Properties		33,067,447			28,107,330			4,960,117
			238,486,412			202,713,620			35,772,992

As at 31 December 2014 Nautilus Minerals Inc recognised its share of the joint venture assets as follows

			December 31,			December 31,
			2014			2013
			$			$
	Assets Under Construction		176,082,878			-
	Mineral Properties		28,381,647			-
			204,464,525			-

17

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

The payment from the State Nominee of the funds out of escrow of $113,000,000, the non-refundable deposit of $7,000,000 and the pre-existing joint venture contribution of $1,797,081 were applied as follows:

	-	Cost recoveries of $30,812,875 for assets under construction and $4,960,117 for mineral properties;
	-	Exploration expense recoveries of $12,068,246 and capital charge of $2,740,006 (Note 18), and
	-	Project partner contribution of $71,215,837 (Note 7)

13	Compensation of Key Management

Key management includes the company’s directors and members of the Executive Committee that includes the CEO, CFO, VP Projects, VP PNG Operations (employment commenced August 2014), VP Strategic Development & Exploration and VP Corporate Social Responsibility (employment ended August 2014). Compensation awarded to key management included:

			December 31,			December 31,
			2014			2013
			$			$
	Salaries and short-term employee benefits		2,470,914			2,050,613
	Benefits paid on termination		181,178			-
	Stock based compensation		712,786			807,433
	Superannuation payments		145,145			130,880
			3,510,023			2,988,926

14

Equity

a)

Common shares issued

Gross proceeds of C$17,600 were received from the exercise of 80,000 share options at a price of C$0.22 per common share during the twelve months ended December 31, 2014. For the twelve months ended December 31, 2013 gross proceeds of C$40,000,000 were raised through the issuance of rights to subscribe for an aggregate of 200,000,000 common shares at a subscription price of C$0.20 per common share.

b)

Loan shares

The Company's share loan plan (the "Loan Plan") was re-approved by the Company's shareholders at the Annual General Meeting in June 2014. The Loan Plan provides for security-based compensation in a manner similar to a stock option plan by enabling participants to acquire an equity interest in the Company using a limited recourse loan provided by a subsidiary of the Company.

The Loan Plan provides for loans to be made to eligible employees who will apply the proceeds toward a subscription for shares. The loans will be made by a subsidiary of the Company and the shares issued by Nautilus will be registered in the name of an administrative agent for the benefit of the applicable employee.

The loans will not bear interest, and the Lender's recourse will be limited to the value of the shares. If the employee elects to sell the shares, the proceeds will be used to repay the loan and any brokerage and other fees, and the employee will be entitled to any remaining balance.

18

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

Employees can only elect to sell the shares if the then-current market price is greater than the subscription price paid for those shares, such that the net proceeds of the sale will equal or exceed the outstanding loan balance in respect the shares being sold.

An employee may, during the term of the loan, elect to repay the loan and become the registered holder of the shares. If an employee ceases to be eligible to participate in the Loan Plan or if the term of the loan expires before the loan is repaid, the administrative agent will return the shares to the Company, and both the loan and the shares will be cancelled.

	Outstanding share options
						Weighted
						average
						exercise
			Share options			price
						C$
	At January 1, 2013		4,200,000			1.77
	Granted		2,250,000			0.22
	Expired		(2,375,000	)		1.83
	At December 31, 2013		4,075,000			0.88
	Granted		2,250,000			0.53
	Expired		(500,000	)		2.91
	Forfeited		(800,000	)		1.07
	Exercised		(80,000	)		0.22
	At December 31, 2014		4,945,000			0.50

19

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

Information relating to share options outstanding at December 31, 2014 is as follows:

	Outstanding loan shares
						Weighted
						average
						exercise
			Loan shares			price
						C$
	At January 1, 2013		3,050,000			1.13
	Granted		4,500,000			0.24
	Forfeited		(675,000	)		1.01
	At December 31, 2013		6,875,000			0.56
	Granted		5,450,000			0.57
	Forfeited		(800,000	)		0.53
	Expired		(200,000	)		2.91
	At December 31, 2014		11,325,000			0.52

No loan shares were purchased during the year ended December 31, 2013 or for the year ended December 31, 2014.

20

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

Information relating to loan shares outstanding at December 31, 2014 is as follows:

The fair value of the share options and loan shares granted is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

			Options			Options
			granted in			granted in
			2014			2013
	Expected dividend yield		Nil			Nil
	Expected stock price volatility		111.28%			93.76%
	Risk-free interest rate		1.13%			1.35%
	Expected life of options in years		2.83			3

The weighted average fair value of the options granted was C$0.53 (2013 – C$0.22) .

			Loan shares			Loan shares
			granted in			granted in
			2014			2013
	Expected dividend yield		Nil			Nil
	Expected stock price volatility		111.28%			93.76%
	Risk-free interest rate		1.13%			1.35%
	Expected life of loan shares in years		2.83			3

The weighted average fair value of the loan shares granted was C$0.57 (2013 – C$0.24) .

The Black-Scholes pricing models used to price options and loan shares require the input of highly subjective assumptions including the estimate of the share price volatility. Changes in the subjective input assumptions can materially affect the fair value estimate.

21

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

15	Exploration Expenditures

			Year ended December 31,
			2014			2013
			$			$
	Boat charter and fuel		-			1,668,130
	General and administration		9,590			75,150
	Geological services and field expenses		99,653			465,263
	Mineral property fees		1,167,213			594,465
	Professional services		492,024			293,188
	Travel		139,078			215,828
	Wages and salaries		1,673,724			1,572,117
	Total operating expenses		3,581,282			4,884,141

In accordance with our policy on exploration and evaluation assets, all exploration expenditure incurred for the Solwara 1 project is capitalised to exploration and evaluation assets, with all other exploration expenditure expensed to the Statement of Loss.

In order to maintain the exploration leases, licenses and permits in which the Company is involved, the Company is expected to fulfil the minimum annual expenditure conditions under which the tenements are granted. These obligations may be varied from time to time, subject to approval, and are expected to be fulfilled in the normal course of operations of the Company. The exploration commitments are based on those exploration tenements that have been granted and may increase or decrease depending on whether additional applications are granted, relinquished or form joint ventures in the future. Based on tenements granted at December 31, 2014, total rental commitments are $4.7 million and total expenditure commitments are $41.4 million over the life of the licenses, which in the majority of cases extend to a maximum of two years, with the exception of the CCZ tenements where expenditure commitments extend to 5 years.

16	General and Administration Expenditures

			Year ended December 31,
			2014			2013
			$			$
	Office and general		3,024,359			2,919,845
	Professional services		1,123,702			2,927,343
	Salary and wages		4,722,081			4,897,588
	Shareholder related costs		496,497			493,242
	Travel		790,068			637,604
	Depreciation		1,194,460			1,187,051
	Total general and administration expenses		11,351,167			13,062,673

22

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

17	Security Deposit Expensed

On February 2, 2015, the Company announced that it and MAC had been victims of a cyber attack by an unknown third party. The Company has engaged a cyber security consultant to investigate the cyber-attack that resulted in the Company paying a deposit of $10,000,000 owing to MAC under the vessel charter agreement to a bank account which the Company believed to be MAC’s, but which MAC has advised was not its account. In the circumstances, the Company has agreed to pre-pay US$10,000,000 of the US$18,000,000 charterer's guarantee on the basis that: (i) the remaining US$8,000,000 of the charterer's guarantee will be provided to MAC by the Company on the commencement of the charter of the vessel in accordance with the original contract; and (ii) the parties have agreed to determine how to proceed in relation to the $10,000,000 deposit following the conclusion of the investigations, which may take some months.

Because of the uncertainty relating to the recovery of the deposit, the full amount has been expensed as at December 31, 2014 to the statement of loss. Should the Company be able to recognise any future economic benefit attributable to the payment following the conclusion of the relevant investigations, a credit would be recorded in the statement of loss in the period of recovery.

18	Rent and Other Income

			Year ended December 31,
			2014			2013
			$			$
	Other income		837			509,003
	Rental income		228,864			75,892
	Capital charge		2,740,006			-
	Reimbursement of E&E expenditure		12,068,246			-
	Total general and administration expenses		15,037,953			584,895

The capital charge and the reimbursement of the E&E expenditure represents items that were included in the purchase price paid by the State Nominee for its’ 15% interest in the Solwara 1 project. The capital charge of $2.7 million was interest payable by the State Nominee under the PNG Equity Agreement in relation to interest accrued on outstanding amounts during the dispute resolution process. The amount of $12.1 million was the State Nominee’s share of the exploration expenditure for the Solwara 1 project prior to the grant of the mining license. The exploration expenditures were expensed by the Company in prior years.

23

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

19	Contingencies and Commitments

a)

Non-cancellable commitments

			December 31
			2014
			$
	Non-cancellable operating leases
	Not later than 1 year		600,058
	Later than 1 year and not later than 2 years		213,804
	Later than 2 years and not later than 3 years		105,993
	Later than 3 years and not later than 4 years		72,980,072
	Later than 4 years and not later than 5 years		72,980,072
	Later than 5 years		218,901,450
	Total Commitments		365,781,449

The non-cancellable commitments as at December 31, 2014 include the payments to be made under the charter party arrangement with MAC for the PSV with a commencement date no later than January 1, 2018.

b)

Cancellable commitments

In order to maintain the exploration leases, licenses and permits in which the Company is involved, the Company is committed to fulfil the minimum annual expenditure conditions under which the tenements are granted. These obligations may be varied from time to time, subject to approval, and are expected to be fulfilled in the normal course of operations of the Company. The exploration commitments are based on those exploration tenements that have been granted and may increase if applications are granted in the future.

The Company has entered into various contracts for the design and build of the seafloor production system. As at December 31, 2014 , the committed value of the contracts is $36.7 million (equivalent). The committed value of $36.7 million reflects ongoing milestone payments for continuing contracts. The contracts are cancellable by the Company at any time, however, in the event of cancellation, the Company is liable for any costs incurred up to that point, with an estimate of costs for terminated contracts included in the accrued costs at year end. No other penalties or cancellation fees are payable under these contracts.

20	Financial risk management

The Company’s activities expose it to a variety of financial risks: foreign exchange risk, credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial performance.

Risk management is carried out under policies approved by the board of directors. The board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.

24

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

a)

Capital Management

The Company’s objectives in the managing of the liquidity and capital are to safeguard the Company’s ability to continue as a going concern and provide financial capacity to meet its strategic objectives. The capital structure of the Company consists of equity attributable to common shareholders, comprising of issue share capital, contributed surplus and deficit.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt, acquire or dispose of assets to facilitate the management of its capital requirements. The Company prepares annual expenditure budgets that are updated as necessary depending upon various factors, including successful capital deployment and general industry conditions. The annual and updated budgets are approved by the Board of Directors. As at December 31, 2014 the Company does not have any long-term debt and is not subject to any externally imposed capital requirements. The Company has sufficient funds to meet its current operating and exploration and development obligations.

b)

Foreign exchange risk

The Company’s operations are located in several different countries, including Canada, Australia, PNG, Tonga, Solomon Islands, Fiji and New Zealand and require equipment to be purchased from several different countries. Nautilus has entered into key contracts in United States dollars, British pounds sterling and euros. Future profitability could be affected by fluctuations in foreign currencies. The Company has not entered into any foreign currency contracts or other derivatives to establish a foreign currency protection program but may consider such actions in the future.

Foreign exchange risk is mitigated by the Company maintaining its cash and cash equivalents in a “basket” of currencies that reflect its current and expected cash outflows. As at December 31, 2014 the Company held its cash and cash equivalents in the following currencies:

c)

Credit Risk

The company places its cash and cash equivalents only with banks with an S&P credit rating of A+ or better. Our maximum exposure to credit risk at reporting date is the carrying value of cash and cash equivalents and other receivables.

25

---

Nautilus Minerals Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

(expressed in US Dollars)

d)

Liquidity Risk

The Company manages liquidity by maintaining adequate cash and short-term investment balances. In addition, the Company regularly monitors and reviews both actual and forecasted cash flows. The exposure of the Company to liquidity risk is considered to be minimal.

26

---

---

NAUTILUS MINERALS INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(US dollars, in accordance with International Financial Reporting Standards)

The following Management Discussion and Analysis (“MD&A”) has been prepared as at March 30, 2015 for the year ended December 31, 2014.

The MD&A of Nautilus Minerals Inc. (the “Company”, “NMI” or “Nautilus”) should be read in conjunction with the Company’s audited consolidated financial statements for the full year ended December 31, 2014, and related notes thereto which have been prepared in accordance with International Financial Reporting Standards (“IFRS”).

Amounts for the full year and the three month periods ended December 31, 2014 and 2013 have been presented in accordance with IFRS.

This MD&A includes references to United States dollars, Canadian dollars, Papua New Guinea kina, United Kingdom pounds sterling and euros. All dollar amounts referenced, unless otherwise indicated, are expressed in United States dollars and the Canadian dollars are referred to as C$, Papua New Guinea kina are referred to as PGK, United Kingdom pounds sterling are referred to as £ and euros are referred to as €.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This document includes “forward-looking statements” which include all statements other than statements of historical fact.

Forward-looking statements include, but are not limited to, statements with respect to the future price of copper, gold and other metals; the estimation of mineral resources; the realization of mineral resource estimates; plans for establishing or expanding mineral resource estimates on the Company’s projects; the timing and amount of estimated future production; the construction and delivery of the Production Support Vessel (“PSV”); the fulfillment of the obligations under the Tongling sales agreement and the timing and sustainability of such arrangements; costs of production; capital expenditures; costs and timing of the development of the Company’s seafloor production system; the Company’s seafloor massive sulphide (“SMS”) prospects (including Solwara 1) and new deposits; success of exploration and development activities; permitting time lines; currency fluctuations; requirements for additional capital; government regulation of exploration operations; the Company's financial position; business strategy; plans and objectives of management for future operations; the design and performance of the PSV and Seafloor Production Tools (“SPTs”); and the procurement of the PSV. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the risk of failure to obtain required equity or debt funding; the risk that material assumptions listed in the paragraph below will not be borne out; changes in project parameters as plans continue to be refined; any additional permitting or licensing requirements associated with any modifications to the scope of the Solwara 1 Project; future prices of copper, gold and other metals being lower than expected; the over-arching risk that the Company will not commence production of mineralized material; possible variations in resources, grade or recovery rates; the risk of failure to conclude the investigation into the cyber-attack, the inability to reach agreement with Marine Assets Corporation (“MAC”) as to the deposit under the vessel charter agreement, the insolvency of MAC or the applicable shipyard and other events which may cause a delay to the delivery of the PSV; the risk that the obligations under the Tongling sales agreement are not fulfilled; late delivery of the PSV and SPTs or other equipment; variations in the cost of the PSV and SPTs or other equipment; variations in exchange rates; the failure to obtain regulatory approval for financings; changes in the cost of fuel and other inflationary factors; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities.

1

---

Such forward-looking statements are current only as at the date of this MD&A and are based on numerous material assumptions (that management believes were reasonable at the time they are made) regarding the Company's present and future business strategies and the environment in which the Company will operate in the future, including the Company's continued compliance with regulatory requirements, the proposed mine plan and the estimated cost and availability of funding for the continued exploration of the Company's tenements. The Company has also assumed that market fundamentals will result in sustained copper and gold demand and prices; that the proposed development of its mineral projects will be viable operationally and economically and proceed as expected; and that any additional financing needed will be available on reasonable terms. With respect to the arrangement with MAC, the Company is assuming that the parties will observe their obligations, that the investigation into the cyber-attack will reach a timely conclusion and that MAC and the Company can agree how to proceed in relation to the payment of the deposit under the vessel charter agreement.

OUR BUSINESS

Overview

Nautilus is a seafloor resource exploration company and the first publicly listed company to commercially explore the ocean floor for copper, gold, silver and zinc rich seafloor massive sulphide deposits and for manganese, nickel, copper and cobalt nodule deposits. The Company’s main focus is to create shareholder value by demonstrating the seafloor production system and establishing a pipeline of development projects to maximize the value of mineral licenses and exploration applications that Nautilus holds in various locations in the Pacific Ocean.

The Company's principal project is the Solwara 1 Project in the Bismarck Sea. The Solwara 1 Project and the Company's other projects are described in detail in the Company's Annual Information Form, available on SEDAR at www.sedar.com.

Nautilus’ seafloor production system has the potential to open a new frontier of resource development as land-based mineral deposits continue to be depleted. Nautilus plans to become the world’s first seafloor producer of copper and gold.

2

---

2014 SIGNIFICANT EVENTS

	•	Nautilus and the State of PNG resolve issues and sign agreement
	•	Nautilus enters into Vessel Charter
	•	Solwara 1 Project advanced
	•	Clarion Clipperton Zone nodule deposit grade and extent confirmed with analysis of samples collected during 2013 exploration program supporting the grade of elements previously reported

Nautilus and State of PNG resolve issues and sign agreement

On April 24, 2014, the Company announced that it and the Independent State of Papua New Guinea (“State”) had signed the PNG Equity Agreement, enabling the Solwara 1 Project to move forward toward production with the full support of the State.

Under the PNG Equity Agreement, the State has taken an initial 15% interest in the Solwara 1 Project, with an option to take up to a further 15% interest within 12 months of the PNG Equity Agreement becoming unconditional. The State paid Nautilus a non-refundable deposit for its initial 15% interest of US$7,000,000 on the date the PNG Equity Agreement was executed.

The PNG Equity Agreement was conditional upon the State, (through its nominee Eda Kopa (Solwara) Limited (“Eda Kopa”), a subsidiary of Petromin PNG Holdings Limited), securing by July 31, 2014, the funding for the State's 15% share of the capital required to complete the development phase of the project up to first production, being US$113,000,000 (excluding the non-refundable deposit), and was to be placed in escrow until Nautilus satisfied the conditions for their release. The PNG Equity Agreement provided further that the funds would be released to Nautilus, and an unincorporated joint venture between the parties for the ongoing operation of the project formed, if within 6 months of the funds being placed in escrow Nautilus secured the charter of a Production Support Vessel and certain intellectual property rights. After first production, the State’s nominee is required to contribute funds in proportion to its interest.

On May 9, 2014, the State’s nominee, Eda Kopa, placed US$113,000,000 into escrow, representing the balance of the funding for Eda Kopa’s 15% share of the capital required to complete the development phase of the Solwara 1 Project up to first production.

On October 22, 2014, the Company satisfied one of the conditions precedent to completion of the PNG Equity Agreement, by securing certain intellectual property rights.

On November 6, 2014, the Company entered into an agreement for the charter of a Production Support Vessel (“PSV”) to be first deployed for use at the Solwara 1 Project. Marine Assets Corporation (“MAC”), a marine solutions company based in Dubai specializing in the delivery of new build support vessels for the offshore industry, will own and provide the marine management of the vessel. The vessel will be chartered to Nautilus for a minimum period of five years at a rate of US$199,910 per day, with options to either extend the charter or purchase the vessel at the end of the five year period. The charter agreement with MAC was filed on SEDAR on November 18, 2014, and an amendment thereto was filed on February 10, 2015.

Under the terms of the arrangement, MAC entered into a shipbuilding contract (the “Shipbuilding Contract”) with Fujian Mawei Shipbuilding Ltd. to design and construct the PSV in accordance with Nautilus' specifications and paid the first installment of the purchase price in November 2014, in accordance with the Shipbuilding Contract.

3

---

On December 11, 2014, in accordance with the PNG Equity Agreement, the sum of US$113,000,000 million was released from escrow to Nautilus and the unincorporated joint venture between Nautilus and the State’s nominee (Eda Kopa) in respect of the Solwara 1 Project was formed (the “Solwara 1 JV”). The Solwara 1 JV is governed by the Joint Venture Agreement among the parties to the PNG Equity Agreement, a copy of which is appended to the PNG Equity Agreement, which was filed on SEDAR on May 2, 2014.

Also in accordance with the PNG Equity Agreement, as a result of completion of the condition subsequent, the arbitration between the parties in respect of the State Equity Option Agreement dated March 29, 2011 was terminated.

Nautilus enters into Vessel Charter

As indicated above on November 6, 2014 Nautilus announced that it entered into an agreement for the charter of a PSV to be first deployed for use at the Solwara 1 Project.

The vessel will first serve as the operational base for the joint venture formed by Nautilus and the State nominee, Eda Kopa, to support the operations carried out by the Solwara 1 JV to extract and to transport high grade copper and gold material from the project site, in the Bismarck Sea of Papua New Guinea.

MAC entered into the Shipbuilding Contract with Fujian Mawei Shipbuilding Ltd., based in Fujian province in south-eastern China, to design and construct the vessel in accordance with Nautilus’ specifications. The Shipbuilding Contract was signed on November 25, 2014. A US$10,000,000 deposit was payable by Nautilus to MAC following the payment by MAC of the first installment under the Shipbuilding Contract. A further charterer’s guarantee of US$18,000,000 was to be provided to MAC by the Solwara 1 JV on the commencement of the charter of the vessel.

When completed, the PSV will measure 227 metres in length and 40 metres in width with accommodation for up to 180 people and generate approximately 31MW of power. All of the below deck mining equipment will be installed in the vessel during the build process to minimize the equipment integration to be completed following delivery of the vessel. The vessel is expected to be delivered by the end of 2017.

On February 2, 2015, the Company announced that it and MAC had been victims of a cyber attack by an unknown third party. The Company has engaged a cyber security consultant to investigate the cyber-attack that resulted in the Company paying the deposit of $10,000,000 owing to MAC under the vessel charter agreement to a bank account which the Company believed to be MAC’s, but which MAC subsequently advised was not its account. In the circumstances, the Company has agreed to pre-pay US$10,000,000 of the US$18,000,000 charterer's guarantee on the basis that: (i) the remaining US$8,000,000 of the charterer's guarantee will be provided to MAC by the Company on the commencement of the charter of the vessel; and (ii) the parties have agreed to determine how to proceed in relation to the US$10,000,000 deposit following the conclusion of the investigations, which may take some months.

4

---

In the meantime, the construction of the vessel continues in accordance with the terms of the Shipbuilding Contract.

Solwara 1 Project advanced

During 2014, the Company continued to advance the Solwara 1 Project and in particular, the three key equipment contracts.

Project Build Progressed

Progress on the development of the Seafloor Production Tools (“SPTs”) continued to advance. Commissioning of the Auxiliary Cutter, Bulk Cutter and Collecting Machine continued at Soil Machine Dynamics premises in Newcastle, England with delivery of the three machines, following factory acceptance testing expected by the end of 2015.

General Marine Contractors in Houston completed weld procedure qualification work and fatigue testing of the riser system during the year. Fabrication of the riser system is scheduled to commence in Q1 2015, with completion by the end of 2015.

GE Hydril has completed testing activities on the main slurry valves with the focus now shifting to assembly planning for the Subsea Slurry Lift Pump. GE Hydril has commenced retrieval of the Subsea Slurry Lift Pump equipment from storage with assembly activities to re-commence mid-year 2015.

Following the execution of the charter party, the shipyard contract has been signed and the Company is working with MAC, the shipyard and ship designer to complete basic design and procurement of long lead items.

The Company plans to resume discussions with other contractors to allow the resurrection of some of the previously terminated contracts in the first half of 2015.

Community Activities

During the year the Company undertook an extensive Community Engagement Program along the West Coast of New Ireland Province, Papua New Guinea. In collaboration with the New Ireland Provincial Government, the Company implemented a Water and Sanitation Pilot Program in two locations, Rasirik Elementary School and Labur Primary School. The basis of the program was developed following a Company funded program to take a PNG National doctor to the West Coast of New Ireland to assess the level of hygiene and sanitation within the villages. Under this program the two schools completed health and hygiene training which was used as the catalyst for change. Once it was understood that a change in sanitation behaviour is required to improve the standard of living within villages, the Company developed a project to install new toilet facilities and infrastructure to provide access to running water within villages. Local youths were employed during this program to gain experience in the construction of the infrastructure. The continued implementation of this project will be determined following an audit of the pilot project which will be completed in early 2015.

The Company is also committed to building capacity in the areas of environmental science and geology and encouraging young students to complete their school education. The second Marine Science Short Course was held in October 2014 in collaboration with the University of Papua New Guinea and Duke University (USA) at the National Fisheries Authority facility on Nago Island in New Ireland Province. 21 students from PNG and other south pacific nations attended the three week marine science course. For the fifth year, Nautilus donated school science awards to schools in New Ireland Province to help encourage students to further their studies.

5

---

Clarion Clipperton Zone nodule deposit grade and extent confirmed

Tonga Offshore Mining Ltd, a 100% Nautilus owned entity, completed a 54 day exploration campaign to its license area located in the Clarion Clipperton Zone (“CCZ”), in the eastern Pacific Ocean. Work was completed by the oceanographic survey vessel ‘R/V Mt Mitchell’, which departed from Seattle, Washington on August 22, 2013. The work program comprised 64,000km² of multibeam mapping and the collection of 2,090 wet kilograms of polymetallic nodules.

It was part of a two stage multi-beam and sampling program designed to upgrade a significant portion of the current 410 million wet tonne inferred resource* to an indicated status, to allow for preliminary engineering and metallurgy studies.

On March 19, 2014, the Company announced that it had processed the data and received analytical results from the samples collected during the exploration program and that such data and results support the grade of elements reported in the March 2013 NI 43-101 technical report*.

* Nimmo, 2013 – “Updated NI43-101 Technical Report Clarrion-Clipperton Zone Project, Pacific Ocean”, dated effective March 20, 2013.

RISK FACTORS

Nautilus’ ability to generate revenues and achieve a return on shareholders’ investment must be considered in light of the early stage nature of the Solwara 1 deposit and seafloor resource production in general. The Company is subject to many of the risks common to early stage enterprises, including personnel limitations, financial risks, metals prices, permitting and other regulatory approvals, the need to raise capital, resource shortages, lack of revenues, equipment failures and potential disputes with, or delays or other failures caused by, third party contractors and joint venture partners. Substantial expenditures are required to discover and establish sufficient resources and to develop the mining and processing facilities and infrastructure at any site chosen for mining. There can be no assurance that the Company will be able to raise sufficient financing to facilitate this development. The Company's existing funds are not sufficient to bring the Solwara 1 Project into production and there can be no assurance that additional sources of finance will be available to the Company. Other factors that influence the Company’s ability to succeed are more fully described in the Company’s 2014 Annual Information Form available on www.sedar.com, under the heading “Risk Factors”. See also the factors discussed under “Cautionary Note Regarding Forward Looking Statements” above.

6

---

SUMMARY OF QUARTERLY RESULTS (unaudited)

The following table sets out selected unaudited quarterly financial information of Nautilus and is derived from unaudited quarterly condensed consolidated interim financial statements prepared by management and expressed in US dollars in accordance with International Financial Reporting Standards (“IFRS”) applicable to interim financial reports.

As Nautilus is currently a pre-production entity engaging in exploration activities there is a significant amount of variability in the quarterly expenditure of the Company depending on the timing of contract milestones and exploration campaigns. Below is a summary of the more significant fluctuations in results excluding those resulting from foreign exchange movements:

Q3 2013

The loss for the period was impacted by increased costs of $1.5 million for the exploration campaign conducted over tenements held by the Company in the CCZ.

Q1 2014

The loss for the period reflected a reduction of $0.6 million in professional fee expenditure following the completion of arbitration with the State.

Q4 2014

The loss for the period reflected two significant offsetting amounts that were realised during the quarter.

During the quarter other income of $15.0 million (2013 – $0.6 million) was recognised from Eda Kopa on establishment of the Solwara 1 JV with $12.1 million received treated as a recovery of previously expensed exploration expenditure and a $2.7 million capital charge also received as a result of the delays in payment during the period of the dispute.

This was offset by a $10.0 million expense resulting from the Company and MAC being the victims of a cyber attack by an unknown third party.

7

---

RESULTS OF OPERATIONS – FOR THE THREE MONTHS ENDED DECEMBER 31, 2014

The following discussion provides an analysis of the financial results of Nautilus:

Loss for the period

For the three months ended December 31, 2014, the Company recorded a loss of $2.0 million ($0.01 loss per share) compared to a loss of $6.2 million ($0.01 loss per share) for the same period in 2013. The primary variances were as follows:

Exploration
Exploration expense remained consistent at $1.8 million (2013 - $1.8 million), with an increase in mineral property fees in 2014 related to the bi-annual tenement rents paid for Tonga and the Solomon Islands, offset by a reduction in geological services expenditure, with 2013 expenditure impacted by the demobilisation costs of completing the exploration campaign to the CCZ that commenced in Q3 2013.

General & Administration
General & Administration expenditure was consistent at $3.3 million (2013 - $3.4 million).

		Three months ended			Three months ended
		December 31, 2014			December 31, 2013
Office and general		797,118			747,065
Professional services		421,902			374,741
Salary and wages		1,675,054			1,811,299
Shareholder related costs		85,391			75,395
Travel		79,695			55,359
Depreciation		281,359			290,802
Total general and administration expenditure		3,340,519			3,354,661

Security Deposit
During the quarter ended December 31, 2014 the Company expensed $10.0 million (2013 – nil) with the Company and MAC being the victims of a cyber attack by an unknown third party.

Because of the uncertainty relating to the recovery of the deposit, the full amount has been expensed as at December 31, 2014 to the statement of loss. Should the Company be able to recognise any future economic benefit attributable to the payment following the conclusion of the relevant investigations, a credit would be recorded in the statement of loss in the period of recovery.

8

---

Corporate Social Responsibility
Corporate Social Responsibility expense remained consistent at $0.4 million (2013 - $0.4 million).

Technology
Technology expense was consistent at $0.1 million (2013 - $0.1 million).

Development
Development expenses increased to $1.3 million (2013 - $0.3 million) with $1.3 million spent on PSV design and procurement in the current quarter, compared to $0.3 million in the comparative period last year.

Foreign exchange
A foreign exchange loss of $0.02 million was recorded during the quarter (2013 – $0.9 million). The foreign exchange loss consists of realized gains and losses on actual cash transactions during the period and unrealized gains and losses on cash denominated in different currencies at the period end. The Company holds a “basket of currencies” to act as a natural hedge against its expected cash outflows and can therefore experience unrealized fluctuations at period end when cash balances are converted to US dollars for reporting purposes, as experienced during the current quarter.

Interest income
Interest income earned on cash and cash equivalents held during the period was $0.07 million (2013 - $0.11 million) with Q4 2013 showing the impact of the rights offer proceeds received in Q2 2013. The Company maintains its cash and cash equivalents with banks with an S&P rating of A+ or better.

Other income
Other income of $15.0 million (2013 – $0.6 million) was earned for the three months ended December 31, 2014. The current year was impacted by the one off inflows from Eda Kopa on establishment of the Solwara 1 JV with $12.1 million received treated as a recovery of previously expensed exploration expenditure and a $2.7 million capital charge also received as a result of the delays in payment during the period of the dispute.

Operating Losses
Overall, Nautilus’ operating loss decreased to $6.9 million for the three months ended December 31, 2014, compared to $6.8 million for the same period in 2013. When adjusting the current quarter operating loss for the respective foreign currency exchange movements the actual operating loss was $6.9 million (2013 $5.9 million) with the major impact coming from the increase of $1.0 million in development expenditure related to preliminary vessel design work.

SELECTED ANNUAL INFORMATION

The following table sets out selected annual financial information of Nautilus and is derived from the Company’s audited consolidated financial statements for the years ended December 31, 2014, 2013 and 2012. The information set out below should be read in conjunction with this MD&A and the 2014 Financial Statements. Amounts are expressed in US dollars unless otherwise indicated.

9

---

Loss for the year

While there was a decrease in the overall level of expenditure in 2014 to $13.8 million (2013 - $22.3 million), the current year loss was impacted by $10.0 million expensed due to the cyber security incident, offset by $14.8 million of other income from the State’s Solwara 1 JV contribution, related to previously expensed project costs and capital charge.

Total assets

Total assets for the year ended December 31, 2014 increased to $339.6 million (2013 - $283.8 million) with receipt of the State’s equity contribution for the Solwara 1 JV and the continued progress on the build of project equipment.

Long-term liabilities

Long-term liabilities increased to $65.1 million (2013 - $10.7 million) with recognition of the liability for the project partner contribution of $60.2 million, being the non-current unearned amount of the State’s equity contribution for the Solwara 1 JV.

RESULTS OF OPERATIONS – FOR THE YEAR ENDED DECEMBER 31, 2014

The following discussion provides an analysis of the financial results of Nautilus:

Loss for the year

For the full year ended December 31, 2014, the Company recorded a loss of $13.8 million ($0.03 loss per share) compared to a loss of $22.3 million ($0.06 loss per share) in 2013. The primary variances were as follows:

10

---

Exploration
Exploration expense decreased to $3.6 million (2013 - $4.9 million), primarily due to the costs incurred during 2013 related to the exploration campaign in the CCZ, offset by increased mineral fees in Tonga and Solomon Islands.

General & Administration
General & Administration expense decreased to $11.4 million (2013 - $13.1 million) reflecting a reduction in professional services expenditure of $1.8 million following the completion of the arbitration with the State.

		Year ended			Year ended
		December 31, 2014			December 31, 2013
Office and general		3,024,359			2,919,845
Professional services		1,123,702			2,927,343
Salary and wages		4,722,081			4,897,588
Shareholder related costs		496,497			493,242
Travel		790,068			637,604
Depreciation		1,194,460			1,187,051
Total general and administration expenditure		11,351,167			13,062,673

Security Deposit
During the year ended December 31, 2014 the Company expensed $10.0 million (2013 – nil) as a result of the Company and MAC being the victims of a cyber attack by an unknown third party.

Because of the uncertainty relating to the recovery of the deposit, the full amount has been expensed as at December 31, 2014 to the statement of loss. Should the Company be able to recognise any future economic benefit attributable to the payment following the conclusion of the relevant investigations, a credit would be recorded in the statement of loss in the period of recovery.

Corporate Social Responsibility
Corporate Social Responsibility expense decreased to $1.0 million (2013 - $1.4 million) with lower salary and wages costs.

Technology
Technology expense was consistent at $0.3 million (2013 - $0.3 million).

Development
Development expenses increased to $2.8 million (2013 - $0.8 million) with $2.4 million spent on PSV design and procurement in the current year compared to $0.6 million in the previous year, with vessel procurement activity only increasing significantly in Q3 2013.

11

---

Foreign exchange
A foreign exchange loss of $0.01 million was recorded for the full year (2013 – $2.8 million). The foreign exchange loss consists of realized gains and losses on actual cash transactions during the period and unrealized gains and losses on cash denominated in different currencies at the period end. The Company holds a “basket of currencies” to act as a natural hedge against its expected cash outflows and can therefore experience unrealized fluctuations at period end when cash balances are converted to US dollars for reporting purposes, as experienced during the current year.

Interest income
Interest income earned on cash and cash equivalents held during the year was $0.2 million (2013 - $0.4 million), with 2013 reflecting the impact of the rights offer proceeds received in Q2 2013. The Company maintains its cash and cash equivalents with banks with an S&P rating of A+ or better.

Other income
Other income of $15.0 million (2013 – $0.6 million) was earned for the three months ended December 31, 2014. The current year was impacted by the one off inflows from Eda Kopa on establishment of the Solwara 1 JV with $12.1 million received treated as a recovery of previously expensed exploration expenditure and a $2.7 million capital charge also received as a result of the delays in payment during the period of the dispute.

Operating Losses
Overall, Nautilus’ operating loss decreased to $19.0 million for the year ended December 31, 2014, compared to $23.3 million for the same period in 2013. When adjusting the current quarter operating loss for the respective foreign currency exchange movements the actual operating loss was $19.0 million (2013 $20.5 million). An increase of $2.0 million for Development expenditure was offset by a $1.3 million reduction in Exploration expenditure, a $1.7 million reduction in General and Administration expenditure, and $0.4 million reduction in Corporate Social Responsibility expenditure.

Cash flows

Operating activities
Cash used in operating activities was $1.7 million for the year ended December 31, 2014 compared to $15.9 million for the corresponding period in 2013. The current year was impacted by one off inflows from Eda Kopa on establishment of the joint venture with $12.1 million received for previously expensed exploration expenditure and a $2.7 million capital charge.

Investing activities
There was a net cash inflow of $10.4 million for the year ended December 31, 2014 compared to a $35.2 million outflow for the corresponding period in 2013. Equipment purchases of $15.4 million and a $10.0 million outflow relating to the vessel security deposit, impacted by a third party cyber attack, were offset by joint venture contributions received in respect of previously capitalised expenditure of $35.8 million.

Financing activities
Cash received from financing activities was $69.4 million for the year ended December 31, 2014 compared to $36.7 million for the corresponding period in 2013. The current year reflects the unearned joint venture contribution of $69.4 million and proceeds of $0.02 million from the exercise of 80,000 stock options while the prior year reflects the net proceeds of the C$40 million rights offering that was completed.

12

---

LIQUIDITY AND CAPITAL RESOURCES

The Company’s financial objective is to ensure that it has sufficient liquidity in the form of cash and/or debt capacity to finance its ongoing requirements to support the Company’s strategy of becoming the first company to commercially extract copper, gold, silver and zinc from the seafloor.

Key financial measures

The Company uses the following key financial measures to assess its financial condition and liquidity:

		December 31			December 31
		2014			2013
Working Capital	$	100.6 million		$	36.1 million
Cash and Cash Equivalents	$	118.8 million		$	40.6 million

Under the Company’s Investment Policy, cash cannot be invested for more than 90 days and must be held on deposit with banks with an S&P credit rating of A+ or better.

Outlook and capital requirements

The Company’s known contractual obligations at December 31, 2014, are quantified in the table below:

			December 31
			2014
			$
	Non-cancellable operating leases
	Not later than 1 year		600,058
	Later than 1 year and not later than 2 years		213,804
	Later than 2 years and not later than 3 years		105,993
	Later than 3 years and not later than 4 years		79,980,072
	Later than 4 years and not later than 5 years		79,980,072
	Later than 5 years		218,901,450
	Total Commitments		365,781,449

The non-cancellable commitments as at December 31, 2014 include the payments to be made under the charter party arrangement with MAC for the PSV with a commencement date no later than January 1, 2018.

The Company is involved in mineral exploration which is a high risk activity and relies on results from each exploration program to determine if areas justify any further exploration and the extent and method of appropriate exploration to be conducted.

The Company has no source of revenue and has significant cash requirements to be able to meet its administrative overhead and maintain its property interests. In order to be able to resume the construction contracts and advance the development of its mineral property interests, the Company will be required to raise additional financing. Until that time, certain discretionary expenditures may be deferred and measures to reduce operating costs will be taken in order to preserve working capital.

13

---

Nautilus expects that cash and cash equivalents will be sufficient to pay for capital expenditure commitments and general and administrative costs for the next 12 months. Depending upon future events, the rate of expenditures and other general and administrative costs could increase or decrease. The Company continues to evaluate a range of alternative options available to it to access capital to fund future expenditures.

Nautilus’ opinion concerning liquidity and its ability to avail itself in the future of the financing options mentioned above are based on currently available information. To the extent that this information proves to be inaccurate, future availability of financing may be adversely affected.

Factors that could affect the availability of financing include Nautilus’ performance (as measured by various factors including the progress and results of its exploration work), the state of international debt and equity markets, investor perceptions and expectations of past and future performance, the global financial climate, metal and commodity prices, political events in the south Pacific, obtaining operating approvals from the PNG government for the Solwara 1 Project, drilling and metallurgical testing results, results from environmental studies, engineering studies and detailed design of equipment.

Foreign currency exchange rate risk

The Company’s operations are located in several different countries, including Canada, Australia, PNG, Tonga, Solomon Islands, Fiji and New Zealand and require equipment to be purchased from several different countries. Nautilus has entered into key contracts in United States dollars and British pounds sterling. Future profitability could be affected by fluctuations in foreign currencies. The Company has not entered into any foreign currency contracts or other derivatives to establish a foreign currency protection program but may consider such actions in the future.

Foreign exchange risk is mitigated by the Company maintaining its cash in a “basket” of currencies that reflect its current and expected cash outflows, however the large inflow of USD in December 2014 has skewed the currency holdings at balance date. As at December 31, 2014 the Company held its cash in the following currencies:

Interest rate risk

The Company holds cash and cash equivalents which earn interest at variable rates as determined by financial institutions. As at December 31, 2014, with other variables unchanged, a 0.1% increase (decrease) in the interest rate would have no significant effect on comprehensive loss.

14

---

Credit risk

The Company places its cash only with banks with an S&P credit rating of A+ or better.

The maximum exposure to credit risk at the reporting date is the carrying value of cash and cash equivalents and other receivables.

Liquidity risk

The Company manages liquidity by maintaining adequate cash and short-term investment balances. In addition, the Company regularly monitors and reviews both actual and forecasted cash flows.

The Company has no source of revenue and has significant cash requirements to be able to meet its administrative overhead and maintain its property interests. In order to be able to resume the construction contracts and advance the development of its mineral property interests, the Company will be required to raise additional financing. Until that time, certain discretionary expenditures may be deferred and measures to reduce operating costs will be taken in order to preserve working capital. Given the measures taken by the Company to minimize expenditures leading up to signing the PNG Equity Agreement with the State and the measures that will continue to be taken, the Company’s exposure to liquidity risk is currently considered to be low.

NEWLY ADOPTED ACCOUNTING POLICIES

During the year ended December 31, 2014, the Company identified the need to adopt the following accounting policies to ensure that the Company continued to meet its obligations for reporting within the IFRS framework.

Joint Arrangements

Under IFRS 11 Joint Arrangements, investments in joint arrangements are typically classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement.

Under the terms of the unincorporated joint venture agreement between the Company and the State Nominee, Nautilus and the State Nominee each beneficially own, 85% and 15% respectively, of the Solwara 1 project and the subsea equipment tools. They are tenants in common in proportion to their ownership interest.

Accordingly, the Company records its 85% interest in the assets and liabilities and income and expenses of the unincorporated joint venture in the consolidated financial statements. The impact of this is similar to proportionate consolidation.

15

---

Impairment of Assets

IAS 36, ‘Impairment of assets’ was amended to clarify disclosure requirements when a recoverable amount is determined based on FVLCTD. The amendment was effective for annual periods beginning on January 1, 2014 and we have adopted the amendment and it did not have any material impact on the financial statements.

16

---

SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of the financial statements in conformity of IFRS requires the use of judgements and estimates that affect the amount reported and disclosed in the consolidated financial statements and related notes. These judgements and estimates are based on management’s knowledge of the relevant facts and circumstances, having regard to previous experience, but actual results may differ materially from the amounts included in the financial statements. Information about such judgements and estimation is contained in the accounting policies and notes to the financial statements, and the key areas are summarized below.

The area of judgment that has the most significant effect on the amounts recognized in these consolidated financial statements is the review of asset carrying values and impairment assessment.

Review of asset carrying values and impairment assessment
Property, plant and equipment and exploration and evaluation assets are considered for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. If an indicator is identified, the asset’s recoverable amount is calculated and compared to the carrying amount. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units or “CGUs”). The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use (being the present value of the expected future cash flows of the relevant asset or CGU). An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.

The determination of fair value less costs to sell and value in use requires management to make estimates and assumptions about expected production, sales volumes, commodity prices, mineral resources, operating costs and future capital expenditures. The estimates and assumptions are subject to risk and uncertainty; hence, there is the possibility that changes in circumstances will alter these assumptions, which may impact the recoverable amount of the assets.

In considering whether any impairment indicators occurred in respect of the Company’s long lived assets as at December 31, 2014, management took into account a number of factors such as metal prices, projected costs to operate equipment, availability and costs of finance, cost and state of completion of subsea equipment construction, exploration successes in other areas, the existence and terms of binding off-take agreements and the Company’s market capitalization compared to its net asset value.

Management has concluded that there are no impairment indicators relating to the Company’s long-lived assets as at December 31, 2014.

FUTURE ACCOUNTING CHANGES

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after July 1, 2014. The Company has reviewed the disclosure requirements of changes in IFRS 8 ‘Operating Segments’, IFRS 9 ‘Financial Instruments: Classification and Measurement’ (effective January 1, 2018) and IFRS 7 ‘Financial Instruments: Disclosure’ (effective January 1, 2018), however this does not currently require any changes to disclosures within the financial statements of the Company.

17

---

There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on our consolidated financial statements.

OUTSTANDING SHARE DATA

The following is a summary of the Company’s outstanding share data as of March 30, 2015.

Common shares

A total of 445,302,865 common shares are outstanding including 11,325,000 restricted shares.

Restricted shares

A total of 11,325,000 restricted shares are issued and outstanding under the Company’s share loan plan, with loan expiry dates ranging from October 2015 through to July 2017. The weighted average issue price for the restricted shares is C$0.52.

Stock Options

A total of 4,945,000 stock options are issued and outstanding, with expiry dates ranging from October 2015 through to July 2017. The weighted average exercise price for all stock options is C$0.50. All stock options entitle the holders to purchase common shares of the Company.

INTERNAL CONTROLS

Disclosure controls and procedures

The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of Nautilus’ disclosure controls and procedures. Based on the results of that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as at December 31, 2014, the Company’s disclosure controls and procedures were effective in providing reasonable assurance that the information required to be disclosed by the Company in reports it files under securities legislation are recorded, processed, summarized and reported within the appropriate time periods and forms specified in the securities legislation.

Internal control over financial reporting

The Company’s management is responsible for establishing and maintaining an adequate system of internal controls, including internal controls over financial reporting. The Company’s internal control over financial reporting (ICFR) is in accordance with criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) framework. Nautilus’ internal controls include policies and procedures that (1) pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail, the transactions related to acquisition, maintenance and disposition of assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and receipts are recorded and expenditures are incurred only in accordance with authorization of management and directors; and (3) provide reasonable (but not absolute) assurance of compliance with regulatory matters and to safeguard reliability of the financial reporting and its disclosures. Having assessed the effectiveness of the Company’s internal controls over financial reporting, the Chief Executive Officer and Chief Financial Officer believe that: (1) the internal controls over financial reporting are effective and provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS; and (2) that no material weaknesses in the reporting were discovered as at December 31, 2014.

18

---

The Company and MAC were victims of a cyber attack by an unknown third party during the fourth quarter of 2014. The incident was reported to the relevant police authorities and the Company engaged a third party cyber security consultant to investigate the cyber-attack that resulted in the Company paying a deposit of US$10,000,000 owing to MAC under the vessel charter agreement to a bank account which the Company believed to be MAC’s, but which MAC subsequently advised was not its account. The parties have agreed to determine how to proceed in relation to the US$10,000,000 deposit following the conclusion of all investigations, which may take some months. In the meantime, the Company has expensed the sum of US$10,000,000 to the statement of loss for the period ended December 31, 2014 but will record a credit in the statement of loss in the period of recovery should the Company be able to recognize any future economic benefit attributable to the payment following the conclusion of the relevant investigations.

As a result of the cyber-attack incident, the Company has clarified its internal control procedures regarding provision of new or revised bank account details to require all details provided via email to be confirmed verbally prior to any payments being made. The Company has determined that this isolated incident committed by an unknown third party does not represent a material weakness in the design or operation of the Company’s ICFR as at December 31, 2014. The incident, which was detected by senior officers, does not indicate that there exists a reasonable possibility that the Company’s ICFR will fail to prevent or detect in a timely manner a material misstatement of a financial statement amount or disclosure.

There have been no material changes in the Company’s ICFR since the year ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, believe that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, but not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitation in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any system of control also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatement due to error or fraud may occur and not be detected.

19

---

ADDITIONAL SOURCES OF INFORMATION

Additional information regarding Nautilus Minerals Inc., including its Annual Information Form, is available on SEDAR at www.sedar.com and on the Company’s website www.nautilusminerals.com.

20

---

---

Nautilus Minerals Inc.
(an exploration stage company)

Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2015 and
September 30, 2014
(Expressed in US Dollars)
(Unaudited)

---

Nautilus Minerals Inc.

Consolidated Statements of Financial Position

(expressed in US Dollars)

(Unaudited)

		September 30,			December 31,
		2015			2014
		$			$
ASSETS
Current assets
Cash and cash equivalents (Note 4)		68,856,243			118,770,134
Prepaid expenses and advances		1,409,425			766,226
		70,265,668			119,536,360
Non-current assets
Restricted cash (Note 7)		502,507			595,952
Prepaid expenses and advances (Note 8)		8,500,000			-
Property, plant and equipment (Note 9)		192,777,847			177,699,461
Exploration and evaluation assets (Note 10)		45,649,929			41,735,818
		247,430,283			220,031,231
TOTAL ASSETS		317,695,951			339,567,591
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities (Note 5)		12,823,984			7,414,236
Project partner contribution (Note 6)		15,858,286			10,733,912
Provision for employee entitlements		836,458			743,035
		29,518,728			18,891,183
Non-current liabilities
Accounts payable and accrued liabilities (Note 5)		759,141			4,570,655
Project partner contribution (Note 6)		50,034,756			60,172,942
Provision for employee entitlements		529,236			402,480
		51,323,133			65,146,077
TOTAL LIABILITIES		80,841,861			84,037,260
Equity (Note 11)
Share Capital		514,161,841			514,149,818
Contributed Surplus		50,086,324			48,896,679
Deficit		(327,394,075	)		(307,516,166	)
Total Equity		236,854,090			255,530,331
TOTAL LIABILITIES AND EQUITY		317,695,951			339,567,591

Approved by the Board of Directors

Signed: “Russell Debney”	Signed: “Cynthia Thomas”
Russell Debney	Cynthia Thomas

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

1

---

Nautilus Minerals Inc.

Consolidated Statements of Loss and Comprehensive Loss

For the three and nine months ended September 30, 2015 and 2014

(expressed in US Dollars)

(Unaudited)

		Three months			Three months			Nine months			Nine months
		ended			ended			ended			ended
		September 30,			September 30,			September 30,			September 30,
		2015			2014			2015			2014
		$			$			$			$
Operating expenses
Exploration (Note 12)		3,902,764			781,407			7,740,033			1,814,410
General and administration (Note 13)		2,726,111			2,806,530			9,128,704			8,010,648
Corporate social responsibility		690,186			305,113			1,186,877			593,599
Technology		86,675			28,055			303,528			192,078
Development		443,689			639,611			1,055,599			1,464,989
Foreign exchange (gains)/losses		546,706			154,076			833,500			(6,994	)
Operating loss		8,396,131			4,714,792			20,248,241			12,068,730
Interest income		(62,206	)		(49,189	)		(150,602	)		(137,599	)
Rent and other income		(41,665	)		(57,884	)		(219,730	)		(175,786	)
Loss and comprehensive loss for the period		8,292,260			4,607,719			19,877,909			11,755,345
Weighted average number of shares outstanding, basic and diluted		445,702,865			442,109,930			445,455,246			441,239,568
Loss per share Basic and diluted		0.02			0.01			0.05			0.03

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

2

---

Nautilus Minerals Inc.

Consolidated statements of Cash flows

For the nine months ended September 30, 2015 and 2014

(expressed in US Dollars)

(Unaudited)

		Nine Months			Nine months
		ended September 30,			ended September 30,
		2015			2014
		$			$
Operating activities
Loss for the period		(19,877,909	)		(11,755,345	)
Adjustments for:
Depreciation and amortization		726,020			913,101
Unrealized foreign exchange losses		991,683			713
Share-based payments		1,194,305			536,009
Changes in non-cash working capital
Prepaid expenses and advances		(643,198	)		(203,228	)
Accounts payable and accrued liabilities		995,046			(775,834	)
Net cash used in operating activities		(16,614,053	)		(11,284,584	)
Investing activities
Restricted cash		93,445			7,327
Charterers guarantee		(10,000,000	)		-
Purchase of plant and equipment		(17,780,440	)		(5,029,013	)
Exploration and evaluation assets		(4,628,523	)		(2,099,896	)
Recovery of exploration and evaluation assets		-			7,000,000
Net cash used in investing activities		(32,315,518	)		(121,582	)
Financing activities
Issuance of shares for cash - net of issue costs		7,363			15,857
Net cash used in financing activities		7,363			15,857
Effect of exchange rate changes on cash and cash		(991,683	)		(713	)
equivalents
Decrease in cash and cash equivalents		(49,913,891	)		(11,391,022	)
Cash and cash equivalents - Beginning of period		118,770,134			40,617,963
Cash and cash equivalents - End of period (Note 4)		68,856,243			29,226,941

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

3

---

Nautilus Minerals Inc.

Consolidated Statements of changes in equity

For the nine months ended September 30, 2015 and 2014

(expressed in US Dollars)

(Unaudited)

		Share capital						Contributed			Deficit			Total
		Number of			Amount			Surplus
		shares
					$			$			$			$
Balance January 1, 2015		445,302,865			514,149,818			48,896,679			(307,516,166	)		255,530,331
Exercise of Loan shares		-			7,363			-			-			7,363
Share-based payments					-			1,194,305						1,194,305
Transfer of value on exercise of Loan shares		-			4,660			(4,660	)		-			-
Issue of shares in Share Loan Plan		400,000			-			-			-			-
Loss for the period		-			-			-			(19,877,909	)		(19,877,909	)
Balance September 30, 2015		445,702,865			514,161,841			50,086,324			(327,394,075	)		236,854,090
Balance January 1, 2014		440,772,865			514,123,985			47,647,463			(293,765,926	)		268,005,522
Exercise of share options		80,000			15,856									15,856
Share-based payments		-			-			536,010			-			536,010
Transfer of value on exercise of share options					9,977			(9,977	)					-
Issue of shares in Share Loan Plan		4,450,000			-			-			-			-
Loss for the period		-			-			-			(11,755,345	)		(11,755,345	)
Balance September 30, 2014		445,302,865			514,149,818			48,173,496			(305,521,271	)		256,802,043

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

4

---

Nautilus Minerals Inc.

Notes to Condensed Iterim Consolidated Financial Statements

For the three and nine months ended September 30, 2015 and 2014

(expressed in US Dollars)

(Unaudited)

1	Corporate Information

Nature of Operations

Nautilus Minerals Inc. (the “Company”, “Nautilus” or “NMI”) is a company whose common shares are listed on the Toronto Stock Exchange and quoted on OTCQX International.

Nautilus is engaged in the exploration and development of the ocean floor for copper and gold rich seafloor massive sulphide deposits and for manganese, nickel, copper and cobalt nodule deposits. To date the Company has not earned any revenues from operations and is considered to be in the exploration stage. The exploration activity involves the search for deepwater copper and gold rich seafloor massive sulphides in the western Pacific Ocean and nodule deposits in the eastern Pacific Ocean. The Company’s main focus is to create shareholder value by demonstrating the effective operation of its seafloor production system and establishing a pipeline of development projects to maximize the value of mineral licenses and exploration applications that Nautilus holds in various locations in the Pacific Ocean. The Company's principal project is the Solwara 1 Project in Papua New Guinea (PNG) in the Bismarck Sea. The proposed principal operations of the Company subject to permitting will be the extraction of copper, zinc, gold and silver deposits where there are economically viable discoveries.

The Company’s consolidated financial statements are presented in US Dollars.

Nautilus is a company incorporated in British Columbia, Canada. The registered office, head office and principal offices of the Company are located at:

	Registered Office (Vancouver, Canada)	Head Office (Vancouver, Canada)
	Nautilus Minerals Inc.	Nautilus Minerals Inc.
	Floor 10	Suite 1400
	595 Howe St	400 Burrard Street
	Vancouver, BC, V6C 2T5	Vancouver, BC, V6C 3A6
	Canada	Canada
	Corporate Office (Toronto, Canada)	Operations (Brisbane, Australia)
	Nautilus Minerals Inc.	Nautilus Minerals Inc.
	Suite 1702, 141 Adelaide Street West	Level 7, 303 Coronation Drive
	Toronto, Ontario M5H 3L5	Milton Queensland, Australia 4064
	Canada

5

---

Nautilus Minerals Inc.

Notes to Condensed Iterim Consolidated Financial Statements

For the three and nine months ended September 30, 2015 and 2014

(expressed in US Dollars)

(Unaudited)

2	State of PNG’s participation in Solwara 1 Project and Liquidity Risk

State of PNG Participation in Solwara 1 Project

On April 24, 2014, the Company announced that it and the Independent State of Papua New Guinea (“State”) had signed the PNG Equity Agreement, enabling the Solwara 1 Project to move forward toward production with the full support of the State.

Under the PNG Equity Agreement, the State has taken an initial 15% interest in the Solwara 1 Project, with an option to take up to a further 15% interest within 12 months of completion under the Agreement. On April 24, 2014, the date the PNG Equity Agreement was executed, the State paid Nautilus a non-refundable deposit for its initial 15% interest of $7.0 million.

On December 11, 2014, completion occurred in accordance with the PNG Equity Agreement such that the sum of $113.0 million was released from escrow to Nautilus and the unincorporated joint venture between Nautilus and the State’s Nominee (Eda Kopa (Solwara) Limited) in respect of the Solwara 1 Project was formed (the “Solwara 1 JV”). The Solwara 1 JV is governed by the Joint Venture Agreement among the parties to the PNG Equity Agreement.

On June 11, 2015 the Company announced that it has agreed to extend by six months the exercise date of the options granted to the State Nominee under the PNG Equity Agreement to increase its stake by up to a further 15%.

Liquidity Risk

These financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business.

The Company has no source of revenue and has significant cash requirements to be able to meet its administrative overhead and maintain its property interests. In order to be able to complete the ongoing sub-sea equipment construction contracts and advance the development of its mineral property interests, the Company will need to raise additional funding. Until that time, certain discretionary expenditures may be deferred and measures to reduce operating costs may be taken in order to preserve working capital.

3	Basis of preparation

These condensed interim consolidated financial statements should be read in conjunction with our audited consolidated annual financial statements for the year ended December 31, 2014.

These condensed interim consolidated financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting ("IAS 34") as issued by the International Accounting Standards Board ("IASB"). The comparative information has also been prepared on this basis.

The accounting policies applied in these condensed interim consolidated financial statements are consistent with those disclosed in our audited consolidated financial statements for the year ended December 31, 2014.

The condensed interim consolidated financial statements were approved on November 9, 2015 by the Board of Directors.

6

---

Nautilus Minerals Inc.

Notes to Condensed Iterim Consolidated Financial Statements

For the three and nine months ended September 30, 2015 and 2014

(expressed in US Dollars)

(Unaudited)

4	Cash and cash equivalents

			September 30,			December 31,
			2015			2014
			$			$
	Cash		7,920,583			70,901,963
	Term Deposits		60,935,660			47,868,171
			68,856,243			118,770,134

5	Accounts payable and accrued liabilities

			September 30,			December 31,
			2015			2014
			$			$
	Current
	Accounts Payable		682,992			963,995
	Accrued Liabilities		3,290,305			2,323,975
	Retention Payable		8,850,687			4,126,266
			12,823,984			7,414,236

			September 30,			December 31,
			2015			2014
			$			$
	Non Current
	Retention Payable		759,141			4,570,655
			759,141			4,570,655

The current and non-current Retention Payable represents the contractual retention from payments to Soil Machine Dynamics to be paid on completion of the contract for the construction of the Seafloor Production Tools. The amounts considered non-current are not due within the next 12 months.

6	Project Partner Contribution

In accordance with the PNG Equity Agreement between the Company and the State dated April 24, 2014, the Company received cash proceeds of $120,000,000 from the State Nominee by way of a $7,000,000 non-refundable deposit received on signing the PNG Equity Agreement and $113,000,000 released from escrow on December 11, 2014 in relation to the completion of the Agreement and the formation of the joint venture with the State Nominee. The project partner contribution liability is the unearned portion of the purchase price of the State’s initial 15% interest. As at September 30, 2015 this totalled $65,893,042 with $15,858,286 recorded as a current liability, being 15% of the approved project budget for the next 12 months, with the balance of $50,034,756 recorded as non-current.

7

---

Nautilus Minerals Inc.

Notes to Condensed Iterim Consolidated Financial Statements

For the three and nine months ended September 30, 2015 and 2014

(expressed in US Dollars)

(Unaudited)

7	Restricted cash

$502,507 (December 31, 2014 - $595,952) has been provided as security for property leases and exploration tenements held in Papua New Guinea and Fiji.

8	Joint Arrangements

On December 11, 2014, the Company announced that completion had occurred under the PNG Equity Agreement and the unincorporated joint venture between Nautilus and the State Nominee in respect of the Solwara 1 Project was formed. The table below presents the carrying values of the related assets as at September 30, 2015.

						Nautilus			State Nominee
			100%			85%			15%
	Prepaid Charterers Guarantee		10,000,000			8,500,000			1,500,000
	Assets Under Construction		225,294,615			191,500,423			33,794,192
	Exploration and evaluation assets		37,995,006			32,295,755			5,699,251
			273,289,621			232,296,178			40,993,443

As at September 30, 2015 Nautilus Minerals Inc recognised its share of the joint venture assets as follows:

			September 30,			December 31,
			2015			2014
			$			$
	Prepaid Charterers Guarantee		8,500,000			-
	Assets Under Construction		191,500,423			176,082,878
	Exploration and evaluation assets		32,295,755			28,381,647
			232,296,178			204,464,525

8

---

Nautilus Minerals Inc.

Notes to Condensed Iterim Consolidated Financial Statements

For the three and nine months ended September 30, 2015 and 2014

(expressed in US Dollars)

(Unaudited)

9	Property, plant and equipment

			Period ended September 30, 2015
			Opening			Additions			Disposals			Closing Cost			Accum			Closing
			Cost									Balance			Dep’n			Carrying
			Balance															Value
			$			$			$			$			$			$
	Leasehold improvements		2,829,694			-			(2,739,964	)		89,730			(89,257	)		473
	Plant and equipment		785,935			85,642			-			871,577			(631,501	)		240,076
	Office equipment		3,220,918			212,773			(104,501	)		3,329,190			(2,878,995	)		450,195
	Motor vehicles		165,562			88,448			-			254,010			(134,299	)		119,711
	Land		466,969			-			-			466,969			-			466,969
	Subsea equipment under construction		176,082,878			15,417,545			-			191,500,423			-			191,500,423
	Total property, Plant and Equipment		183,551,956			15,804,408			(2,844,465	)		196,511,899			(3,734,052	)		192,777,847

			Year ended December 31, 2014
			Opening			Additions			Disposals			Closing Cost			Accum			Closing
			Cost									Balance			Dep’n			Carrying
			Balance															Value
			$			$			$			$			$			$
	Leasehold improvements		2,828,884			810			-			2,829,694			(2,315,383	)		514,311
	Plant and equipment		778,781			7,154			-			785,935			(582,675	)		203,260
	Office equipment		3,205,369			15,549			-			3,220,918			(2,842,122	)		378,796
	Motor vehicles		165,562			-			-			165,562			(112,315	)		53,247
	Land		466,969			-			-			466,969			-			466,969
	Subsea equipment under construction		195,745,530			11,150,223			(30,812,875	)		176,082,878			-			176,082,878
	Total property, plant & equipment		203,191,095			11,173,736			(30,812,875	)		183,551,956			(5,852,495	)		177,699,461

The disposal amount of $30,812,875 for the year ended December 31, 2014 for the subsea equipment under construction represents the recovery, under the terms of the PNG Equity Agreement, of 15% of the costs, as defined, previously capitalised to the equipment that are attributable to the State Nominee.

9

---

Nautilus Minerals Inc.

Notes to Condensed Iterim Consolidated Financial Statements

For the three and nine months ended September 30, 2015 and 2014

(expressed in US Dollars)

(Unaudited)

10	Exploration and evaluation assets

In 2006, the Company through its 100% owned subsidiary Nautilus Minerals Niugini Ltd acquired a 100% interest in certain PNG subsea exploration licenses by issuing common shares with an estimated historical fair value of $12,213,367 to Barrick Gold Inc., following its acquisition on of Placer Dome.

Following the grant of the mining lease (ML154) for the Solwara 1 deposit on January 13, 2011 the Company determined that an economic benefit was more likely than not to be recovered from the Solwara 1 deposit and, accordingly, commenced capitalizing exploration and evaluation costs associated with the Solwara 1 deposit from that point forward.

			September 30,			December 31,
			2015			2014
			$			$
	Opening balance		41,735,818			43,448,448
	Engineering services		738,815			735,650
	Environmental consulting		508,036			230,302
	Project management and oversight		2,396,360			2,220,764
	Geological services and field expenses		270,900			32,400
	Mineral property fees		-			28,371
	Disposal to joint venture		-			(4,960,117	)
			3,914,111			(1,712,630	)
	Closing balance		45,649,929			41,735,818

The disposal amount of $4,960,117 for the year ended December 31, 2014 represents the recovery, under the terms of the PNG Equity Agreement, of 15% of the costs, as defined, previously capitalised to the Solwara 1 project that are attributable to the State Nominee.

Although the Company has taken steps to verify title to exploration and evaluation assets in which it has an interest, these procedures do not guarantee a clear title. Property title may be subject to unregistered prior agreements and regulatory requirements. The Company is not aware of any disputed claim of title.

10

---

Nautilus Minerals Inc.

Notes to Condensed Iterim Consolidated Financial Statements

For the three and nine months ended September 30, 2015 and 2014

(expressed in US Dollars)

(Unaudited)

11

Equity

a)

Common share issues

Gross proceeds of C$9,600 were received from the exercise of 40,000 loan shares at a price of C$0.24 per common share during the nine months ended September 30, 2015.

Outstanding share options

						Weighted
						average
						exercise
			Share options			price
						C$
	At January 1, 2014		4,075,000			0.88
	Granted		2,250,000			0.53
	Expired		(500,000	)		2.91
	Forfeited		(800,000	)		1.07
	Exercised		(80,000	)		0.22
	At December 31, 2014		4,945,000			0.50
	Granted		1,800,000			0.45
	At September 30, 2015		6,745,000			0.49
	Information relating to share options outstanding at September 30, 2015 is as follows:

Weighted

Weighted

Weighted

average

average

average

remaining

exercise price

exercise price

life of

Outstanding

Vested stock

of outstanding

of vested

outstanding

Price range

share options

options

options

options

options

C$

C$

C$

(months)

0.00 – 0.99

6,520,000

2,820,000

0.47

0.49

18.8

1.00 – 1.99

225,000

225,000

1.01

1.01

6.3

6,745,000

3,045,000

0.49

0.53

18.4

11

---

Nautilus Minerals Inc.

Notes to Condensed Iterim Consolidated Financial Statements

For the three and nine months ended September 30, 2015 and 2014

(expressed in US Dollars)

(Unaudited)

Outstanding loan shares

						Weighted
						average
						exercise
			Loan shares			price
						C$
	At January 1, 2014		6,875,000			0.56
	Granted		5,450,000			0.57
	Forfeited		(800,000	)		0.53
	Expired		(200,000	)		2.91
	At December 31, 2014		11,325,000			0.52
	Granted		400,000			0.45
	Exercised		(40,000	)		0.24
	At September 30, 2015		11,685,000			0.52

Information relating to loan shares outstanding at September 30, 2015 is as follows:

Weighted

Weighted

Weighted

average

average

average

remaining

Outstanding

exercise price

exercise price

life of

share loan

Vested loan

of outstanding

of vested

outstanding

Price range

shares

shares

loan shares

loan shares

loan shares

C$

C$

C$

(months)

0.00 – 0.99

10,010,000

4,100,000

0.44

0.45

16.4

1.00 – 1.99

1,675,000

-

1.01

-

6.3

11,685,000

4,100,000

0.52

0.45

14.9

12

---

Nautilus Minerals Inc.

Notes to Condensed Iterim Consolidated Financial Statements

For the three and nine months ended September 30, 2015 and 2014

(expressed in US Dollars)

(Unaudited)

The fair value of the share options and loan shares granted is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

			Options			Options
			granted in			granted in
			2015			2014
	Expected dividend yield		Nil			Nil
	Expected stock price volatility		104.04%			111.28%
	Risk-free interest rate		0.58%			1.13%
	Expected life of options in years		3.00			2.83

The weighted average fair value of the options granted was C$0.45 (2014 – C$0.53) .

			Loan shares			Loan shares
			granted in			granted in
			2015			2014
	Expected dividend yield		Nil			Nil
	Expected stock price volatility		104.04%			111.28%
	Risk-free interest rate		0.58%			1.13%
	Expected life of loan shares in years		3.00			2.83

The weighted average fair value of the loan shares granted was C$0.45 (2014 – C$0.57) .

The Black-Scholes pricing models used to price options and loan shares require the input of highly subjective assumptions including the estimate of the share price volatility. Changes in the subjective input assumptions can materially affect the fair value estimate.

			Three months			Three months			Nine months			Nine months
			ended			ended			ended			ended
			September 30			September 30			September 30			September 30
			2015			2014			2015			2014
			$			$			$			$
	General and administration		31,209			-			49,522			-
	Geological services and field expenses		3,110,274			37,851			5,587,638			85,677
	Mineral property fees		49,718			52,525			102,865			232,001
	Professional services		115,904			209,175			356,175			328,983
	Travel		100,973			49,737			283,677			67,816
	Wages and salaries		494,686			432,119			1,360,156			1,099,933
	Total Exploration Expenditures		3,902,764			781,407			7,740,033			1,814,410

12	Exploration Expenditures

In accordance with our policy on exploration and evaluation assets, all exploration expenditure incurred for the Solwara 1 project is capitalised to exploration and evaluation assets, with all other exploration expenditure expensed to the Statement of Loss.

13

---

Nautilus Minerals Inc.

Notes to Condensed Iterim Consolidated Financial Statements

For the three and nine months ended September 30, 2015 and 2014

(expressed in US Dollars)

(Unaudited)

In order to maintain the exploration leases, licenses and permits in which the Company is involved, the Company is expected to fulfil the minimum annual expenditure conditions under which the tenements are granted. These obligations may be varied from time to time, subject to approval, and are expected to be fulfilled in the normal course of operations of the Company. The exploration commitments are based on those exploration tenements that have been granted and may increase or decrease depending on whether additional applications are granted, relinquished or form joint ventures in the future. Based on tenements granted at September 30, 2015, total rental commitments are $1.0 million and total expenditure commitments are $31.2 million over the life of the licenses, which in the majority of cases extend to a maximum of two years, with the exception of the CCZ tenements where expenditure commitments extend to 5 years.

13	General and Administration Expenditures

			ended			ended			ended			ended
			September 30			September 30			September 30			September 30
			2015			2014			2015			2014
			$			$			$			$
	Office and general		645,717			858,416			2,129,765			2,227,241
	Professional services		652,880			104,852			2,068,582			701,800
	Salary and wages		1,146,218			1,130,242			3,249,792			3,047,027
	Shareholder related costs		116,049			108,760			406,741			411,106
	Travel		94,776			266,613			547,805			710,373
	Depreciation		70,471			337,647			726,019			913,101
	Total General & Administration Expenditures		2,726,111			2,806,530			9,128,704			8,010,648

14	Related party transactions

Protection Group International Ltd, trading as PGI Strontium Ltd (“PGI”) is a company based in the United Kingdom which provides integrated, intelligence-led risk management solutions with respect to the protection of assets. PGI is a privately owned company of which 51% is owned by United Engineering Services, a wholly owned subsidiary of MB Holding Company LLC, one of the Company’s major shareholders. PGI provided risk assessment and training related services to the Company in the normal course of business and on an arm’s length basis. For the 9 months ended September 30, 2015 the Company incurred costs of $1,005,755 (2014 – nil) for services provided by PGI.

14

---

Nautilus Minerals Inc.

Notes to Condensed Iterim Consolidated Financial Statements

For the three and nine months ended September 30, 2015 and 2014

(expressed in US Dollars)

(Unaudited)

15	Contingencies and Commitments

a)

Non-cancellable commitments

			September 30
			2015
			$
	Non-cancellable commitments
	Not later than 1 year		1,082,969
	Later than 1 year and not later than 2 years		646,118
	Later than 2 years and not later than 3 years		517,185
	Later than 3 years and not later than 4 years		73,155,835
	Later than 4 years and not later than 5 years		73,155,835
	Later than 5 years		217,915,950
	Total Commitments		366,473,892

The non-cancellable commitments as at September 30, 2015 include the payments to be made under the charter party arrangement with Marine Assets Corporation for the Production Support Vessel with a commencement date no later than January 1, 2018.

b)

Cancellable commitments

In order to maintain the exploration leases, licenses and permits in which the Company is involved, the Company is committed to fulfil the minimum annual expenditure conditions under which the tenements are granted. These obligations may be varied from time to time, subject to approval, and are expected to be fulfilled in the normal course of operations of the Company. The exploration commitments are based on those exploration tenements that have been granted and may increase if applications are granted in the future.

The Company has entered into various contracts for the design and build of the seafloor production system. As at September 30, 2015, the committed value of the contracts is $52.8 million. The committed value of $52.8 million reflects ongoing milestone payments for continuing contracts. The contracts are cancellable by the Company at any time, however, in the event of cancellation, the Company is liable for any costs incurred up to that point, with an estimate of costs for terminated contracts included in the accrued costs at period end. No other penalties or cancellation fees are payable under these contracts.

16	Financial risk management

The Company’s activities expose it to a variety of financial risks: foreign exchange risk, credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial performance.

Risk management is carried out under policies approved by the board of directors. The board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.

15

---

Nautilus Minerals Inc.

Notes to Condensed Iterim Consolidated Financial Statements

For the three and nine months ended September 30, 2015 and 2014

(expressed in US Dollars)

(Unaudited)

a)

Capital Management

The Company’s objectives in the managing of the liquidity and capital are to safeguard the Company’s ability to continue as a going concern and provide financial capacity to meet its strategic objectives. The capital structure of the Company consists of equity attributable to common shareholders, comprising of issue share capital, contributed surplus and deficit.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt, acquire or dispose of assets to facilitate the management of its capital requirements. The Company prepares annual expenditure budgets that are updated as necessary depending upon various factors, including successful capital deployment and general industry conditions. The annual and updated budgets are approved by the Board of Directors. As at September 30, 2015 the Company does not have any long-term debt and is not subject to any externally imposed capital requirements. The Company has sufficient funds to meet its current operating and exploration and development obligations.

b)

Foreign exchange risk

The Company’s operations are located in several different countries, including Canada, Australia, PNG, Tonga, Solomon Islands, Fiji and New Zealand and require equipment to be purchased from several different countries. Nautilus has entered into key contracts in United States dollars, British pounds sterling and euros. Future profitability could be affected by fluctuations in foreign currencies. The Company has not entered into any foreign currency contracts or other derivatives to establish a foreign currency protection program but may consider such actions in the future.

Foreign exchange risk is mitigated by the Company maintaining its cash and cash equivalents in a “basket” of currencies that reflect its current and expected cash outflows. As at September 30, 2015 the Company held its cash and cash equivalents in the following currencies:

c)

Credit Risk

The company places its cash and cash equivalents only with banks with an S&P credit rating of A+ or better. Our maximum exposure to credit risk at reporting date is the carrying value of cash and cash equivalents and other receivables.

16

---

Nautilus Minerals Inc.

Notes to Condensed Iterim Consolidated Financial Statements

For the three and nine months ended September 30, 2015 and 2014

(expressed in US Dollars)

(Unaudited)

d)

Liquidity Risk

The Company manages liquidity by maintaining adequate cash and short-term investment balances. In addition, the Company regularly monitors and reviews both actual and forecasted cash flows. The exposure of the Company to liquidity risk is considered to be minimal.

17

---

---

NAUTILUS MINERALS INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(US dollars)

The following Management Discussion and Analysis (“MD&A”) has been prepared as at November 9, 2015 for the period ended September 30, 2015.

The MD&A of Nautilus Minerals Inc. (the “Company”, “NMI” or “Nautilus”) should be read in conjunction with the Company’s unaudited condensed interim consolidated financial statements for the three months and nine months ended September 30, 2015, and related notes thereto (the “Third Quarter 2015 Financial Statements”) which have been prepared in accordance with IAS 34, Interim Financial Reporting. This MD&A should also be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2014, and the related notes thereto (the “2014 Financial Statements”), and the related annual management’s discussion and analysis and the Annual Information Form on file with the Canadian provincial and territorial securities regulatory authorities.

This MD&A includes references to United States dollars, Canadian dollars, Papua New Guinea kina, United Kingdom pounds sterling and euros. All dollar amounts referenced, unless otherwise indicated, are expressed in United States dollars and the Canadian dollars are referred to as C$, Papua New Guinea kina are referred to as PGK, United Kingdom pounds sterling are referred to as £ and euros are referred to as €.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This document includes “forward-looking statements” which include all statements other than statements of historical fact.

Forward-looking statements include, but are not limited to, statements with respect to the future price of copper, gold and other metals; the estimation of mineral resources; the realization of mineral resource estimates; plans for establishing or expanding mineral resource estimates on the Company’s projects; the timing and amount of estimated future production; the construction and delivery of the Production Support Vessel (“PSV”); the fulfillment of the obligations under the Tongling sales agreement and the timing and sustainability of such arrangements; costs of production; capital expenditures; costs and timing of the development of the Company’s seafloor production system; the Company’s seafloor massive sulphide (“SMS”) prospects (including Solwara 1) and new deposits; success of exploration and development activities; permitting time lines; currency fluctuations; requirements for additional capital; government regulation of exploration operations; the Company's financial position; business strategy; plans and objectives of management for future operations; the design and performance of the PSV and Seafloor Production Tools (“SPTs”); and the procurement of the PSV. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the risk of failure to obtain required equity or debt funding; the risk that material assumptions listed in the paragraph below will not be borne out; changes in project parameters as plans continue to be refined; any additional permitting or licensing requirements associated with any modifications to the scope of the Solwara 1 Project; future prices of copper, gold and other metals being lower than expected; the over-arching risk that the Company will not commence production of mineralized material; possible variations in resources, grade or recovery rates; the risk of failure to conclude the investigation into the cyber-attack, the inability to reach agreement with Marine Assets Corporation (“MAC”) as to the deposit under the vessel charter agreement, the insolvency of MAC or the applicable shipyard and other events which may cause a delay to the delivery of the PSV; the risk that the obligations under the Tongling sales agreement are not fulfilled; late delivery of the PSV and SPTs or other equipment; variations in the cost of the PSV and SPTs or other equipment; variations in exchange rates; the failure to obtain regulatory approval for financings; changes in the cost of fuel and other inflationary factors; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities.

---

 

Such forward-looking statements are current only as at the date of this MD&A and are based on numerous material assumptions (that management believes were reasonable at the time they are made) regarding the Company's present and future business strategies and the environment in which the Company will operate in the future, including the Company's continued compliance with regulatory requirements, the proposed mine plan and the estimated cost and availability of funding for the continued exploration of the Company's tenements. The Company has also assumed that market fundamentals will result in sustained copper and gold demand and prices; that the proposed development of its mineral projects will be viable operationally and economically and proceed as expected; and that any additional financing needed will be available on reasonable terms. With respect to the arrangement with MAC, the Company is assuming that the parties will observe their obligations, that the investigation into the cyber-attack will reach a timely conclusion and that MAC and the Company can agree how to proceed in relation to the payment of the deposit under the vessel charter agreement.

OUR BUSINESS

Overview

Nautilus is a seafloor resource exploration company and the first publicly listed company to commercially explore the ocean floor for copper, gold, silver and zinc rich seafloor massive sulphide deposits and for manganese, nickel, copper and cobalt nodule deposits. The Company’s main focus is to create shareholder value by demonstrating the seafloor production system and establishing a pipeline of development projects to maximize the value of mineral licenses and exploration applications that Nautilus holds in various locations in the Pacific Ocean.

The Company’s principal project is the Solwara 1 Project in the Bismarck Sea. The Solwara 1 Project and the Company’s other projects are described in detail in the Company's Annual Information Form, available on SEDAR at www.sedar.com.

---

Nautilus’ seafloor production system has the potential to open a new frontier of resource development as land-based mineral deposits continue to be depleted. Nautilus plans to become the world’s first seafloor producer of copper and gold.

2015 Q3 SIGNIFICANT EVENTS

	•	Solwara 1 Project advanced
	•	Commencement of physical construction of the Production Support Vessel
	•	Exploration programs undertaken

Solwara 1 Project advanced

During the third quarter of 2015, the Company continued to advance the Solwara 1 Project and in particular, the three key equipment contracts.

Project Build Progressed

Progress on the development of the Seafloor Production Tools continued to advance. Commissioning of the Auxiliary Cutter, Bulk Cutter and Collecting Machine continued at Soil Machine Dynamics premises in Newcastle, England with delivery of the three machines, following factory acceptance testing expected by the end of Q4 2015.

General Marine Contractors in Houston continued with fabrication of the riser system during the quarter; all materials are on site in Houston, with completion expected by the end of Q1 2016.

GE Hydril has commenced assembly of the Subsea Slurry Lift Pump in preparation for factory acceptance testing in the first half of 2016. Upon delivery, the equipment will be delivered to the shipyard for incorporation into the shipbuilding program.

The Company has re-entered into a contract with Sichuan Hong Hua Petroleum Ltd to fabricate the riser handling equipment. Completion of this contract is scheduled for the end of Q3 2016 whereupon the equipment will be delivered to the shipyard for integration into the shipbuilding program. The Company has also re-engaged with SPX Clyde Union to complete delivery of seawater pumping systems, a contract that was also previously suspended during the dispute with the State. This equipment will be delivered to the shipyard in Q2 2016 where it will be incorporated into the shipbuilding program.

The Company is in discussions with various other contractors to provide items of equipment required for the riser system and these will be timed for delivery to coincide with completion of shipbuilding.

Community Activities

The Company continued with the 2015 community engagement program along the west coast of New Ireland Province, PNG throughout Q3 2015. During the quarter Nautilus commenced hosting a monthly meeting with Members and local level government representatives. This meeting will be a forum for Nautilus to update the local government on progress made on CSR programs, as well as the Solwara 1 Project. The Company also recommenced its community engagement program in East New Britain province during the quarter.

---

Working with the New Ireland Provincial Government, Nautilus has continued to implement its water and sanitation program. The plan will see 27 schools located nearest to the Solwara 1 Project site host the program over the next 12 months. Each school will receive health and hygiene training, along with new facilities which will provide students and teachers with a reliable supply of fresh water and access to sanitation facilities. During the quarter another three schools hosted the program, Komalabuo elementary, Kono elementary and Kono Primary School. In total 8 schools have been completed.

Earlier this year the Company worked alongside the New Ireland Health Department to complete a baseline study into the current standard of healthcare provided along the West Coast of New Ireland Province. Nautilus engaged an expert consultant, Abt JTA, to lead the program. Abt JTA submitted their final report to Nautilus which has been provided to all levels of Government for their information. In September 2015, Nautilus held a workshop alongside the New Ireland Health Department to discuss the findings of the report with all key stakeholders including churches, locals and aid agencies, and determine ways forward for the health program. The next step is for Nautilus to establish a Public Private Partnership (PPP) with the National Department of Health and New Ireland Health Department. This partnership will manage the health program, and provide a sustainable footing for health programs on the west coast of New Ireland.

A requirement of the Memorandum of Understanding between the Company and the New Ireland Provincial Government is for the Company to build a minimum of two bridges along the West Coast of New Ireland Province. Cardno (PNG) Ltd, a consultancy firm specialising in the delivery of sustainable projects and community programs, was engaged by the company to complete topographical surveys and geotechnical and hydrological investigations. In addition, Cardno also completed preliminary bridge designs.

Production Support Vessel construction advanced

Vessel basic design continues, with the submission of drawings to the classification society underway. This will ensure the PSV is being designed and built in accordance with classification society rules. Steel cutting was initiated on September 25, 2015, slightly ahead of schedule, marking the start of ship construction.

The orders for all major long lead items are in place.

Exploration programs undertaken

The 43 day MV Duke 2015 cruise to the 100% owned exploration licenses in the Solomon Islands was completed during the quarter. Amongst its achievements were the discoveries of two natural hydrothermal plumes which are a high priority for further work to assess their mineralisation potential. Approximately 550 line km of Tow-Yo plume hunting and approximately 31,000km² of state-of-the-art multibeam bathymetry/backscatter mapping were completed. This resulted in 68 prospective targets being considered for the next stage of exploration.

An immediate benefit from the MV Duke 2015 cruise is the ability to significantly rationalise the large tenement position in the Solomon Islands.

---

The 3 month RV Yuzmorgeologia 2015 resource evaluation and environmental baseline cruise to the 100% owned Tonga Offshore Mining Limited project successfully mobilised on July 22, 2015. This long cruise has exceeded all stretch targets with respect to data and sample collection and upon completion of the fieldwork on October 10, 2015 has commenced its transit to the demobilisation port. A considerable amount of geological data, resource samples and environmental baseline data/samples will be assayed and analysed as soon as is practical.

In addition to the above mineral exploration cruises, the 100% owned Solwara 12 project, in the Bismarck Sea, was progressed through the acquisition of environmental baseline data and the deployment of long term environmental baseline monitoring equipment, marking the start of the company’s ongoing resource pipeline.

RISK FACTORS

Nautilus’ ability to generate revenues and achieve a return on shareholders’ investment must be considered in light of the early stage nature of the Solwara 1 deposit and seafloor resource production in general. The Company is subject to many of the risks common to early stage enterprises, including personnel limitations, financial risks, metals prices, permitting and other regulatory approvals, the need to raise capital, resource shortages, lack of revenues, equipment failures and potential disputes with, or delays or other failures caused by third party contractors or joint venture partners. Substantial expenditures are required to discover and establish sufficient resources and to develop the mining and processing facilities and infrastructure at any site chosen for mining. There can be no assurance that the Company will be able to raise sufficient financing to facilitate this development. The Company's existing funds are not sufficient to bring the Solwara 1 Project into production and there can be no assurance that additional sources of finance will be available to the Company. Other factors that influence the Company’s ability to succeed are more fully described in the Company’s 2014 Annual Information Form available on www.sedar.com, under the heading “Risk Factors”. See also the factors discussed under “Cautionary Note Regarding Forward Looking Statements” above.

SUMMARY OF QUARTERLY RESULTS (unaudited)

The following table sets out selected unaudited quarterly financial information of Nautilus and is derived from unaudited quarterly condensed consolidated interim financial statements prepared by management and expressed in US dollars in accordance with International Financial Reporting Standards (“IFRS”) applicable to interim financial reports.

As Nautilus is currently a pre-production entity engaging in exploration activities there is a significant amount of variability in the quarterly expenditure of the Company depending on the timing of contract milestones and exploration campaigns. Below is a summary of the more significant fluctuations in results, excluding those resulting from foreign exchange movements:

---

Q1 2014

The loss for the period reflected a reduction of $0.6 million in professional fee expenditure following the completion of the hearing of the arbitration with the State in Q4 2013.

Q4 2014

The loss for the period reflected two significant offsetting amounts that were realised during the quarter.

During the quarter other income of $15.0 million (2013 – $0.6 million) was recognised on the establishment of the Solwara 1 JV, with $12.1 million received treated as a recovery of previously expensed exploration expenditure and a $2.7 million capital charge also received as a result of the delays in payment during the period of the dispute with the State.

This was offset by a $10.0 million expense resulting from the Company and MAC being the victims of a cyber attack by an unknown third party.

Q2 2015

The loss for the period reflected a significant increase in exploration expenditure to $3.3 million dollars for the quarter as the Company works to progress exploration work in the Solomon Islands and Tonga.

Q3 2015

The loss for the period reflected a significant increase in exploration expenditure to $3.9 million dollars for the quarter as the Company completed exploration work in the Solomon Islands and commenced resource evaluation work in the CCZ.

RESULTS OF OPERATIONS – FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2015

The following discussion provides an analysis of the financial results of Nautilus:

Loss for the period

For the three months ended September 30, 2015, the Company recorded a loss of $8.3 million ($0.02 loss per share) compared to a loss of $4.6 million ($0.01 loss per share) for the same period in 2014. The primary variances were as follows:

Exploration

Exploration expense increased to $3.9 million (2014 - $0.8 million), with the increase directly related to exploration activity during the quarter. The current quarter included $0.8 million for the exploration campaign in the Solomon Islands conducting bathymetry mapping and plume hunting activities, $0.5 million for preliminary target generation work for Tonga and $1.8 million of resource evaluation work undertaken in the CCZ.

---

		Nodule Exploration						SMS Exploration						Total Exploration
		Three months ended						Three months ended						Three months ended
		September 30,						September 30,						September 30,
		2015			2014			2015			2014			2015			2014
General and administration		-			-			31,209			-			31,209			-
Geological services		1,679,436			24,236			1,430,838			13,615			3,110,274			37,851
Mineral property fees		-			-			49,718			52,525			49,718			52,525
Professional services		67,609			36,768			48,295			172,407			115,904			209,175
Travel		62,070			21,888			38,903			27,849			100,973			49,737
Salary and wages		166,307			139,652			328,379			292,467			494,686			432,119
Total exploration expenditure		1,975,422			222,544			1,927,342			558,863			3,902,764			781,407

General & Administration
General & Administration expenditure decreased to $2.7 million (2014 - $2.8 million). Office and general costs were $0.2 million lower due to a decrease in rent expense having relocated the Brisbane office and the favourable impact from the depreciation of the Australian dollar. Travel expenditure was $0.2 million lower in line with business requirements and depreciation decreased $0.3 million with leasehold improvements being fully depreciated at the end of Q2. This was offset by increased professional fees of $0.5 million with $0.2 million in relation to the Earth Economics report and $0.2 million of increased legal fees related to the preparation of a shelf prospectus.

		Three months ended			Three months ended
		September 30, 2015			September 30, 2014
Office and general		645,717			858,416
Professional services		652,880			104,852
Salary and wages		1,146,218			1,130,242
Shareholder related costs		116,049			108,760
Travel		94,776			266,613
Depreciation		70,471			337,647
Total general and administration Expenditure		2,726,111			2,806,530

Corporate Social Responsibility
Corporate Social Responsibility expense increased to $0.7 million (2014 - $0.3 million), with increased costs for community engagement and preliminary design work associated with infrastructure projects in New Ireland province during the current period.

Technology
Technology expense increased to $0.1 million (2014 - $0.0 million) for the quarter due to increased patent costs.

Development
Development expenses decreased to $0.4 million (2014 - $0.6 million) with the corresponding period for 2014 including $0.2 million paid to consultants that assisted with securing a vessel contract.

Foreign exchange
A foreign exchange loss of $0.5 million was recorded during the quarter (2014 – $0.2 million). The foreign exchange loss consists of realized gains and losses on actual cash transactions during the period and unrealized gains and losses on cash denominated in different currencies at the period end. The Company holds a “basket of currencies” to act as a natural hedge against its expected cash outflows and can therefore experience unrealized fluctuations at period end when cash balances are converted to US dollars for reporting purposes, as experienced during the current quarter.

---

Interest income
Interest income earned on cash and cash equivalents held during the period was $0.06 million (2014 - $0.05 million). The Company maintains its cash and cash equivalents with banks with an S&P rating of A+ or better.

Other income
Other income was $0.04 million for the quarter (2014 – $0.06 million), with the current year including management fee income charged to the joint venture, offset by a decrease in income from the expiration of a sub-lease arrangement.

Operating Losses
Overall, Nautilus’ operating loss increased to $8.4 million for the three months ended September 30, 2015, compared to $4.7 million for the corresponding period in 2014. When adjusting the current period operating loss for the respective foreign currency exchange movements, the actual operating loss was $7.9 million (2014 $4.6 million), with the major impact coming from the $3.1 million of increased exploration expenditure in relation to the various campaigns currently being undertaken.

RESULTS OF OPERATIONS – FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015

The following discussion provides an analysis of the financial results of Nautilus:

Loss for the period

For the nine months ended September 30, 2015, the Company recorded a loss of $19.9 million ($0.05 loss per share) compared to a loss of $11.8 million ($0.03 loss per share) for the same period in 2014. The primary variances were as follows:

Exploration
Exploration expense increased to $7.7 million (2014 - $1.8 million) for the nine months ended September 30, 2015, as a direct result of increased exploration activity for the year to date. The current period included $2.4 million for the exploration campaign that took place in the Solomon Islands conducting bathymetry mapping and plume hunting activities, $2.7 million in relation to CCZ resource evaluation work conducted, environmental baseline studies in the Bismarck Sea cost $0.2 million The increase of $0.3 million for salary and wages is a combination of increased permanent staff from the corresponding period last year and additional contract labour to assist with the aforementioned programs for the period.

---

		Nodule Exploration						SMS Exploration						Total Exploration
		Nine months ended						Nine months ended						Nine months ended
		September 30,						September 30,						September 30,
		2015			2014			2015			2014			2015			2014
General and administration		-			-			49,522			-			49,522			-
Geological services		2,536,024			63,128			3,051,614			22,549			5,587,638			85,677
Mineral property fees		47,000			57,000			55,865			175,001			102,865			232,001
Professional services		187,837			133,665			168,338			195,318			356,175			328,983
Travel		108,282			25,022			175,395			42,794			283,677			67,816
Salary and wages		351,003			291,731			1,009,153			808,202			1,360,156			1,099,933
Total exploration expenditure		3,230,146			570,546			4,509,887			1,243,864			7,740,033			1,814,410

General & Administration
General & Administration expenditure increased to $9.1 million (2014 - $8.0 million). There was an increase in professional service fees of $1.4 million primarily related to network monitoring and investigation of the cyber attack that occurred in Q4 2014 and $0.1 million for salary and wages expense impacted by the annual salary review and increased stock based compensation expense for the current period, while the corresponding period in 2014 was impacted by the reversal of $0.1 million of stock based compensation expense following the forfeiture of previously issued options. This was offset by a decrease of $0.2 million for travel expenditure in line with business requirements and a decrease of $0.2 million for depreciation expense due to leasehold improvements being fully amortised at the end of Q2 2015.

		Nine months ended			Nine months ended
		September 30, 2015			September 30, 2014
Office and general		2,129,765			2,227,241
Professional services		2,068,582			701,800
Salary and wages		3,249,792			3,047,027
Shareholder related costs		406,741			411,106
Travel		547,805			710,373
Depreciation		726,019			913,101
Total general and administration Expenditure		9,128,704			8,010,648

Corporate Social Responsibility
Corporate Social Responsibility expense increased to $1.2 million (2014 - $0.6 million) for the nine months ended September 30, 2015, with increased costs for preliminary design work associated with infrastructure projects in New Ireland province during the current period.

Technology
Technology expense increased to $0.3 million (2014 - $0.2 million) for the nine months ended September 30, 2015 due to increased patent costs.

Development
Development expenses decreased to $1.1 million (2014 - $1.5 million) for the nine months ended September 30, 2015 with the corresponding period for 2014 including $0.3 million paid to consultants that assisted with securing a vessel contract.

---

Foreign exchange
A foreign exchange loss of $0.8 million was recorded during the nine months ended September 30, 2015 (2014 – $0.01 million gain). The foreign exchange loss consists of realized gains and losses on actual cash transactions during the period and unrealized gains and losses on cash denominated in different currencies at the period end. The Company holds a “basket of currencies” to act as a natural hedge against its expected cash outflows and can therefore experience unrealized fluctuations at period end when cash balances are converted to US dollars for reporting purposes, as experienced during the current period.

Interest income
Interest income earned on cash and cash equivalents held during the nine months ended September 30, 2015 was $0.2 million (2014 - $0.1 million). The Company maintains its cash and cash equivalents with banks with an S&P rating of A+ or better.

Other income
Other income of $0.2 million was consistent (2014 – $0.2 million) for the nine months ended September 30, 2015, with the current year including management fee income charged to the joint venture.

Operating Losses
Overall, Nautilus’ operating loss increased to $20.2 million for the nine months ended September 30, 2015, compared to $12.1 million for the corresponding period in 2014. When adjusting the current period operating loss for the respective foreign currency exchange movements, the actual operating loss was $19.4 million (2014 $12.1 million), with the major impact coming from the $5.9 million of increased exploration expenditure in relation to the various campaigns currently being undertaken and the $1.0 million of professional service fees in relation to network monitoring and investigation of the cyber attack that occurred in Q4 2014.

Cash flows

Operating activities
Cash used in operating activities was $16.6 million for the nine months ended September 30, 2015 compared to $11.3 million for the corresponding period in 2014, largely reflecting the increase in exploration expenditures in the period.

Investing activities
Cash used in investing activities was $32.3 million for the nine months ended September 30, 2015 compared to $0.1 million for the corresponding period in 2014. The current year was impacted by the $10.0 million prepaid in relation to the charterers’ guarantee, while the prior year included $7.0 million cash inflow for the recovery of exploration and evaluation costs relating to the arrangement with the State Nominee.

Financing activities
Cash flow from financing activities was $0.01 million for the nine months ended September 30, 2015, compared to $0.02 million for the corresponding period 2014. The inflows relate to loan shares exercised during the period.

---

LIQUIDITY AND CAPITAL RESOURCES

The Company’s financial objective is to ensure that it has sufficient liquidity in the form of cash and/or debt capacity to finance its ongoing requirements to support the Company’s strategy of becoming the first company to commercially extract copper, gold, silver and zinc from the seafloor.

Key financial measures

The Company uses the following key financial measures to assess its financial condition and liquidity: September 30, September 30,

		2015			2014
Working Capital	$	39.3 million		$	99.9 million
Cash and Cash Equivalents	$	68.9 million		$	118.8 million

Under the Company’s Investment Policy, cash cannot be invested for more than 90 days and must be held on deposit with banks with an S&P credit rating of A+ or better.

Outlook and capital requirements

The Company’s known contractual obligations at September 30, 2015, are quantified in the table below:

		September
		30,
		2015
		$
Non-cancellable commitments
Not later than 1 year		1,082,969
Later than 1 year and not later than 2 years		646,118
Later than 2 years and not later than 3 years		517,185
Later than 3 years and not later than 4 years		73,155,835
Later than 4 years and not later than 5 years		73,155,835
Later than 5 years		217,915,950
Total Commitments		366,473,892

The non-cancellable commitments as at September 30, 2015 include the payments to be made under the charter party arrangement with MAC for the PSV with a commencement date no later than January 1, 2018.

The Company is involved in mineral exploration which is a high risk activity and relies on results from each exploration program to determine if areas justify any further exploration and the extent and method of appropriate exploration to be conducted.

The Company has no source of revenue and has significant cash requirements to be able to meet its administrative overhead and maintain its property interests. In order to be able to resume the construction contracts and advance the development of its mineral property interests, the Company will be required to raise additional funding. Until that time, certain discretionary expenditures may be deferred and measures to reduce operating costs will be taken in order to preserve working capital.

---

Nautilus expects that cash and cash equivalents will be sufficient to pay for capital expenditure commitments and general and administrative costs for the next 12 months. Depending upon future events, the rate of expenditures and other general and administrative costs could increase or decrease. The Company continues to evaluate a range of alternative options available to it to access capital to fund future expenditures.

Nautilus’ opinion concerning liquidity and its ability to avail itself in the future of the financing options mentioned above are based on currently available information. To the extent that this information proves to be inaccurate, future availability of financing may be adversely affected.

Factors that could affect the availability of funding include Nautilus’ performance (as measured by various factors including the progress and results of its exploration work), the state of international debt and equity markets, investor perceptions and expectations of past and future performance, the global financial climate, metal and commodity prices, political events in the south Pacific, obtaining operating approvals from the PNG government for the Solwara 1 Project, drilling and metallurgical testing results on the Company’s tenements, ongoing results from environmental studies, engineering studies and detailed design of equipment.

Foreign currency exchange rate risk

The Company’s operations are located in several different countries, including Canada, Australia, PNG, Tonga, Solomon Islands, Fiji and New Zealand and require equipment to be purchased from several different countries. Nautilus has entered into key contracts in United States dollars and British pounds sterling. Future profitability could be affected by fluctuations in foreign currencies. The Company has not entered into any foreign currency contracts or other derivatives to establish a foreign currency protection program but may consider such actions in the future.

Foreign exchange risk is mitigated by the Company maintaining its cash in a “basket” of currencies that reflect its current and expected cash outflows. As at September 30, 2015 the Company held its cash in the following currencies:

Interest rate risk

The Company holds cash and cash equivalents which earn interest at variable rates as determined by financial institutions. As at September 30, 2015, with other variables unchanged, a 0.1% increase (decrease) in the interest rate would have no significant effect on comprehensive loss.

---

Credit risk

The Company places its cash only with banks with an S&P credit rating of A+ or better.

The maximum exposure to credit risk at the reporting date is the carrying value of cash and cash equivalents and other receivables.

Liquidity risk

The Company manages liquidity by maintaining adequate cash and short-term investment balances. In addition, the Company regularly monitors and reviews both actual and forecasted cash flows.

The Company has no source of revenue and has significant cash requirements to be able to meet its administrative overhead and maintain its property interests. In order to be able to advance the development of the Solwara 1 Project and its mineral property interests, the Company will be required to raise additional funding. Until that time, certain discretionary expenditures may be deferred and measures to reduce operating costs will be taken in order to preserve working capital. Given the measures taken by the Company to minimize expenditures leading up to signing the PNG Equity Agreement with the State and the measures that will continue to be taken, the Company’s exposure to liquidity risk is currently considered to be low.

SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of the financial statements in conformity of IFRS requires the use of judgements and estimates that affect the amount reported and disclosed in the consolidated financial statements and related notes. These judgements and estimates are based on management’s knowledge of the relevant facts and circumstances, having regard to previous experience, but actual results may differ materially from the amounts included in the financial statements. Information about such judgements and estimation is contained in the accounting policies and notes to the financial statements, and the key areas are summarized below.

The area of judgment that has the most significant effect on the amounts recognized in these consolidated financial statements is the review of asset carrying values and impairment assessment.

Review of asset carrying values and impairment assessment
Property, plant and equipment and exploration and evaluation assets are considered for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. If an indicator is identified, the asset’s recoverable amount is calculated and compared to the carrying amount. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units or “CGUs”). The recoverable amount is the higher of an asset’s fair value less costs to dispose and value in use (being the present value of the expected future cash flows of the relevant asset or CGU). An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.

The determination of fair value less costs to sell and value in use requires management to make estimates and assumptions about expected production, sales volumes, commodity prices, mineral resources, operating costs and future capital expenditures. The estimates and assumptions are subject to risk and uncertainty; hence, there is the possibility that changes in circumstances will alter these assumptions, which may impact the recoverable amount of the assets.

---

 

In considering whether any impairment indicators occurred in respect of the Company’s long lived assets as at September 30, 2015, management took into account a number of factors such as metal prices, projected costs to operate equipment, availability and costs of finance, cost and state of completion of subsea equipment construction, exploration successes in other areas, the existence and terms of binding off-take agreements and the Company’s market capitalization compared to its net asset value.

Management has concluded that there are no impairment indicators relating to the Company’s long-lived assets as at September 30, 2015.

FUTURE ACCOUNTING CHANGES

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after July 1, 2014. The Company has reviewed the disclosure requirements of changes in IFRS 8 ‘Operating Segments’, IFRS 9 ‘Financial Instruments: Classification and Measurement’ (effective January 1, 2018) and IFRS 7 ‘Financial Instruments: Disclosure’ (effective January 1, 2018), however this does not currently require any changes to disclosures within the financial statements of the Company.

There are no other International Financial Reporting Standards that are not yet effective that would be expected to have a material impact on our consolidated financial statements.

OUTSTANDING SHARE DATA

The following is a summary of the Company’s outstanding share data as of November 9, 2015.

Common shares

A total of 445,502,865 common shares are outstanding including 11,485,000 restricted shares.

Restricted shares

A total of 11,485,000 restricted shares are issued and outstanding under the Company’s share loan plan, with loan expiry dates ranging from October 2015 through to July 2018. The weighted average issue price for the restricted shares is C$0.51.

Stock Options

A total of 5,645,000 stock options are issued and outstanding, with expiry dates ranging from October 2015 through to July 2018. The weighted average exercise price for all stock options is C$0.43. All stock options entitle the holders to purchase common shares of the Company.

---

INTERNAL CONTROLS

Internal control over financial reporting

There have been no material changes in the Company’s internal control over financial reporting since the year ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

ADDITIONAL SOURCES OF INFORMATION

Additional information regarding Nautilus Minerals Inc., including its Annual Information Form, is available on SEDAR at www.sedar.com and on the Company’s website www.nautilusminerals.com.

---

---

FORM 51-102F3
MATERIAL CHANGE REPORT

ITEM 1.

NAME AND ADDRESS OF ISSUER

Nautilus Minerals Inc. (the "Issuer")
Suite 1400 – 400 Burrard Street
Vancouver, BC
V6C 3A6

ITEM 2.

DATE OF MATERIAL CHANGE

December 11, 2015

ITEM 3.

NEWS RELEASE

Issued December 11, 2015 and distributed through the facilities of Marketwired.

ITEM 4.

SUMMARY OF MATERIAL CHANGE

The Issuer announced that it has entered into a new agreement with Tongling Nonferrous Metals Group Co. Ltd. for the sale of the product extracted from the Issuer's Solwara 1 deposit located in the Bismark Sea of Papua New Guinea. The new agreement replaces a previous binding heads of agreement dated April 21, 2012 between the parties.

ITEM 5.1

FULL DESCRIPTION OF MATERIAL CHANGE

See news release attached as Schedule "A".

ITEM 5.2

DISCLOSURE FOR RESTRUCTURING TRANSACTIONS

Not applicable.

ITEM 6.

RELIANCE ON SUBSECTION 7.1(2) OF NATIONAL INSTRUMENT 51-102

Not Applicable.

ITEM 7.

OMITTED INFORMATION

There are no significant facts required to be disclosed herein which have been omitted.

ITEM 8.

EXECUTIVE OFFICER

	Contact:	Shontel Norgate, Chief Financial Officer
	Telephone:	+61 (7) 3318-5555

ITEM 9.

DATE OF REPORT

December 16, 2015

---

- 2 -

Schedule "A"

Press Release

Number 2015 – 27

Nautilus and Tongling sign new offtake agreement for Solwara 1

Toronto Ontario, December 11, 2015 - Nautilus Minerals Inc. (TSX:NUS, OTCQX: NUSMF, OTC:NUSMF Nasdaq Intl Designation) (the "Company" or "Nautilus") today announced it has signed a new agreement with Tongling Nonferrous Metals Group Co. Ltd (“Tongling”) for the sale of the product extracted from the Company’s Solwara 1 deposit located in the Bismarck Sea of Papua New Guinea, with first delivery expected in the first half of 2018.

On April 21, 2012, Nautilus and Tongling entered into a binding heads of agreement (“HOA”) for the sale of the product extracted from the Solwara 1 deposit (see links section for further details). Following a series of detailed negotiations focused on achieving a mutually beneficial and workable arrangement, the parties finalized the terms of a new take or pay agreement, referred to as the Master Ores Sales and Processing Agreement (“MOSPA”), which replaces the terms of the HOA. The MOSPA will be filed under the Company's profile on the SEDAR website (www.sedar.com).

Compared to the HOA, the terms of the MOSPA offer significant cost savings and reduced business risk to Nautilus, whilst giving Tongling the freedom to process the Solwara 1 material in a manner which optimizes its return. The MOSPA has simplified the arrangements between the parties in many respects and it now operates as a more conventional material sales agreement where Tongling will pay Nautilus for a fixed proportion of copper, gold and silver in the mineralized material.

The copper payment will be for 95% of recoverable copper as determined by locked cycle testwork on samples of shipments. The gold payment is fixed at 50% of the contained gold in the mineralized material which represents a premium payment for gold compared to the HOA. Payment for silver is fixed at 30% of contained silver in the mineralized material. The Asian international copper concentrate benchmark will still be used as the basis for smelter treatment and refining charges related to the recoverable copper.

From Tongling’s perspective, the MOSPA offers greater flexibility over the design and operation of a concentrator to be built specifically for the processing of Solwara 1 material. The construction of the concentrator will initially be financed by Tongling, with these costs recovered through a fixed plant capital fee payable by Nautilus monthly over the term of the MOSPA. Nautilus shall provide Tongling with a bank guarantee covering 50% of the concentrator capital cost. Tongling now has the exclusive right to market or process any pyrite concentrates produced from the Solwara 1 material, whereas under the HOA the parties were to jointly market any pyrite concentrates sharing any profit on a 50/50 basis.

Mike Johnston, Nautilus' CEO, commented, "This new agreement provides improved terms for both Nautilus and Tongling and can be truly described as a “win-win” outcome. The MOSPA gives greater flexibility to Tongling with respect to its operations, while providing Nautilus with certainty and an improved Net Smelter Return. I am delighted to be continuing our relationship with Tongling as a key business partner supporting the development of the world’s first Seafloor Massive Sulphide mining project.”

Zhan Deguong, Vice President Tongling Nonferrous Metals Group Co. Ltd, commented “Tongling Non Ferrous Metals Group has a long history of technological innovation, and is committed to the “green economy” where waste streams are minimized and value is realized on all components of the material. Our modern world class processing facilities will allow us to extract maximum value making this win-win agreement possible. We are very proud to support Nautilus in the development of Solwara 1, a ground breaking project which signals a new era in the mining industry.”

---

- 3 -

About Tongling Nonferrous Metals Group Co. Ltd

Tongling Nonferrous Metals Group Co., Ltd., together with its subsidiaries, engages in the copper smelting, copper ore mining, processing of copper products and other related businesses primarily in the People's Republic of China. They are one of the world’s leading copper and zinc smelting groups. The company produces copper concentrates containing gold, silver, copper, sulfur and other elements; iron concentrates; sulfur fine sand products; single-sulphide, iron ore, and iron pellets; copper cathodes; copper flat wires; oxygen-free copper rods; phosphor copper anodes; precision brass sheets and strips; copper sheets and strip classes; lead frame strip classes; phosphor bronze tins; brass rods; self-adhesive and lubricating cables; and resistant wires. It also offers sulfuric acid, copper sulfate, and nickel sulphate. The company was formerly known as Anhui Tongdu Copper Co., Ltd. and changed its name to Tongling Nonferrous Metals Group Co., Ltd. in September 2007. Tongling Nonferrous Metals Group Co., Ltd. was founded in 1992 and was listed on Shenzhen Stock Exchange in 1996. It is headquartered in Tongling City, China. In 2014, Tongling reported that it produced 1.3M tons of copper cathodes, and 4.05M tons of sulphuric acid, 12.5 tons of gold and 650 tons of silver. The core business of Tongling is copper smelting.

Links:

http://www.nautilusminerals.com/IRM/Company/ShowPage.aspx/PDFs/1040-16294999/NautilusMineralssignslandmarkofftakeagreementforSolwa

For more information please refer to www.nautilusminerals.com or contact:

Investor Relations	Principal American Liaison
Nautilus Minerals Inc. (Toronto)	Cowen and Company
Email: investor@nautilusminerals.com	599 Lexington Avenue
Tel: +1 (416) 551 1100	New York, NY 10022
	otcqxrequest@cowen.com

Neither the TSX nor the OTCQX accepts responsibility for the adequacy or accuracy of this press release.

The information in this news release under the section "About Tongling Nonferrous Metals Group Co. Ltd" is based on the financial statements and other publicly filed documents of Tongling Nonferrous Metals Group Co. Ltd.

Certain of the statements made in this news release may contain forward-looking information within the meaning of applicable securities laws, including statements with respect to the development of the world’s first Seafloor Massive Sulphide mining project and the first delivery of mineralised material expected in the first half of 2018. We have made numerous assumptions about such statements, including assumptions relating to the funding, completion and operation of the Company's seafloor production system. Even though our management believes the assumptions made and the expectations represented by such statements are reasonable, there can be no assurance that they will prove to be accurate. Forward-looking information by its nature involves known and unknown risks, uncertainties and other factors which may cause the actual results to be materially different from any future results expressed or implied by such forward-looking information. Please refer to our most recently filed Annual Information Form in respect of material assumptions and risks related to the prospects of extracting minerals from the seafloor and other risks relating to the Company's business and plans for development of the Solwara 1 Project. The Company is assuming that the seafloor production system will be built and operate according to the Nautilus specifications and on schedule. Risks related to such arrangement include delay to the delivery of the seafloor production equipment and a consequent delay to the commencement of production. Risks related to advancing towards production include the risk that the Company will be unable to obtain at all or on acceptable terms the remaining financing necessary to fund completion of the build and deployment of the Company's seafloor production system. As the Company has not completed an economic study in respect of the Solwara 1 Project, there can be no assurance that the Company's production plans will, if fully funded and implemented, successfully demonstrate that seafloor resource production is commercially viable. Except as required by law, we do not expect to update forward-looking statements and information as conditions change and you are referred to the full discussion of the Company's business contained in the Company's reports filed with the securities regulatory authorities in Canada.

About Nautilus Minerals Inc.

Nautilus is the first company to explore the ocean floor for polymetallic seafloor massive sulphide deposits. Nautilus was granted the first mining lease for such deposits at the prospect known as Solwara 1, in the territorial waters of Papua New Guinea, where it is aiming to produce copper, gold and silver. The company has also been granted its environmental permit for this site.

---

- 4 -

Nautilus also holds highly prospective exploration acreage in the western Pacific (granted and under application), as well as in international waters in the Central Pacific.

A Canadian registered company, Nautilus is listed on the TSX:NUS stock exchange and trades on the OTCQX:NUSMF. Its corporate office is in Brisbane, Australia. Its major shareholders include MB Holding Company LLC, an Oman based group with interests in mining, oil & gas, which holds a 28.14% interest, Metalloinvest, the largest iron ore producer in Europe and the CIS, which has a 20.89% holding and global mining group Anglo American, which holds a 5.99% interest (each on a non-diluted basis, excluding loan shares outstanding under the Company’s share loan plan).

---

---

FORM 51-102F3
MATERIAL CHANGE REPORT

ITEM 1.	NAME AND ADDRESS OF ISSUER
	Nautilus Minerals Inc. (the “Issuer”)
	Suite 1400 – 400 Burrard Street
	Vancouver, BC
	V6C 3A6
ITEM 2.	DATE OF MATERIAL CHANGE
	May 5, 2015
ITEM 3.	NEWS RELEASE
	Issued May 6, 2015 and distributed through the facilities of Marketwired.
ITEM 4.	SUMMARY OF MATERIAL CHANGE
	The Issuer announced that Mr Usama Al Barwani had resigned as a Director of the Issuer  and that Mr Tariq Al Barwani had been appointed a Director of the Issuer.
ITEM 5.1	FULL DESCRIPTION OF MATERIAL CHANGE
	See news release attached as Schedule "A".
ITEM 5.2	DISCLOSURE FOR RESTRUCTURING TRANSACTIONS
	Not applicable.
ITEM 6.	RELIANCE ON SUBSECTION 7.1(2) OF NATIONAL INSTRUMENT 51-102
	Not Applicable.
ITEM 7.	OMITTED INFORMATION
	There are no significant facts required to be disclosed herein which have been omitted.
ITEM 8.	EXECUTIVE OFFICER

	Contact:	Shontel Norgate, Chief Financial Officer
	Telephone:	+61 (7) 3318-5555

ITEM 9.	DATE OF REPORT
	May 7, 2015

---

- 2 -

Schedule "A"

Press Release

Number 2015 – 13

Nautilus Minerals announces changes to its Board of Directors

Toronto Ontario, May 6, 2015 - Nautilus Minerals Inc. (TSX:NUS, OTCQX: NUSMF) (the "Company" or "Nautilus") announces changes to its board of directors with the appointment of Mr Tariq Al Barwani and the resignation of Mr Usama Al Barwani.

Geoffrey Loudon, Nautilus Minerals' Chairman said “I would like to thank Usama for his valuable contribution to the Company over the past 18 months and wish him well as his responsibilities within the MB Group increase. I would also like to welcome Tariq to the Board and look forward to his input in helping the Company achieve its objective of developing the world's first commercial seafloor copper-gold project."

Following the resignation of Mr Usama Al Barwani and the appointment of Mr Tariq Al Barwani, the members of the Company's Board of Directors are as follows:

A. Geoffrey Loudon (Chairman and Non-Executive Director)

Dr. Mohammed Al Barwani (Non-Executive Director)

Mark Horn (Non-Executive Director)

Russell Debney (Non-Executive Director)

Cynthia Thomas (Non-Executive Director)

Tariq Al Barwani (Non-Executive Director)

Tariq Al Barwani
Mr Al Barwani, who was nominated to the Board by MB Holding Company LLC, is a director and shareholder of MB Holding Company and the Chief Executive Officer of Mawarid Mining LLC, a wholly-owned subsidiary of MB Holding Company. Mawarid Mining was established to explore and develop mining opportunities in Oman and internationally. Mawarid Mining’s Oman Copper business operates several open pit copper mines and processes ore at its copper concentrate facility in the Al Batinah region of Oman. Mr Al Barwani has a Bachelor of Science in Geology from Imperial College, United Kingdom and a Masters in Business Administration specializing in strategy and leadership from McGill University in Canada.

For more information please refer to www.nautilusminerals.com or contact:
Investor Relations	Principal American Liaison
Nautilus Minerals Inc. (Toronto)	Cowen and Company
Email: investor@nautilusminerals.com	599 Lexington Avenue
Tel: +1 (416) 551 1100	New York, NY 10022
	otcqxrequest@cowen.com

1 | 2

---

About Nautilus Minerals Inc.

Nautilus is the first company to explore the ocean floor for polymetallic seafloor massive sulphide deposits. Nautilus was granted the first mining lease for such deposits at the prospect known as Solwara 1, in the territorial waters of Papua New Guinea, where it is aiming to produce copper, gold and silver. The company has also been granted its environmental permit for this site.

Nautilus also holds approximately 420,000 km2 of highly prospective exploration acreage in the western Pacific; in PNG, the Solomon Islands, Fiji, Vanuatu and Tonga, as well as in international waters in the eastern Pacific.

A Canadian registered company, Nautilus is listed on the TSX:NUS stock exchange and trades on the OTCQX:NUSMF. Its corporate office is in Brisbane, Australia. Its major shareholders include MB Holding Company LLC, an Oman based group with interests in mining, oil & gas, which holds a 28.14% interest, Metalloinvest, the largest iron ore producer in Europe and the CIS, which has a 20.89% holding and global mining group Anglo American, which holds a 5.99% interest (each on a non-diluted basis, excluding loan shares outstanding under the Company’s share loan plan).

2 | 2

---

---

FORM 51-102F3
MATERIAL CHANGE REPORT

ITEM 1.	NAME AND ADDRESS OF ISSUER
	Nautilus Minerals Inc. (the “Company”)
	Suite 1400 – 400 Burrard Street
	Vancouver, BC
	V6C 3A6
ITEM 2.	DATE OF MATERIAL CHANGE
	2 February 2015
ITEM 3.	NEWS RELEASE
	Issued 2 February 2015 and distributed through the facilities of Marketwired.
ITEM 4.	SUMMARY OF MATERIAL CHANGE
	Following the Company’s discovery of a cyber attack resulting in the payment of a US$10M deposit to a bank account believed to be that of Marine Assets Corporation (“MAC”), but which MAC has advised was not its account, the Company has pre-paid US$10M of the US$18M charterer’s guarantee that under the terms of the vessel charter agreement was to be provided to MAC on the delivery of the vessel.
ITEM 5.1	FULL DESCRIPTION OF MATERIAL CHANGE
	See news release attached as Schedule "A".
ITEM 5.2	DISCLOSURE FOR RESTRUCTURING TRANSACTIONS
	Not applicable.
ITEM 6.	RELIANCE ON SUBSECTION 7.1(2) OF NATIONAL INSTRUMENT 51-102
	Not applicable.
ITEM 7.	OMITTED INFORMATION
	There are no significant facts required to be disclosed herein which have been omitted.
ITEM 8.	EXECUTIVE OFFICER

	Contact:	Shontel Norgate, Chief Financial Officer
	Telephone:	+61 (7) 3318-5555

ITEM 9.	DATE OF REPORT
	4 February 2015

---

Schedule "A"

Press Release

Number 2015 – 02

Nautilus part pays charterer’s guarantee

Toronto Ontario, February 2, 2015 - Nautilus Minerals Inc. (TSX:NUS, OTCQX: NUSMF) (Company or Nautilus) announces it has pre-paid US$10M of the US$18M charterer’s guarantee that was to be provided to Marine Assets Corporation (MAC) on the commencement of the charter of the vessel, which is to be first deployed for use at the Company’s Solwara 1 Project.

Under the terms of the Company’s vessel charter agreement with MAC, the Company agreed to pay MAC a US$10M deposit (Deposit) after the contract for the construction of the vessel between MAC and Fujian Mawei Shipbuilding Ltd (Shipbuilding Contract) became effective by the payment of the first installment in late November 2014.

In December 2014, it was discovered that the Company and MAC had been victims of a cyber attack by an unknown third party and as a result, the Company paid the Deposit to a bank account which it believed to be MAC’s, but which MAC has advised was not its account.

The matter was promptly referred to the police authorities in the relevant jurisdictions and an investigation is underway. The Company has also engaged a cyber security firm to ensure the ongoing security of its and MAC’s networks and to investigate the source of the cyber attack. MAC and the Company are co-operating with each other and the authorities to facilitate the timely resolution of the investigations.

In the circumstances, the Company has agreed to pre-pay US$10M of the charterer’s guarantee on the basis that: (i) the remaining US$8M of the charterer’s guarantee will be provided to MAC by the Company on the commencement of the charter of the vessel; and (ii) the parties have agreed to determine how to proceed in relation to the Deposit following the conclusion of the investigations, which may take some months.

In the meantime, the construction of the vessel continues in accordance with the terms of the Shipbuilding Contract and the Company continues to progress all aspects of the Solwara 1 Project, so that it can achieve its goal of making seafloor mining a reality by early 2018.

Links:

http://www.nautilusminerals.com/s/Media-NewsReleases.asp?ReportID=682236

http://www.nautilusminerals.com/s/Media-NewsReleases.asp?ReportID=685730

For more information please refer to www.nautilusminerals.com or contact:

Investor Relations	Principal American Liaison
Nautilus Minerals Inc. (Toronto)	Cowen and Company
Email: investor@nautilusminerals.com	599 Lexington Avenue
Tel: +1 (416) 551 1100	New York, NY 10022
	otcqxrequest@cowen.com

1 | 2

---

Neither the TSX nor the OTCQX accepts responsibility for the adequacy or accuracy of this press release.

Certain of the statements made in this news release may contain forward-looking information within the meaning of applicable securities laws, including statements with respect to the agreement between the Company and MAC, the respective obligations there under, the conclusion of the investigation into the cyber attack and the implications arising from the Deposit mistakenly paid by the Company to an unknown third party. We have made numerous assumptions about such statements. Even though our management believes the assumptions made and the expectations represented by such statements are reasonable, there can be no assurance that they will prove to be accurate. Forward-looking information by its nature involves known and unknown risks, uncertainties and other factors which may cause the actual results to be materially different from any future results expressed or implied by such forward-looking information. Please refer to our most recently filed Annual Information Form in respect of material assumptions and risks related to the prospects of extracting minerals from the seafloor. With respect to the arrangement with MAC, the Company is assuming that the parties will observe their obligations, that the investigation into the cyber attack will reach a timely conclusion and that MAC and the Company can agree how to proceed in relation to the Deposit. Risks related to such arrangement include the failure to conclude the investigation into the cyber attack, the inability to reach agreement with MAC as to the Deposit, the insolvency of MAC or the Shipyard and other events which may cause a delay to the delivery of the vessel. Except as required by law, we do not expect to update forward-looking statements and information as conditions change and you are referred to the full discussion of the Company's business contained in the Company's reports filed with the securities regulatory authorities in Canada.

About Nautilus Minerals Inc.

Nautilus is the first company to explore the ocean floor for polymetallic seafloor massive sulphide deposits. Nautilus was granted the first mining lease for such deposits at the prospect known as Solwara 1, in the territorial waters of Papua New Guinea, where it is aiming to produce copper, gold and silver. The company has also been granted its environmental permit for this site.

Nautilus also holds approximately 450,000 km2 of highly prospective exploration acreage in the western Pacific; in PNG, the Solomon Islands, Fiji, Vanuatu and Tonga, as well as in international waters in the eastern Pacific.

A Canadian registered company, Nautilus is listed on the TSX:NUS stock exchange and OTCQX:NUSMF. Its corporate office is in Brisbane, Australia. Its major shareholders include MB Holding Company LLC, an Oman based group with interests in mining, oil & gas, which holds a 28.14% interest, Metalloinvest, the largest iron ore producer in Europe and the CIS, which has a 20.89% holding and global mining group Anglo American, which holds a 5.99% interest (each on a non- diluted basis, excluding loan shares outstanding under the Company’s share loan plan).

2 | 2

---

---

NAUTILUS MINERALS INC.

Suite 1400, 400 Burrard Street
Vancouver, British Columbia V6C 3A6

INFORMATION CIRCULAR

(As at May 7, 2015 except as indicated)

Nautilus Minerals Inc. (the "Company" or "Nautilus") is providing this Information Circular and a form of proxy in connection with management's solicitation of proxies for use at the annual general meeting (the "Meeting") of the Company to be held on Tuesday, June 16, 2015 and at any adjournments. Unless the context otherwise requires, when we refer in this Information Circular to the Company, its subsidiaries are also included. The Company will conduct its solicitation by mail and officers and employees of the Company may, without receiving special compensation, also telephone or make other personal contact with shareholders. The Company will pay the cost of solicitation.

This Information Circular contains references to United States dollars, Australian dollars and Canadian dollars. All dollar amounts referenced, unless otherwise indicated, are expressed in United States dollars, Australian dollars are referred to as "A$", and Canadian dollars are referred to as "C$".

APPOINTMENT OF PROXYHOLDER

The purpose of a proxy is to designate persons who will vote the proxy on a shareholder's behalf in accordance with the instructions given by the shareholder in the proxy. The persons whose names are printed in the enclosed form of proxy are officers or Directors of the Company (the "Management Proxyholders").

A shareholder has the right to appoint a person other than a Management Proxyholder, to represent the shareholder at the Meeting by striking out the names of the Management Proxyholders and by inserting the desired person's name in the blank space provided or by executing a proxy in a form similar to the enclosed form. A proxyholder need not be a shareholder.

VOTING BY PROXY

Only registered shareholders or duly appointed proxyholders are permitted to vote at the Meeting.Shares represented by a properly executed proxy will be voted or be withheld from voting on each matter referred to in the Notice of Meeting in accordance with the instructions of the shareholder on any ballot that may be called for and if the shareholder specifies a choice with respect to any matter to be acted upon, the shares will be voted accordingly.

If a shareholder does not specify a choice and the shareholder has appointed one of the Management Proxyholders as proxyholder, the Management Proxyholder will vote in favour of the matters specified in the Notice of Meeting and in favour of all other matters proposed by management at the Meeting.

The enclosed form of proxy also gives discretionary authority to the person named therein as proxyholder with respect to amendments or variations to matters identified in the Notice of the Meeting and with respect to other matters which may properly come before the Meeting. At the date of this Information Circular, management of the Company knows of no such amendments, variations or other matters to come before the Meeting.

---

2

COMPLETION AND RETURN OF PROXY

Completed forms of proxy must be deposited at the office of the Company’s registrar and transfer agent, Computershare Investor Services Inc., Proxy Department, 100 University Avenue, P.O. Box 4572, Toronto, Ontario, M5J 2Y1 not later than forty-eight (48) hours, excluding Saturdays, Sundays and holidays, prior to the time of the Meeting, unless the chairman of the Meeting elects to exercise his discretion to accept proxies received subsequently.

NON-REGISTERED HOLDERS

Only shareholders whose names appear on the records of the Company as the registered holders of shares or duly appointed proxyholders are permitted to vote at the Meeting. Most shareholders of the Company are "non-registered" shareholders because the shares they own are not registered in their names but instead registered in the name of a nominee such as a brokerage firm through which they purchased the shares; bank, trust company, trustee or administrator of self-administered RRSP's, RRIF's, RESP's and similar plans; or clearing agency such as The Canadian Depository for Securities Limited (a "Nominee"). If you purchased your shares through a broker, you are likely a non-registered holder.

If you, as a non-registered holder, wish to vote at the Meeting in person, you should appoint yourself as proxyholder by writing your name in the space provided on the request for voting instructions or proxy provided by the Nominee and return the form to the Nominee in the envelope provided. Do not complete the voting section of the form as your vote will be taken at the Meeting.

The Company is forwarding meeting materials directly to "non-objecting beneficial owners" (or "NOBOs"). If you are a NOBO and the Company or its agent has sent these materials directly to you (instead of through a Nominee), your name and address and information about your holdings of securities have been obtained in accordance with applicable securities regulatory requirements from the Nominee holding on your behalf. By choosing to send these materials to you directly, the Company (and not the Nominee holding on your behalf) has assumed responsibility for (i) delivering these materials to you and (ii) executing your proper voting instructions. Please return your voting instructions as specified in the request for voting instructions.

The Company is not using the "notice-and-access" delivery procedures established under Canadian securities legislation. The Company does not intend to pay for an intermediary to deliver to "objecting beneficial owners" (or "OBOs") the proxy-related materials and Form 54-101F7 Request for Voting Instructions Made by Intermediary. An OBO will not receive the materials unless the OBO's Nominee assumes the cost of delivery.

REVOCABILITY OF PROXY

In addition to revocation in any other manner permitted by law, a registered shareholder, his attorney authorized in writing or, if the shareholder is a corporation, a corporation under its corporate seal or by an officer or attorney thereof duly authorized, may revoke a proxy by instrument in writing, including a proxy bearing a later date. The instrument revoking the proxy must be deposited at the registered office of the Company, at any time up to and including the last business day preceding the date of the Meeting, or any adjournment thereof, or with the chairman of the Meeting on the day of the Meeting.

A non-registered shareholder who wishes to revoke a proxy or voting instructions should contact their Nominee well in advance of the Meeting. A non-registered shareholder who wishes to change voting instructions given by telephone or internet may be able to revoke such voting instructions by voting a second time via the same method.

---

3

VOTING SHARES AND PRINCIPAL HOLDERS THEREOF

The Company is authorized to issue an unlimited number of common shares without par value ("shares"), of which 445,302,865 shares are issued and outstanding as of May 7, 2015 (including 11,325,000 shares held by the Agent under the Share Loan Plan). Persons who are registered shareholders at the close of business on May 7, 2015 will be entitled to receive notice of and vote at the Meeting and will be entitled to one vote for each share held, subject to the provisions of the Share Loan Plan in respect of loan shares. For information on the Share Loan Plan, see below under the heading "Securities Authorized for Issuance Under Equity Compensation Plans – Information Concerning the Company's Share Loan Plan." The Company has only one class of shares.

To the knowledge of the Directors and executive officers of the Company, no person beneficially owns, directly or indirectly, or controls or directs shares carrying 10% or more of the voting rights attached to all shares of the Company except as listed below:

	No. of Shares Beneficially Owned, Controlled	Percentage of Outstanding
Name	or Directed, Directly or Indirectly	Shares(1)
Mohammed Al Barwani(2)	122,120,852	27.42%
Metalloinvest Holding (Cyprus)	90,668,516	20.36%
Limited

(1)	On a diluted basis, including 11,325,000 shares held by the Agent under the Share Loan Plan. On a non-diluted basis, the applicable percentages are 28.14% (in respect of Dr. Al Barwani) and 20.89% (in respect of Metalloinvest Holding (Cyprus) Limited).
(2)	Shares are held via MB Holding Co. LLC and Mawarid Offshore Mining Ltd, companies indirectly controlled by Dr. Al Barwani.

In this Information Circular, references to the number of outstanding shares on a "diluted" basis mean the number of outstanding shares including shares held by the Agent under the Share Loan Plan, and references to the number of outstanding shares on a "non-diluted" basis mean the number of outstanding shares excluding shares held by the Agent under the Share Loan Plan. See "Securities Authorized for Issuance under Equity Compensation Plans – Information Concerning the Company's Share Loan Plan" for details of the Share Loan Plan.

ELECTION OF DIRECTORS

The Directors of the Company are elected at each annual general meeting and hold office until the next annual general meeting or until their successors are appointed. The Company’s board of directors has two committees, the Audit Committee and the Governance, Nomination and Remuneration Committee (the "GN&R Committee"). Membership of each committee is as set out in the table below.

In accordance with the Company’s Articles, the directors have fixed the number of directors of the Company at six (6). Management of the Company proposes to nominate each of the following persons for election as a Director. In the absence of instructions to the contrary, the enclosed proxy will be voted for the nominees herein listed. Information concerning such persons, as furnished by the individual nominees, is as follows:

---

4

			Number of Common
	Principal Occupation or	Previous Service	Shares Beneficially
	employment and, if not a previously	as a Director	Owned,
Name, Jurisdiction of	elected Director, occupation during	(Date first elected	Controlled or Directed,
Residence and Position	the past 5 years	or appointed)	Directly or Indirectly(3)
A. Geoffrey Loudon(1)(2)	Executive Chairman of the private	May 4, 2006	3,108,029
New Zealand	New Zealand based L&M Group of
Chairman and Director	minerals and energy companies.
Russell Debney(1)(2)	Lawyer. Chief Executive Officer of	May 4, 2006	515,300
New South Wales,	Direct Nickel Limited, an ASX
Australia	listed company developing process
Director	technology for the nickel laterite
	industry.
Cynthia Thomas(1)(2)	Principal of Conseil Advisory	June 23, 2010	80,000
Reno, Nevada	Services Inc., a financial advisory
Director	firm specializing in the natural
	resource sector, since 2000.
Dr. Mohammed Al	Chairman of MB Holding Co. LLC,	September 11, 2012	122,120,852(4)
Barwani	a company with interests in oilfield
Muscat, Oman	services, exploration and production
Director	of hydrocarbon, mining & minerals,
	engineering & manufacturing and
	investments since 1982.
Mark Horn	Chief Executive of M. Horn & Co.,	September 20, 2013	Nil
Lincolnshire, U.K.	an advisory group specializing in
Director	corporate finance and research.
Tariq Al Barwani	Chief Executive Officer of Mawarid	April 28, 2015	Nil
Muscat, Oman	Mining LLC, a wholly-owned
Director	subsidiary of MB Holding Co. LLC,
	established to explore and develop
	mining opportunities in Oman and
	internationally.

(1)	Current member of the Audit Committee.
(2)	Current member of the GN&R Committee.
(3)	Shares beneficially owned, directly or indirectly, or over which control or direction is exercised (which, for clarity, does not include shares held by the Agent pursuant to the Company's Share Loan Plan) as at May 7, 2015, based upon information furnished to the Company by individual Directors. Unless otherwise indicated, such shares are held directly.
(4)	Shares are held by MB Holding Co. LLC and Mawarid Offshore Mining Ltd, companies indirectly controlled by Dr. Al Barwani.

Dr. Al Barwani and Mr. Al Barwani were nominated by MB Holding Co. LLC, which, through its subsidiary Mawarid Offshore Mining Ltd., holds 27.42% of the Company's outstanding common shares, and of which Dr. Al Barwani is the Chairman and Mr. Al Barwani is the Chief Executive Officer of Mawarid Mining LLC. Mr. Horn was nominated by Metalloinvest Holdings (Cyprus) Limited, which holds 20.36% of the Company's outstanding common shares.

Other than Dr. Al Barwani, Mr. Al Barwani and Mr. Horn, no proposed director is to be elected under any arrangement or understanding between the proposed director and any other person or company, except the directors and executive officers of the company acting solely in such capacity.

---

5

Majority Voting Policy

As required by the policies of the Toronto Stock Exchange (the "TSX"), the Board of Directors of the Company adopted a majority voting policy effective from March 30, 2015 (the "Majority Voting Policy"). In accordance with the requirements of the TSX, the Majority Voting Policy provides as follows:

	•	In an election of directors, other than at a Contested Meeting, any director who receives a greater number of shares withheld, than shares voted in favour of his or her election, must immediately tender his or her resignation ("Resignation") to the Board of Directors.
	•	The Board shall determine whether or not to accept the Resignation within 90 days after the date of the relevant meeting.
	•	The Board shall accept the Resignation absent exceptional circumstances.
	•	The Resignation will be effective when accepted by the Board.
	•	The director tendering the Resignation will not participate in any Board or committee meeting at which the Resignation is considered.
	•	The Company shall promptly issue a news release with the Board's decision and send a copy to TSX.
	•	If the Resignation is not accepted, the news release shall fully state the reasons for that decision.
	•	A "Contested Meeting" is a meeting at which the number of directors nominated for election is greater than the number of seats available on the Board.

Regulatory Orders, Bankruptcies and Directorships in Other Reporting Issuers

To the knowledge of the Company, none of the management nominees for election as a Director:

(a)	is, as at the date of this Information Circular, or has been, within 10 years before the date of this Information Circular, a director, chief executive officer ("CEO") or chief financial officer ("CFO") of any company (including the Company) that:

	(i)	was the subject, while the proposed director was acting in the capacity as director, CEO or CFO of such company, of a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days; or
	(ii)	was subject to a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, that was issued after the proposed director ceased to be a director, CEO or CFO but which resulted from an event that occurred while the proposed director was acting in the capacity as director, CEO or CFO of such company; or

(b)

is, as at the date of this Information Circular, or has been within 10 years before the date of this Information Circular, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or

---

6

(c)	has, within the 10 years before the date of this Information Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director; or
(d)	has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or
(e)	has been subject to any penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable security holder in deciding whether to vote for a proposed director.

The Directors hold directorships in other reporting issuers as set out below:

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Composition of the Governance, Nomination & Remuneration Committee

The Company's GN&R Committee, on behalf of the Board of Directors, monitors compensation of executive officers of the Company. Independent Directors Messrs. Loudon and Debney and Ms. Thomas were members of the GN&R Committee during the most recently completed financial year. Mr. Loudon also serves as the Company’s Chairman.

The GN&R Committee possesses the following skills and experience that enable it to make decisions on the suitability of the Company’s compensation policies and practices: experience in the management of companies, human resources management including hiring, dismissals, as well as establishing, communicating and evaluating overall corporate objectives and personal performance objectives.

Nautilus’ Chairman, Geoff Loudon, is a geologist with international experience covering resource exploration, development and production as well as investment banking. He was founder and Chairman of Niugini Mining Limited, an international gold and copper producer. He was a founding director of Lihir Gold Limited, an international gold producer. He is Executive Chairman of New Zealand based L & M Group, which produces gold, oil and gas.

Russell Debney is a commercial and corporate lawyer as well as a Director of a number of companies in the mining and resources industry. He has significant experience in the management, financing and structuring of resource projects, particularly in the offshore environment, and is Chief Executive Officer of Direct Nickel Limited, a developer of process technology for nickel laterite deposits.

---

7

Cynthia Thomas is the Principal of Conseil Advisory Services Inc., an independent financial advisory firm specialising in the natural resource industry which she founded in 2000. Prior to founding Conseil, Ms. Thomas worked with Bank of Montreal, Scotiabank and ScotiaMcLeod in the corporate and investment banking divisions.

None of the members of the GN&R Committee have any indebtedness to the Company or any of its subsidiaries (other than indebtedness of Mr. Debney under the Share Loan Plan, as described below under the heading "Indebtedness of Directors and Executive Officers") nor have they any material interest, or have any associates or affiliates which have any material interest, direct or indirect, in any actual or proposed transaction in the last financial year which has materially affected or would materially affect the Company or any of its subsidiaries.

Additional information regarding the GN&R Committee is provided below under the heading "Corporate Governance Disclosure – Compensation of Directors and the CEO".

Risk Considerations

The Board considers the implications of the risks associated with the Company’s compensation policies and practices when determining rewards for its officers and Directors. The Board has undertaken a review of the risks, if any, associated with the Company’s compensation policies and practices and intends to do so at least once annually.

Executive compensation is comprised of both short-term compensation in the form of a base salary/fee and an incentive plan through the grant of stock options and loan shares as described in detail below. This structure ensures that a significant portion of executive compensation (stock options/loan shares) is both long-term and "at risk" and, accordingly, is directly linked to the achievement of business results and the creation of long term shareholder value.

The Board also has the ability to set out vesting periods in each stock option agreement and share loan plan offer. As the benefits of such compensation, if any, are not realized by officers and Directors until a significant period of time has passed, the ability of officers to take inappropriate or excessive risks that are beneficial to their compensation at the expense of the Company and the shareholders is extremely limited. Furthermore, all elements of executive compensation are discretionary. As a result, it is unlikely an officer would take inappropriate or excessive risks at the expense of the Company or the shareholders that would be beneficial to their short-term compensation when their long-term compensation might be put at risk from their actions.

Due to the relatively small size of the Company and its current management group, the Board is able to closely monitor and consider any risks which may be associated with the Company’s compensation policies and practices. Risks, if any, may be identified and mitigated through regular Board meetings during which financial and other information of the Company is reviewed.

No risks have been identified arising from the Company’s compensation policies and practices that are reasonably likely to have a material adverse effect on the Company.

Hedging of Economic Risks in the Company’s Securities

Directors and officers may not take any derivative or speculative positions in the Company’s securities. This is to prevent the purchase of financial instruments that are designed to hedge or offset any decrease in the market value of the Company’s securities.

---

8

Report on Executive Compensation

The Board of Directors collectively has the responsibility to administer the compensation policies related to the executive management of the Company, including those named in the Summary Compensation Table below. The Company's Goverance, Nomination & Remuneration Committee, on behalf of the Board of Directors, monitors compensation of executive officers of the Company. Additional information regarding the GN&R Committee and its role and responsibilities is provided below under the heading "Corporate Governance Disclosure – Compensation of Directors and the CEO".

Executive compensation is based upon the need to provide a compensation package that will allow the Company to attract and retain qualified and experienced executives, balanced with a pay-for-performance philosophy. Compensation for the current and prior fiscal years has historically been based upon negotiated contracts, with stock options and, since the initial approval of the Share Loan Plan at the Annual General Meeting held July 26, 2011 (the "2011 AGM"), loan shares, being issued as a long term incentive for performance. A compensation consultant was not engaged by the Company to determine executive compensation at any time since the Company's most recently completed financial year; however, an annual review of executive compensation was completed using AON Hewitt’s report entitled, “The McDonald Gold and General Mining Industry Remuneration Report No. 52” and dated October 2013 ("Remuneration Report"). The Remuneration Report is an external salary survey based on approximately 126 resource companies in respect of 173 operations, and is used by the Company to ensure it remains competitive and is able to retain its executives. The survey group is broad, representing gold and other metalliferous / non-metalliferous mining companies, mining contractors and exploration companies. Of the organisations that contribute data to the Remuneration Report, 68% are operated by mining companies and 32% are operated by mining contractors. The mining companies are benchmarked based on gross revenue, operating budget and employee numbers.

The Company has a performance based remuneration process established across the Company including the Company's executives. At the end of each year key performance indicators ("KPIs"), which have been recommended by the GN&R Committee and approved by the Board based on the Company’s goals, are assessed by the CEO. Where possible, the KPIs are specific and measurable. A short term cash incentive may be awarded to the Company's executives on attaining the annual KPIs. A short term cash incentive was awarded to the NEOs (as defined under "Summary Compensation Table" below) for the 2014 financial year and paid in January 2015.

As the Company’s 2013 KPIs were not achieved, none of the NEOs received any cash incentive payment for the 2013 financial year.

In December 2012, following approximately 60 positions being made redundant by the Company, the Board approved the implementation of a short term employee retention plan (“Retention Plan”) to ensure that the Company’s corporate memory was retained. Under the Retention Plan, which is unrelated to the achievement of the KPIs, the NEOs were entitled to a cash bonus, equal to their maximum annual cash bonus as a percentage of base salary outlined in the table below, provided that the NEO was still employed by the Company as at December 31, 2013. The cash bonus payable to NEOs under the Retention Plan was paid in January 2014.

The Company relies on the exemption in Subsection 2.1(4) of Form 51-102F6 to disclosure of performance goals or similar conditions in respect of specific quantitative or qualitative performance-related factors on the basis that such disclosure would seriously prejudice the interests of the Company. The Company is a seafloor resource exploration company and the first publically listed company to commercially explore the ocean floor for copper, gold, silver and zinc seafloor massive sulphide deposits. The Company holds tenement licences and exploration applications in various locations in the western and central Pacific Ocean and is establishing a pipeline of prospects for development. The Company’s main focus is on developing a seafloor production system that can be used to extract resources from its seafloor prospects. The system is intended to be applied to its initial development project, the Solwara 1 Project, located in the Bismarck Sea in the territorial waters of PNG. Nautilus' seafloor production system has the potential to open a new frontier of resource development as land-based mineral deposits continue to be depleted. With the Solwara 1 Project, Nautilus plans to become the world's first seafloor producer of copper and gold. If the Company were to disclose its specific performance goals it could provide the Company’s potential competitors in this newly developed market with insight into its confidential business plans and strategies and identify the factors and underlying assumptions that are reflected in the Company’s confidential business plans. Given the pioneering nature of the Company's business, the Company cannot state with accuracy how difficult it could be for the NEOs, or how likely it will be for the Company, to achieve the undisclosed performance goals.

---

9

The maximum annual cash bonus as a percentage of base salary for which each Named Executive Officer was eligible in 2014 is set forth in the following table:

The Company's stock option and share loan plans are used to provide the equivalent of share purchase options which are granted in consideration of the level of responsibility of the executive as well as his or her impact or contribution to the longer-term operating performance of the Company. In determining the number of options or loan shares to be granted to the executive officers, the Board of Directors takes into account the number of options or loan shares, if any, previously granted to each executive officer, and the exercise price of any outstanding options or loan shares to ensure that such grants are in accordance with the policies of the TSX, and closely align the interests of the executive officers with the interests of shareholders.

See "Securities Authorized for Issuance Under Equity Compensation Plans – Information Concerning the Company’s Stock Option Plan and Information Concerning the Company's Share Loan Plan".

Base Salary and Bonus

The Chairman of the GN&R Committee, currently Mr. Loudon, prepares recommendations for the GN&R Committee with respect to the base salary and, if appropriate, bonuses to be paid to the Chief Executive Officer and to other executive officers. The GN&R Committee approves the base salaries and bonuses for the executive officers including the Chief Executive Officer. The GN&R's recommendation for the Chief Executive Officer and the executive officers is then submitted for approval by the Board of Directors of the Company. The compensation recommended is determined based on an assessment by the GN&R Committee of the executive's performance, a consideration of compensation levels in companies similar to the Company and a review of the performance of the Company as a whole.

---

10

Chief Executive Officer Compensation

The compensation of the Chief Executive Officer consists of an annual base salary, and, if warranted, bonus and stock options/loan shares determined in the manner described in the above discussion of compensation for all executive officers.

Performance Graph

The following graph compares the yearly percentage change in the cumulative total shareholder return on the common shares of the Company for the past five years, with the cumulative total return of the S&P TSX Composite Index, assuming reinvestment of dividends. The common share trading data is as reported by the TSX.

As discussed above, executive compensation is based upon the need to provide a compensation package that will allow the Company to attract and retain qualified and experienced executives, balanced with a pay-for-performance philosophy. However, there is no direct correlation between the performance graph and executive compensation.

Option/Loan Share-based awards

The Company's stock option and share loan plans are used to provide the equivalent of share purchase options which are granted in consideration of the level of responsibility of the executive as well as his or her impact or contribution to the longer-term operating performance of the Company. In determining the number of options or loan shares to be granted to the executive officers, the Board of Directors takes into account the number of options or loan shares, if any, previously granted to each executive officer, and the exercise price of any outstanding options or loan shares to ensure that such grants are in accordance with the policies of the TSX, and closely align the interests of the executive officers with the interests of shareholders.

The GN&R Committee has the responsibility to administer the compensation policies related to the executive management of the Company, including option/loan share-based awards.

Summary Compensation Table

The following table (presented in accordance with Form 51-102F6 of National Instrument 51-102 Continuous Disclosure Obligations) sets forth all annual and long term compensation for services in all capacities to the Company for the three most recently completed financial years in respect of each of the individuals comprised of the Chief Executive Officer and the Chief Financial Officer as at December 31, 2014, and the other three most highly compensated executive officers of the Company as at December 31, 2014 whose individual total compensation for the most recently completed financial year exceeded $150,000 and any individual who would have satisfied these criteria but for the fact that such individual was not serving as such an officer at the end of the most recently completed financial year (collectively the "Named Executive Officers" or "NEOs").

---

11

					Non-Equity
					Incentive Plan
					Compensation
				Option-	($)
			Share-	Based		Long-		All Other
NEO Name and			Based	Awards	Annual	term	Pension	Compensation	Total
Principal		Salary	Awards	(2)	Incentive	Incentive	Value	(5)	Compensation
Position(1)	Year	($)	($)	($)	Plans(4)	Plans	($)	($)	($)
Michael	2014	518,948	N/A	271,479	153,427	N/A	N/A	62,070	1,005,924
Johnston(3)	2013	575,011	N/A	82,415	Nil	N/A	N/A	235,065	892,491
President &	2012	480,208	N/A	124,723	Nil	N/A	N/A	41,057	645,988
Chief Executive
Officer
Shontel Norgate	2014	314,636	N/A	190,036	84,952	N/A	N/A	37,567	627,191
Chief Financial	2013	337,402	N/A	54,943	Nil	N/A	N/A	141,566	533,911
Officer	2012	361,730	N/A	124,723	Nil	N/A	N/A	32,556	519,009
Kevin Cain	2014	489,482	N/A	190,036	132,160	N/A	N/A	58,444	870,122
VP – Projects	2013	524,898	N/A	54,943	Nil	N/A	N/A	220,198	800,039
	2012	562,746	N/A	124,723	Nil	N/A	N/A	50,647	738,116
Jonathan Lowe	2014	291,561	N/A	135,740	78,721	N/A	N/A	34,812	540,834
VP – Strategic	2013	312,337	N/A	54,943	Nil	N/A	N/A	130,975	498,255
Development &	2012	301,982	N/A	62,362	Nil	N/A	N/A	35,299	399,643
Exploration
Karen Hauff	2014	220,303	N/A	135,740	66,761	N/A	N/A	28,834	451,638
General Counsel	2013	207,336	N/A	21,977	Nil	N/A	N/A	86,874	316,187
and Company	2012	222,289	N/A	41,574	Nil	N/A	N/A	22,665	286,528
Secretary

	(1)	The compensation awarded to, earned by, paid to, or payable to each of the NEOs was in Australian dollars and for the most recently completed financial year has been translated herein at the rate of A$1.00 for every US$0.9025. The rate at which compensation for the 2013 financial year has been translated is A$1.00 for every US$0.9678. The rate at which compensation for the 2012 financial year has been translated is A$1.00 for every US$1.0376. The Company uses the average annual rate to translate the compensation into the reporting currency.
	(2)	The numbers in this column reflect the issuance of loan shares under the Company's Share Loan Plan, which are more akin to option-based awards than share-based awards. See the discussion of the Share Loan Plan and the Option Plan below under the heading "Securities Authorized for Issuance Under Equity Compensation Plans". The Company used the Black-Scholes-Merton model as the methodology to calculate the issue date fair value, and relied on the assumptions and estimates set forth in the Company's audited financial statements for the 2014 financial year. The Company chose this methodology because it is expected to be the most accurate measure of the fair value of the Company’s options and loan shares and is consistent with the methodology used for accounting purposes.
	(3)	Mr. Johnston was appointed President and CEO in October 2012. He had formerly acted as VP Strategic Development and Exploration.
	(4)	The payment of Annual Incentives for the NEOs relevant to the 2014 financial year were paid in 2015, with no Annual Incentive paid for 2012 or 2013, however a retention bonus was paid in January 2014, as described above under the heading "Compensation Discussion and Analysis – Report on Executive Compensation".
	(5)	Other compensation relates to superannuation contributions made – refer to "Pension Plan Benefits" below, and includes the retention bonus paid in January 2014, as described above under the heading "Compensation Discussion and Analysis – Report on Executive Compensation".

---

12

Incentive Plan Awards

Outstanding Share-Based Awards and Option-Based Awards

The following table sets forth information concerning all awards outstanding under incentive plans of the Company at the end of the most recently completed financial year, including awards granted before the most recently completed financial year, to each of the NEOs.

	Option-Based Awards				Share-Based Awards
						Market or
						Payout	Market or
					Number of	Value Of	Payout Value
	Number of			Value of	Shares Or	Share-	Of vested
	Securities			Unexercised	Units Of	Based	share based
	Underlying	Option		In-The-	Shares	Awards	awards not
	Unexercised	Exercise	Option	Money	That Have	That Have	paid out or
	Options	Price	Expiration Date	Options (1)	Not Vested	Not Vested	distributed
Name	(a)	(b)	(c)	(d)	(e)	(f)	(g)
Michael	300,000(2)	C$1.01(2)	09 April 2016(2)	Nil	N/A	N/A	N/A
Johnston	750,000(2)	C$0.24(2)	01 July 2016(2)	C$105,000	N/A	N/A	N/A
	1,000,000(2)	C$0.57(2)	01 July 2017(2)	Nil	N/A	N/A	N/A
Shontel	300,000(2)	C$1.01(2)	09 April 2016(2)	Nil	N/A	N/A	N/A
Norgate	500,000(2)	C$0.24(2)	01 July 2016(2)	C$70,000	N/A	N/A	N/A
	700,000(2)	C$0.57(2)	01 July 2017(2)	Nil	N/A	N/A	N/A
Kevin Cain	300,000(2)	C$1.01(2)	09 April 2016(2)	Nil	N/A	N/A	N/A
	500,000(2)	C$0.24(2)	01 July 2016(2)	C$70,000	N/A	N/A	N/A
	700,000(2)	C$0.57(2)	01 July 2017(2)	Nil	N/A	N/A	N/A
Jonathan	150,000(2)	C$1.01(2)	09 April 2016(2)	Nil	N/A	N/A	N/A
Lowe	500,000(2)	C$0.24(2)	01 July 2016(2)	C$70,000	N/A	N/A	N/A
	500,000(2)	C$0.57(2)	01 July 2017(2)	Nil	N/A	N/A	N/A
Karen	100,000(2)	C$1.01(2)	09 April 2016(2)	Nil	N/A	N/A	N/A
Hauff	200,000(2)	C$0.24(2)	01 July 2016(2)	C$28,000	N/A	N/A	N/A
	500,000(2)	C$0.57(2)	01 July 2017(2)	Nil	N/A	N/A	N/A

	(1)	This amount is calculated based on the positive difference between the market value of the shares underlying the options at December 31, 2014, which was C$0.38, and the exercise or base price of the option.
	(2)	Reflects the issuance of loan shares under the Company's Share Loan Plan. See the discussion of the Share Loan Plan and the Option Plan below under the heading "Securities Authorized for Issuance Under Equity Compensation Plans". Column (a) reflects the number of loan shares issued; column (b) reflects the issue price of the loan shares; column (c) reflects the loan expiration date; column (d) reflects the positive difference between the market value of the shares on December 31, 2014, which was C$0.38, and the issue price reflected in column (b).

---

13

Incentive Plan Awards – Value Vested Or Earned During The Year

The following table sets out the value of all non-equity incentive plan compensation earned and stock options that vested during the financial year ended December 31, 2014 for each of the Named Executive Officers:

(1)

This amount is the dollar value that would have been realized by obtaining the difference between the market price of the shares underlying options and the exercise price of the options under the option-based award on the vesting date. No loan shares issued to NEOs vested in 2014.

Narrative Discussion

No short term incentives or KPIs were paid to the NEOs for either the 2012 or the 2013 financial year. A short term cash incentive for achievement of KPIs was paid to NEOs for the 2014 financial year in January 2015. Any amounts paid upon attaining annual KPIs would be considered "Non-Equity Incentive Plan Compensation" for the purposes of this Executive Compensation disclosure.

The short term incentive payment due to NEOs under the Retention Plan was paid in January 2014, as described above under the heading "Compensation Discussion and Analysis – Report on Executive Compensation".

The issue of stock options or loan shares to Named Executive Officers is approved by the Board in accordance with the Company’s stock option and share loan plans, taking into consideration their position within the Company and the number of stock options and loan shares available for issue.

No loan shares issued to NEOs vested in 2014. With respect to any options or loan shares that vested during the year:

---

14

Pension Plan Benefits

The Company does not have any form of pension plan that provides for payments or benefits to the Named Executive Officers at, following, or in connection with retirement. The Company does not have any form of deferred compensation plan. The Company contributes the equivalent of 9.25% of the base salary of each Named Executive Officer into the Named Executive Officer’s preferred superannuation fund.

Termination and Change of Control Benefits

The terms of the employment contracts between the Company or its subsidiaries and the Named Executive Officers that were in existence at the end of the most recently completed financial year are as follows.

As used below, a "change of control" shall be deemed to have occurred if the Company is the subject of a takeover bid at a time when the market capitalization of the Company exceeds US$150 million, pursuant to which any person (or group of persons acting jointly or in concert) acquires more than 50.1% of the then issued and outstanding common shares of the Company. As noted below under the heading "Information Concerning the Company's Stock Option Plan" and "Information Concerning the Company's Share Loan Plan", all unvested stock options and loan shares shall vest upon a change of control. If an NEO terminates his or her service agreement within 90 days of the date of a change of control, s/he shall be entitled to a severance payment equal to his or her annual base salary. If any NEO's employment is terminated within 9 months of a change of control, such NEO shall be entitled to a severance payment equal to three times his or her annual salary.

1.	The Company entered into an employment agreement dated January 1, 2014 with Michael Johnston (the "Johnston Agreement") pursuant to which it engaged Mr. Johnston as its President & CEO. The Johnston Agreement provides for a base salary of $518,948 per annum. In the event of termination without cause other than following a change of control, Mr. Johnston would be entitled to six months notice. If Mr. Johnston had been terminated without cause as at December 31, 2014, he would have been entitled to a payment of $553,732. If a change of control had occurred on December 31, 2014, he would have been entitled to receive a payment of $568,248 and other benefits having a value of $138,473 if he terminated the Johnston Agreement within 90 days from the date of the change of control or a payment of $1,704,745 and other benefits having a value of $138,473 if terminated by the Company within 9 months of the change of control, and option-based awards of C$105,000.(1) (2)
2.	The Company entered into an employment agreement dated August 29, 2014 with Shontel Norgate (the "Norgate Agreement") pursuant to which it has engaged Ms. Norgate as its Chief Financial Officer. The Norgate Agreement provides for a base salary of $314,636 per annum. In the event of termination without cause other than following a change of control, Ms. Norgate would be entitled to twelve weeks notice. If Ms. Norgate had been terminated without cause as at December 31, 2014, she would have been entitled to a payment of $352,588. If a change of control had occurred on December 31, 2014, she would have been entitled to receive a payment of $344,527 and other benefits having a value of $193,575 if she terminated the Norgate Agreement within 90 days from the date of the change of control or a payment of $1,033,581 and other benefits having a value of $193,575 if terminated by the Company within 9 months of the change of control, and option-based awards of C$70,000.(1) (2)
3.	The Company entered into an employment agreement dated August 29, 2014 with Kevin Cain (the "Cain Agreement") pursuant to which it has engaged Mr. Cain as its VP – Projects. The Cain Agreement provides for a base salary of $489,482 per annum. In the event of termination without cause other than following a change of control, Mr. Cain would be entitled to twelve weeks notice. If Mr. Cain had been terminated without cause as at December 31, 2014, he would have been entitled to a payment of $246,025. If a change of control had occurred on December 31, 2014, he would have been entitled to receive a payment of $535,983 and other benefits having a value of $39,877 if he terminated the Cain Agreement within 90 days from the date of the change of control or a payment of $1,607,948 and other benefits having a value of $39,877 if terminated by the Company within 9 months of the change of control, and option-based awards of C$70,000.(1) (2)

---

15

4.	The Company entered into an employment agreement dated September 18, 2014 with Jonathan Lowe (the "Lowe Agreement") pursuant to which it has engaged Mr. Lowe as its VP – Strategic Development and Exploration. The Lowe Agreement provides for a base salary of $291,561 per annum. In the event of termination without cause other than following a change of control, Mr. Lowe would be entitled to twelve weeks notice. If Mr. Lowe had been terminated without cause as at December 31, 2014, he would have been entitled to a payment of $292,850. If a change of control had occurred on December 31, 2014, he would have been entitled to receive a payment of $319,260 and other benefits having a value of $145,500 if he terminated the Lowe Agreement within 90 days from the date of the change of control or a payment of $957,779 and other benefits having a value of $145,500 if terminated by the Company within 9 months of the change of control, and option-based awards of C$70,000.(1) (2)
5.	The Company entered into an employment agreement dated August 29, 2014 with Karen Hauff (the "Hauff Agreement") pursuant to which it has engaged Ms. Hauff as its General Counsel and Company Secretary. The Hauff Agreement provides for a base salary of $247,260 per annum. In the event of termination without cause other than following a change of control, Ms. Hauff would be entitled to twelve weeks notice. If Ms. Hauff had been terminated without cause as at December 31, 2014, she would have been entitled to a payment of $114,251. If a change of control had occurred on December 31, 2014, she would have been entitled to receive a payment of $270,750 and other benefits having a value of $10,116 if she terminated the Hauff Agreement within 90 days from the date of the change of control or a payment of $812,250 and other benefits having a value of $10,116 if terminated by the Company within 9 months of the change of control, and option-based awards of C$28,000.(1) (2)

(1)	Calculated by multiplying the difference between the market price of the shares on such date and the exercise price of the option (or issue price of the loan share) by the number of option (or loan shares) subject to early vesting.
(2)	The compensation awarded to, earned by, paid to, or payable to each of the NEOs was in Australian dollars and for the most recently completed financial year has been translated herein at the rate of A$1.00 for every US$0.9025.

Director Compensation

Director Compensation Table

The following table sets forth all amounts of compensation provided to the directors who are not Named Executive Officers, for the Company’s most recently completed financial year:

---

16

	(1)	The Company used the Black-Scholes-Merton model as the methodology to calculate the grant date fair value, and relied on the assumptions and estimates set forth in the Company's audited financial statements for the 2014 financial year. The Company chose this methodology because it is expected to be the most accurate measure of the fair value of the Company’s options and is consistent with the methodology used for accounting purposes.
	(2)	Mr. Debney was issued 400,000 loan shares pursuant to the Share Loan Plan described below. The value ascribed to such loan shares has been determined using the Black-Scholes-Merton model as the methodology to calculate the grant date fair value, and relied on the assumptions and estimates set forth in the Company's audited financial statements for the 2014 financial year. The Company chose this methodology because it is expected to be the most accurate measure of the fair value of the Company’s loan shares and is consistent with the methodology used for accounting purposes.

Historically, the Company has had no arrangements, standard or otherwise, pursuant to which Directors are compensated by the Company or its subsidiaries for their services in their capacity as Directors, or for committee participation or involvement in special assignments.

On June 26, 2013, the Board approved the following fee structure for the performance of non-executive directors of the Company.

The first payment pursuant to the above fee structure commenced in 2014.

The Company has a formalized stock option plan and a share loan plan for the granting of incentive stock options and loan shares to the officers, employees and Directors. The purpose of granting such options and loan shares is to assist the Company in compensating, attracting, retaining and motivating the Directors of the Company and to closely align the interests of such persons to that of the shareholders.

Incentive Plan Awards - Outstanding Share-Based Awards and Option-Based Awards

The following table sets forth information concerning all awards outstanding under incentive plans of the Company at the end of the most recently completed financial year, including awards granted before the most recently completed financial year, to each of the Directors who are not Named Executive Officers:

---

17

	(1)	This amount is calculated based on the positive difference between the market value of the shares underlying the options at December 31, 2014, which was C$0.38, and the exercise price of the option.
	(2)	Reflects the issuance of loan shares under the Company's Share Loan Plan. See the discussion of the Share Loan Plan and the Option Plan below under the heading "Securities Authorized for Issuance Under Equity Compensation Plans". Column (a) reflects the number of loan shares issued; column (b) reflects the issue price of the loan shares; column (c) reflects the loan expiration date; column (d) reflects the positive difference between the market value of the shares on December 31, 2014, which was C$0.38, and the issue price reflected in column (b).

Incentive Plan Awards – Value Vested Or Earned During The Year

The following table sets out the value of all stock options and loan shares that vested during the financial year ended December 31, 2014 for each of the Directors:

			Non-Equity Incentive
	Option-Based Awards -	Share-Based Awards -	Plan Compensation -
	Value Vested	Value Vested	Value Earned
	During The Year (1)	During The Year	During The Year
Director Name	($)	($)	($)
A. Geoffrey Loudon	C$40,200	N/A	N/A
Russell Debney	C$26,800	N/A	N/A
Cynthia Thomas	C$26,800	N/A	N/A
Mohammed Al Barwani	C$26,800	N/A	N/A
Usama Al Barwani	N/A	N/A	N/A
Mark Horn	N/A	N/A	N/A

(1)

This amount is the dollar value that would have been realized by obtaining the difference between the market price of the shares underlying options and the exercise price of the options on the vesting date.

---

18

The issue of stock options and loan shares to Directors is recommended by the GN&R Committee and approved by the Board in accordance with the Company’s stock option and share loan plans, taking into consideration their position within the Company and the number of stock options and loan shares available for issue.

With respect to options or loan shares that vested during the year:

(1)

Options and loan shares vest at 20% every six months commencing six months after the date of issue of the options or loan shares.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table sets forth the Company's compensation plans under which equity securities are authorized for issuance as at the end of the most recently completed financial year.

			Number of common shares
	Number of common		remaining available for
	shares to be issued upon	Weighted-average	future issuance under equity
	exercise of outstanding	exercise price of	compensation plans
	options, warrants and	outstanding options,	(excluding common shares
	rights	warrants and rights	reflected in column (a))
Plan Category	(a)	(b)	(c)
Equity compensation plans	16,270,000	C$0.51	27,127,786(1)
approved by securityholders
Equity compensation plans not	N/A	N/A	N/A
approved by securityholders
Total	16,270,000	C$0.51	27,127,786

---

19

(1)

As described below, the Company’s stock option plan is a "rolling" stock option plan. The number of shares available for future issuance takes into account the 11,325,000 shares held by the Agent as at December 31, 2014 under the Company's Share Loan Plan, as described below. The weighted average issue price of such loan shares outstanding as at December 31, 2014 was C$0.52.

Information Concerning the Company’s Stock Option Plan

At the Company’s Annual General Meeting held June 25, 2014 (the "2014 AGM"), the shareholders re-approved the Company’s current form of stock option plan (the "Option Plan"). The Option Plan was first approved by shareholders at the 2011 AGM and replaced the Company’s previous stock option plan which had been in place since June 4, 2008.

Information relating to the Option Plan is as follows:

	•	The Option Plan is administered by the Board of Directors or, if the Directors so determine, by a committee of the Directors authorized to administer the Option Plan (the "Committee").
	•	Options may be granted to directors, officers and employees of the Company as well as persons or corporations engaged to provide services to the Company (or any entity controlled by the Company) and any individuals employed by such persons or corporations.
	•	The number of shares issuable to insiders of the Company at any time, under all security based compensation arrangements of the Company, cannot exceed 10% of the Company’s issued and outstanding shares.
	•	The number of shares issued to insiders of the Company as a group, within any one year period, under all security based compensation arrangements of the Company, cannot exceed 10% of the Company’s issued and outstanding shares as at the end of such one year period.
	•	The number of shares issuable upon exercise of outstanding options at any time will, when combined with the number of shares held by the Agent under the Share Loan Plan (as described below), be limited to 10% of the Company's issued and outstanding shares, on a non-diluted basis. As at May 7, 2015, an aggregate maximum of 43,397,786 shares are issuable under the Option Plan and the Share Loan Plan.
	•	As at May 7, 2015, an aggregate of 16,270,000 options and loan shares were issued and outstanding, representing 3.65% of the Company’s issued and outstanding common shares as at such date (or 3.75% on a non-diluted basis). Of these, 4,945,000 are outstanding options, representing 1.11% of the issued and outstanding shares (1.14% on a non-diluted basis).
	•	Subject to the limitation applicable to insiders of the Company and the limit on the maximum number of options available for issuance under the Option Plan, there is no restriction on the number of options that can be granted to any one person.
	•	The Board or, if applicable, the Committee has the authority to determine the exercise price of the options granted under the Option Plan provided that the exercise price must be not less than the closing price on the TSX on the last trading day immediately preceding the date of grant of the options.
	•	The Option Plan does not contain provisions allowing for the transformation of a stock option into a stock appreciation right.

---

20

	•	Vesting of options will be at the discretion of the Board or, if applicable, the Committee, other than in the event of a change of control of the Company, upon which all previously unvested options shall vest immediately and shall be exercisable in whole or in part.
	•	The maximum term of options granted under the Option Plan is 10 years from the date of grant. The Option Plan provides that the expiry date of options shall be the later of the date set by the Board or the Committee as the last date on which an option may be exercised and, if such date falls during or within five (5) trading days after the end of a "Black-Out Period" (as defined below), the date that is ten (10) trading days following the date on which such Black-Out Period ends (the "Extension Period"); provided that if an additional Black-Out Period is subsequently imposed during the Extension Period, then such Extension Period shall be deemed to commence following the end of such additional Black-Out Period to enable the exercise of such Option within ten (10) trading days following the end of the last imposed Black-Out Period. For these purposes, a "Black-Out Period" means a period of time during which, pursuant to the policies of the Company trading in common shares or options of the Company is prohibited or restricted.
	•	If an optionee ceases to be eligible to receive options under the Option Plan as a result of termination for cause, any outstanding options held by such optionee on the date of such
		termination shall be cancelled as of that date.
	•	If an optionee ceases to be eligible to receive options under the Option Plan as a result of his or her death, any outstanding options held by such optionee on such date shall be exercisable by his or her estate until the earlier of the expiry time of such options or 12 months after the date of death.
	•	If an optionee ceases to be eligible to receive options under the Option Plan for reasons other than termination for cause or death, any outstanding options held by such optionee at such time shall remain exercisable for a period ending on the earlier of the expiry time of such option or six months after the optionee ceases to be eligible to receive options. Notwithstanding the foregoing, the Board of Directors may, on a case by case basis, allow such options to remain in full force and effect until any time up to the original expiry time of such options, irrespective of whether such expiry time is more than six months after the optionee ceases to be eligible to receive options.
	•	Options granted under the Option Plan are not assignable or transferable other than pursuant to a will or by the laws of descent and distribution.
	•	The Board of Directors may from time to time, without shareholder approval and subject to applicable law and to the prior approval, if required, of TSX or any other regulatory body having authority over the Company or the Option Plan, suspend, terminate or discontinue the Option Plan at any time, or amend or revise the terms of the Option Plan or of any option granted under, or otherwise governed by, the Option Plan to:

	(a)	make amendments of a clerical or typographical nature and to include clarifying provisions in the Option Plan;
	(b)	implement features or requirements that are necessary or desirable under applicable tax and securities laws;
	(c)	change vesting provisions;
	(d)	change termination provisions for an insider provided that the expiry time does not extend beyond the original expiry time under the Option Plan;

---

21

	(e)	change termination provisions for an optionee who is not an insider beyond the original expiry time;
	(f)	reduce the exercise price of an option for an optionee who is not an insider; and
	(g)	implement a cashless exercise feature, payable in cash or securities;
	provided that no such amendment, revision, suspension, termination or discontinuance shall in any manner adversely affect any option previously granted to an optionee under the Option Plan without the consent of that optionee. Any other amendments to the Option Plan or options granted thereunder (or options otherwise governed thereby) will be subject to the approval of the shareholders.

•

The Option Plan does not contain any provisions relating to the provision of financial assistance by the Company to optionees to facilitate the purchase of common shares upon the exercise of options.

Information Concerning the Companys Share Loan Plan

The Company's share loan plan (referred to in this Information Circular as the "Share Loan Plan" or the "Loan Plan") was re-approved by the shareholders at the 2014 AGM. The Loan Plan provides for security-based compensation in a manner similar to a stock option plan by enabling participants to acquire an equity interest in the Company using a limited recourse loan provided by a subsidiary of the Company. The Loan Plan provides for loans to be made to eligible participants ("SLP Participants") who apply the proceeds toward a subscription for shares. The loans are made by a subsidiary of the Company (the "Lender") and the shares issued by Nautilus are registered in the name of Computershare Trust Company of Canada as administrative agent (the "Agent") for the benefit of the applicable SLP Participant.

The loan does not bear interest, and the Lender's recourse is limited to the value of the shares. If the SLP Participant elects to sell the shares (which will be effected by the Agent), the proceeds will be used to repay the loan and any brokerage and other fees, and the SLP Participant will be entitled to any remaining balance.

SLP Participants can only elect to sell the shares if the then-current market price is greater than the subscription price paid for those shares, such that the net proceeds of the sale will equal or exceed the outstanding loan balance in respect of the shares being sold. An SLP Participant may, during the term of the loan, elect to repay the loan and become the registered holder of the shares. If an SLP Participant ceases to be eligible to participate in the Loan Plan or if the term of the loan expires before the loan is repaid, the Agent will return the shares to the Company, and both the loan and the shares will be cancelled.

Shares issued pursuant to the Loan Plan are referred to as "Restricted Shares" as long as they are outstanding and registered in the name of the Agent (i.e. before the date that the shares are sold in the market to pay the loan or the SLP Participant otherwise repays the loan).

The purpose of the Loan Plan is to provide a tax-efficient security-based compensation program for the Company's Australian employees and directors.

The following describes certain terms of the Loan Plan, which are analogous to the terms of the Option Plan, to the extent applicable:

•

The SLP Participants will be full-time or part-time employees and directors of Nautilus or any subsidiary, provided any such SLP Participant has their primary residence in Australia.

---

22

	•	The number of Restricted Shares outstanding at any time will, when combined with the number of shares issuable upon exercise of outstanding options under the Option Plan, be limited to 10% of the Company's issued and outstanding shares, on a non-diluted basis (but excluding outstanding Restricted Shares in the calculation of issued and outstanding shares), at that time. In the same manner as the Option Plan is "reloaded" when options are exercised, when Restricted Shares cease to be restricted on the repayment of the loan, the number of shares issuable under the Loan Plan will be increased. Any Restricted Shares that are cancelled will be eligible to be reissued, subject always to the 10% limit. The corresponding 10% limitation in the Option Plan will be applied in a manner consistent with the above 10% limitation in the Loan Plan, in that the calculation will exclude outstanding Restricted Shares in the denominator. In addition, as required by applicable Australian securities laws, the number of shares offered to Australian residents under the Loan Plan, when aggregated with the number of shares that would be issued, and the number of shares that have been issued over the previous 5 years, to Australian residents under any security based compensation arrangements, must not exceed 5% of the total number of issued shares at the time each offer is made under the Loan Plan.
	•	The number of shares issued to insiders of the Company as a group within a one year period under all security based compensation arrangements will not exceed 10% of the total number of issued and outstanding shares, on a non-diluted basis (but excluding outstanding Restricted Shares in the calculation of issued and outstanding shares), as at the end of such one year period. Subject to the limitations on the number of shares issuable under the Loan Plan and the Option Plan as noted above, there is no maximum number of shares that any one person is entitled to receive pursuant to the Loan Plan.
	•	The price at which shares will be issued under the Loan Plan will be determined by the Board of Directors or, if applicable, any committee of the Board of Directors to which administration of the Loan Plan is delegated (the "SLP Committee"), and will be not less than the closing price of the shares on the TSX on the last trading day prior to the date of issuance.
	•	The maximum term of loans made under the Loan Plan is 10 years. The Loan Plan contains provisions for the extension of a loan that would otherwise terminate during or within five trading days after the end of a Black-Out Period until the date that is 10 trading days after the end of an SLP Black-Out Period. A "SLP Black-Out Period" means a period of time during which, pursuant to the policies of the Company trading in shares is prohibited or restricted.
	•	Vesting of Restricted Shares will be at the discretion of the Board of Directors or the SLP Committee. At the time of vesting, an SLP Participant will be entitled to deal with Restricted Shares by directing that they be sold into the market or by repaying the applicable loan. In the event of a change of control of the Company, all previously unvested Restricted Shares will vest immediately. SLP Participants will agree to vote Restricted Shares beneficially owned by them in accordance with the recommendations of management.
	•	If an SLP Participant ceases to be eligible to receive a loan under the Loan Plan for reasons other than termination for cause (or death or legal incapacity), any existing loan made to such person (and the corresponding vested Restricted Shares) will remain outstanding for a period ending on the earlier of the expiry date of the loan or six months after the SLP Participant ceases to be eligible to receive a loan under the Loan Plan. Notwithstanding the foregoing, the Board of Directors may, on a case by case basis, allow such Restricted Shares to remain outstanding until any time up to the original expiry date of the applicable loan, irrespective of whether such expiry date is more than six months after the SLP Participant ceases to be eligible to receive a loan under the Loan Plan. If an SLP Participant ceases to be eligible to receive a loan under the Loan Plan as a result of termination for cause, any existing loan made to such person (and the corresponding Restricted Shares) will be cancelled as of that date.

---

23

	•	If an SLP Participant ceases to be eligible to receive a loan under the Loan Plan as a result of death or legal incapacity, any existing loan made to such person (and the corresponding vested Restricted Shares) will remain outstanding for a period ending on the earlier of the expiry date of the loan or one year after the death or incapacity of the SLP Participant.
	•	Loans made under the Loan Plan and corresponding Restricted Shares are not assignable or transferable other than pursuant to a will or by the laws of descent and distribution.
	•	Holders of Restricted Shares will waive their rights to receive: (i) any cash dividends declared and (ii) any assets of the Company on dissolution, and shall direct that such cash or other assets be paid or directed to the Company.
	•	The Board of Directors may from time to time, without shareholder approval and subject to applicable law and to the prior approval, if required, of TSX or any other regulatory body having authority over the Company or the Loan Plan, suspend, terminate or discontinue the Loan Plan at any time, or amend or revise the terms of the Loan Plan or of any loan made pursuant to the Loan Plan to:

	(a)	make amendments of a clerical or typographical nature and to include clarifying provisions in the Loan Plan;
	(b)	implement features or requirements that are necessary or desirable under applicable tax and securities laws;
	(c)	change vesting provisions;
	(d)	change termination provisions for an insider provided that the expiry date does not extend beyond the original expiry date under the Loan Plan; and
	(e)	change termination provisions for an SLP Participant who is not an insider beyond the original expiry date;

provided that no such amendment, revision, suspension, termination or discontinuance will in any manner adversely affect any loan previously granted to an SLP Participant under the Loan Plan without the consent of that SLP Participant. Any other amendments to the Loan Plan or loans granted thereunder will be subject to the approval of the shareholders.

As at May 7, 2015, an aggregate of 11,325,000 loan shares were issued and outstanding under the Loan Plan, representing 2.54% of the Company’s issued and outstanding common shares as at such date (2.61% on a non-diluted basis).

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

Other than as disclosed below, as at May 7, 2015, there was no indebtedness outstanding of any current or former Director, executive officer or employee of the Company or any of its subsidiaries which is owing to the Company or any of its subsidiaries or to another entity which is the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Company or any of its subsidiaries, entered into in connection with a purchase of securities or otherwise.

---

24

(1)

Pursuant to the Company’s Share Loan Plan, the terms of which are described above under "Information Concerning the Company's Share Loan Plan" .

Other than as disclosed below, no individual who is, or at any time during the most recently completed financial year was, a director or executive officer of the Company, no proposed nominee for election as a director of the Company and no associate of such persons:

(i)	is or at any time since the beginning of the most recently completed financial year has been, indebted to the Company or any of its subsidiaries; or
(ii)	whose indebtedness to another entity is, or at any time since the beginning of the most recently completed financial year has been, the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Company or any of its subsidiaries,

in relation to a securities purchase program or other program.

(1)

The transactions described in this table occurred pursuant to the Company's Share Loan Plan, the terms of which are described above. The amount outstanding as at May 7, 2015 is equal to the largest amount outstanding during the year ended December 31, 2014. No amounts have been forgiven in respect of the issuance of loan shares to the persons named above.

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

Except as set out herein, no person who has been a director or executive officer of the Company at any time since the beginning of the Company's last financial year, no proposed nominee of management of the Company for election as a director of the Company and no associate or affiliate of the foregoing persons, has any material interest, direct or indirect, by way of beneficial ownership or otherwise, in matters to be acted upon at the Meeting other than the election of directors or the appointment of auditors.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

Other than as set forth herein, no informed person or proposed director of the Company and no associate or affiliate of the foregoing persons has or has had any material interest, direct or indirect, in any transaction since the commencement of the Company's most recently completed financial year or in any proposed transaction which in either such case has materially affected or would materially affect the Company.

---

25

APPOINTMENT OF AUDITOR

PricewaterhouseCoopers LLP, Chartered Accountants, of Vancouver, British Columbia is the auditor of the Company. Unless otherwise instructed, the proxies given pursuant to this solicitation will be voted for the re-appointment of PricewaterhouseCoopers LLP as the auditor of the Company to hold office for the ensuing year at a remuneration to be fixed by the Directors.

MANAGEMENT CONTRACTS

No management functions of the Company are performed to any substantial degree by a person other than the Directors or executive officers of the Company.

CORPORATE GOVERNANCE DISCLOSURE

National Policy 58-201 establishes corporate governance guidelines which apply to all public companies. The Company has reviewed its own corporate governance practices in light of these guidelines and, as prescribed by National Instrument 58-101, discloses its corporate governance practices.

Independence of Members of Board

The Company's Board currently consists of six directors all of whom are nominated for election as a director at the Meeting and are independent based on the test for independence set forth in Section 1.4 of National Instrument 52-110 Audit Committees ("NI 52-110").

Management Supervision by Board

The size of the Company is such that all the Company's operations are conducted by a small management team, overseen by the Board which currently consists of independent directors, including the Chair (A. Geoffrey Loudon). The directors are actively and regularly involved in reviewing and supervising the operations of the Company and have regular and full access to management. The directors are able to meet at any time without any members of management being present. In addition, the Audit Committee is able to meet with the Company's auditors without management being in attendance.

Participation of Directors in Other Reporting Issuers

The participation of the directors in other reporting issuers is described in the table provided under the heading "Election of Directors" in this Information Circular.

Participation of Directors in Board Meetings

During the year ended December 31, 2014, four board meetings were held. The attendance record of each director for the board meetings held is as follows:

---

26

Board Mandate

The Board has adopted a Board Mandate, the text of which is attached as Schedule A to this Information Circular.

Position Descriptions

The Board has not developed or adopted written position descriptions for the Chair of the Board and for the chair of each of its committees. The Board considers the mandates and charters for the Board and its committees, as applicable, sufficiently set forth the responsibilities of the Board and the relevant committees and correspondingly make evident the role and responsibilities of the Chair of the Board and the chair of each of its committees.

The Chair of the Board is responsible for the management, development and effective performance of the Board, and for providing leadership to the directors in carrying out their collective responsibilities to supervise the management of the business and affairs of the company. The Chair is also charged with the responsibility of leading the Board and organizing it to function in partnership with, but independently of, management of the Company in order to facilitate the achievement of the goals of the Company, including sustainable growth and maximizing shareholder value. In particular, the Chair:

	•	sets all Board meeting agendas with the CEO, and leads all board discussions;
	•	facilitates and chairs discussions among the Company’s independent directors, facilitates communication between the independent directors and the Company’s management, and is responsible for discussing any performance issues of any director; and
	•	if and when necessary, acts as a spokesperson on behalf of the Board in dealing with the press and members of the public.

The Chair of each Committee of the Board is responsible for guiding the Committee in the fulfillment of its duties and responsibilities and managing the process through which the Committee carries out such duties and responsibilities. In fulfilling such role, each Chair of a Committee is charged with:

---

27

	•	overseeing the mandate, structure, composition, membership and activities delegated to the Committee;
	•	reporting the results of each Committee meeting at the next Board meeting and ensuring that Committee minutes are available to each Director;
	•	setting the agenda for Committee meetings in consultation with the Board, other Committee members, the CEO and the appropriate members of management;
	•	communicating with appropriate members of management in fulfilling the mandate of the Committee;
	•	ensuring that Committee members are receiving written information and are exposed to presentations from management consistent with fulfilling the mandate of the Committee;
	•	allotting sufficient time during Committee meetings to fully discuss agenda items of relevance and importance to directors; and
	•	retaining expert consultants on behalf of the Committee, as needed.

The Board considers the employment agreement with the CEO sufficiently sets forth the role and responsibilities of the CEO. The CEO is responsible for the overall leadership and management of the Company in accordance with the strategies, policies and mandates established by the Board from time to time, and reports to the Board regarding the management and operations of the Company, including any progress and deviations from any strategic plans set by the Board. In addition, the Board regularly discusses corporate and individual objectives for the CEO to achieve, including the CEO’s role in keeping with industry practices and corporate governance standards.

Orientation and Continuing Education

While the Company does not have formal orientation and training programs, new Board members are provided with:

1.	access to recent, publicly filed documents of the Company, technical reports and the Company's internal financial information;
2.	access to management and technical experts and consultants;
3.	access to the Company’s policies and procedures including the Nautilus Charter (as described below); and
4.	an update by management and other directors on the strategic direction and progress of the company.

Board members are encouraged to communicate with management, auditors and technical consultants; to keep themselves current with industry trends and developments and changes in legislation with management's assistance; and to attend related industry seminars and visit the Company's operations. Board members have full access to the Company's records.

Management provide information and education sessions to the Board and its committees on a continuing basis as necessary to keep the Directors up-to-date with the Company, its business and the environment in which it operates as well as with developments in the responsibilities of Directors, corporate governance, ethics and compliance.

Presentations are made to the Board from time to time to educate and keep them informed of changes within the Company and of regulatory and industry requirements and standards.

---

28

Ethical Business Conduct

The Board views good corporate governance as an integral component to the success of the Company and to meet responsibilities to shareholders.

The Board has adopted a Charter (the "Charter"), which sets forth the Company’s mission, objectives and values. The Board has instructed its management and employees to abide by the Charter and to bring any breaches of the Charter to the attention of the Board or management. The Company administers regular training to its employees in relation to the Charter. No material change reports have been filed by the Company since the beginning of the Company's most recently completed financial year pertaining to any conduct of a director or executive officer that constitutes a departure from the Charter.

The Board requires that directors and executive officers who have an interest in a transaction or agreement with the Company promptly disclose that interest at any meeting of the Board at which the transaction or agreement will be discussed and abstain from discussions and voting in respect to same if the interest is material or if required to do so by corporate or securities law.

A copy of the Charter was filed and is available on SEDAR (www.sedar.com) as of May 30, 2013.

Nomination of Directors

The Board and the GN&R Committee have the responsibility for identifying potential Board candidates. Each of the members of the GN&R Committee is independent of the Company.

The Board and the GN&R Committee assess potential Board candidates to fill perceived needs on the Board for required skills, expertise, independence and other factors. Members of the Board and representatives of the resources industry are consulted for possible candidates. The Board has adopted terms of reference that set forth the responsibilities, powers and operations of the GN&R Committee.

The terms of reference do not specify a formal process for the identification of new candidates, as changes to the Board are made infrequently. It does however, provide that it is the GN&R Committee’s duty to, among other things:

	(a)	lead the process for Board appointments and make recommendations to the Board;
	(b)	evaluate the structure, size and composition (including the balance of skills, knowledge and experience) of the Board;
	(c)	before an appointment is made, evaluate the balance of skills, knowledge and experience on the Board and, in the light of this evaluation, prepare a description of the role and capabilities required for a particular appointment;
	(d)	be responsible for identifying and nominating for the approval of the Board, candidates to fill Board vacancies as and when they arise; and
	(e)	review annually the time required from a non-executive director.

Compensation of Directors and the CEO

The GN&R Committee, which is composed entirely of independent directors, has the primary responsibility for determining the compensation for the Company’s directors and officers.

On June 26, 2013, the Board approved the following fee structure for the performance of non-executive directors of the Company.

---

29

The first payment to non-executive directors of the Company pursuant to the new fee structure was in 2014.

Non-executive directors are also able to participate in the Company’s Option Plan and Share Loan Plan. All remuneration for senior executives is recommended by the GN&R Committee and approved by the full Board. To determine compensation payable, the GN&R Committee reviews compensation paid for senior management of companies of similar size and stage of development in the mineral exploration and mining industries and determines an appropriate compensation reflecting the need to provide incentive and compensation for the time and effort expended by senior management while taking into account the financial and other resources of the Company.

In setting the compensation, the GN&R Committee annually reviews the performance of the CEO and other members of senior management in light of the Company's objectives and considers other factors that may have impacted the success of the Company in achieving its objectives.

The Board has adopted a written charter that sets forth the responsibilities, powers and operations of the GN&R Committee.

Other Board Committees

As the directors are actively involved in the operations of the Company and the size of the Company's operations does not warrant a larger board of directors, the Board has determined that committees other than the Audit Committee and the GN&R Committee are not necessary at this stage of the Company's development.

Assessments

On December 6, 2013, the Board approved the implementation of an annual survey/questionnaire method of evaluating and assessing the performance of the Board, its committees and each individual director as to its, his or her effectiveness and contribution in accordance with NI 58-201 Corporate Governance Guidelines.

A survey/questionnaire was completed by each of the Directors in respect of the 2014 financial year asking for quantitative ratings in the areas of Board responsibility, operations and effectiveness and for the Directors to make comments or suggestions about the Board responsibilities, the way the Board operates or things that the Board could do to enhance its effectiveness.

The survey/questionnaire also asked for quantitative ratings with respect to the performance of the Company’s Audit Committee and GN&R Committee and for comments or suggestions about the Committees’ responsibilities, the way the Committees operate or things that the Committees could do to enhance their effectiveness.

Finally, the survey/questionnaire contained a self-evaluation survey intended to provide a self-assessment of each of the current Board members and their comments with respect to their individual circumstances, and ability to contribute to the Company.

The results of the survey have been reviewed by the GN&R Committee who shall prepare a report containing any recommendations necessary in light of the survey results, for consideration by the Board.

---

30

Director Term Limits and Other Mechanisms of Board Renewal

The Company has not adopted term limits for its directors or other mechanisms for Board renewal. The GN&R Committee, on an annual basis, reviews the size, composition, mandate and performance of the Board and the various committees of the Board, and makes recommendations for appointment, removal of directors or other adjustments as appropriate.

The GN&R Committee has considered whether to propose that the Board adopt term limits for directors and has determined not to do so after consideration of a number of factors, including the significant advantages associated with the continued involvement of long-serving directors who have gained a deep understanding of the Company's projects, operations and objectives during their tenure; the experience, corporate memory and perspective of such directors; the annual review processes performed by the Board and its committees; the professional experience, areas of expertise and personal character of members of the Board; and the current needs and objectives of the Corporation. The Company believes that director term limits are an arbitrary mechanism for removing directors, and can result in highly qualified and experienced directors forced out solely based on the length of their service.

The Company has adopted a Majority Voting Policy in accordance with TSX requirements (see "Election of Directors – Majority Voting Policy").

Policies Regarding the Representation of Women on the Board

The Company has not adopted a written policy relating to the identification and nomination of women directors, as it believes that the interests of the Company would be better served by ensuring that new directors are identified and selected from the widest possible group of potential candidates. A formalized written diversity policy governing the identification and selection of potential candidates may unduly restrict the Board's ability to select the best candidate.

Consideration of the Representation of Women in the Director Identification and Selection Process

The GN&R Committee, under the supervision of the Board is responsible for establishing qualifications and skills necessary for an effective Board and for various committees of the Board, including but not limited to factors such as professional experience, particular areas of expertise, personal character, potential conflicts of interest, diversity and other commitments.

Although diversity (which includes diversity in gender, age, ethnicity and cultural background) is one of the factors considered in the Company's director identification and selection process, other factors, being professional experience, particular areas of expertise and personal character, are given greater consideration in the director identification and selection process. In light of the Company's view that candidates should be selected from the widest possible group of qualified individuals, the level of representation of women may be considered but is not a major factor in identifying and nominating candidates for election or re-election to the Board.

Cynthia Thomas, a female director of the Company, is a member of the GN&R Committee and as such plays an active role in considering gender diversity factors along with the other members of the GN&R Committee. Ms. Thomas is also a member of the Audit Committee. She has served on the Board since June 2010.

Consideration Given to the Representation of Women in Executive Officer Appointments

The Company's views with respect to the representation of women in executive officer positions when making executive officer appointments is the same as its views on the representation of women in the director identification and selection process. In making decisions as to executive officer appointments, the Company believes that decisions to hire or promote an individual should be based on that person's professional experience, particular areas of expertise, character and merit. Accordingly, the level of representation of women in executive officer positions may be considered but is not a major factor when making executive officer appointments.

---

31

The Company's Chief Financial Officer, Shontel Norgate, and its General Counsel and Company Secretary, Karen Hauff, are women.

Issuer's Targets Regarding the Representation of Women on the Board and in Executive Officer Positions

The Company has not adopted a target regarding women on the Board or in executive officer positions for the reasons set out above and the Company believes that adopting such a target may unduly restrict its ability to select, hire or promote the best candidate for the position in question.

Number of Women on the Board and in Executive Officer Positions

The Company currently has one female Board member representing approximately 17% of the Company's directors. The Company currently has two female executive officers representing approximately 33% of the Company's executive officers.

AUDIT COMMITTEE INFORMATION

Information regarding the Company's Audit Committee as required by Form 52-110F1 of NI 52-110, including a copy of the Audit Committee's terms of reference, is contained in Schedule A of the Company's Annual Information Form dated March 30, 2015 (the "AIF"). A copy of the AIF is available under the Company's profile on SEDAR at www.sedar.com. Upon request, the Company will promptly provide a copy of the AIF free of charge to a shareholder.

ADDITIONAL INFORMATION

Additional information relating to the Company is on SEDAR at www.sedar.com. Shareholders may contact the Company at investor@nautilusminerals.com to request copies of the Company's financial statements and MD&A.

Financial information is provided in the Company's comparative financial statements and MD&A for its most recently completed financial year which are filed on SEDAR.

OTHER MATTERS

Management of the Company is not aware of any other matter to come before the Meeting other than as set forth in the Notice of Meeting. If any other matter properly comes before the Meeting, it is the intention of the persons named in the enclosed form of proxy to vote the shares represented thereby in accordance with their best judgment on such matter.

DATED this 7th day of May 2015.

APPROVED BY THE BOARD OF DIRECTORS

	"Michael Johnston"
	Michael Johnston, Chief Executive Officer

---

SCHEDULE A

BOARD MANDATE

LIST OF MATTERS IN RELATION TO ALL GROUP COMPANIES RESERVED FOR DECISION BY
THE FULL BOARD OF DIRECTORS

1.	Strategy And Management
1.1	Participation with management in developing the group's long term objectives and commercial strategy, and approval, monitoring and assessing of the same.
1.2	To the extent feasible, satisfying itself: (i) as to the integrity of the Chief Executive Officer and other executive officers, and (ii) that the CEO and other executive officers create a culture of integrity throughout the Company.
1.3	Approval of the annual operating and capital expenditure budgets and any material changes to them.
1.4	Oversight of the group's operations ensuring:

	(a)	competent and prudent management
	(b)	sound planning
	(c)	an adequate system of internal control
	(d)	adequate accounting and other records
	(e)	compliance with statutory and regulatory obligations.

1.5	Any decision to cease to operate all or any material part of the group's business.
1.6	Reviewing and approving any proposed changes to the Company’s Articles and Notice of Articles.
1.7	Identify business risks; determine, with input from management and committees, what risks are acceptable; and ensure that systems and actions are in place to monitor and manage risk.
1.8	Meet at least once annually to: plan for the future growth of the Company; identify the principal risks of the Company’s business; review existing systems and, where applicable, ensure implementation of appropriate systems to manage such risks; monitor senior management; and ensure timely disclosure of material transactions through the issuance of news releases and financial statements.
1.9	Meet as necessary depending upon the state of the Company’s affairs and in light of opportunities or risks which the Company faces. When necessary and appropriate, issues may be approved and adopted by way of written resolutions.
1.10	Meetings may either be in person, by teleconference, or by videoconference, as determined by the Chairman.

---

2

2.	Structure and Capital
2.1	Changes relating to the group's capital structure including reduction of capital, share issues (except under employee share plans) and share buy backs.
2.2	Major changes to the group's corporate structure.
2.3	Changes to the group's management and control structure.
2.4	Any changes to the Company's listing or its status as a reporting issuer.
2.5	Responsibility for any take-over bid, proposed merger, amalgamation, arrangement, significant acquisition, disposition of all or substantially all of the assets or any similar form of business combination, including the approval of any agreements, circulars or other documents in connection therewith.
3.	Financial Reporting and Controls
3.1	Approval of interim and annual financial statements and management's discussion and analysis ("MD&A"), subject to any delegation to the audit committee of approval of interim financial statements and MD&A.
3.2	Approval of the dividend policy.
3.3	Declaration of dividends.
3.4	Approval of any significant changes in accounting policies or practices.
3.5	Approval of treasury policies including foreign currency exposure and the use of financial derivatives.
4.	Internal Controls
4.1	Ensuring maintenance of a sound system of internal control over financial reporting and risk management including:

	(a)	receiving reports on, and reviewing the effectiveness of, and, with management, giving effect to the group's internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements; and
	(b)	undertaking an annual assessment of these processes.

5.	Contracts
5.1	Contracts which are material strategically or by reason of size, entered into by the Company or any subsidiary in the ordinary course of business, for example bank borrowings and acquisitions or disposals of fixed assets.
5.2	Contracts of the Company or any subsidiary not in the ordinary course of business, for example loans and repayments; foreign currency transactions; major acquisitions or disposals.

---

3

5.3	Material investments.
5.4	Material strategic alliances, joint ventures, partnership or profit sharing arrangements.
5.5	Contracts or arrangements with any shareholder, director, or any company or entity with which such shareholder or director is associated.
6.	Communication
6.1	Approval of resolutions and corresponding documentation to be put forward to shareholders at a general meeting.
6.2	Approval of all circulars and prospectuses.
6.3	Approval of press releases concerning matters decided or approved by the board.
7.	Board Membership And Other Appointments
7.1	Receive recommendations from the nomination committee and make determinations with respect to:

	(a)	changes to the structure, size and composition of the board;
	(b)	ensuring adequate succession planning for the board and senior management;
	(c)	appointments to the Board;
	(d)	selection of the chairman of the board and the chief executive and appointment of other officers;
	(e)	if at any time the chairman of the board is not independent of the Company, appointment of the lead independent director;
	(f)	membership and chairmanship of board committees, which appointments shall be made at the meeting of directors immediately following the AGM each year;
	(g)	continuation in office of directors at the end of their term of office when they are due to be re-elected by shareholders at the AGM and otherwise as appropriate;
	(h)	continuation in office of any director at any time, including the suspension or termination of service of an executive director as an employee of the Company, subject to applicable law and their service contract;
	(i)	appointments to boards of subsidiaries; and
	(j)	any change to a Director's terms of employment.

7.2	Receive recommendations from the audit committee and make determinations with respect to remuneration of auditors and appointment, reappointment or removal of the external auditor to be put to shareholders for approval.

---

4

8.	Remuneration
8.1	Receiving recommendations from the remuneration committee and making determinations with respect to:

	(a)	the remuneration policy for the directors, company secretary and other senior executives;
	(b)	the remuneration of the non-executive directors, subject to shareholder approval as applicable; and
	(c)	the introduction of new share incentive plans or major changes to existing plans, to be put to shareholders for approval.

9.	Delegation Of Authority
9.1	Determining the division of responsibilities between the chairman, the chief executive and other executive directors.
9.2	Approval of terms of reference of board committees.
9.3	Receiving reports from board committees on their activities.
9.4	Forming ad hoc committees of independent directors to consider and make recommendations to the full Board of Directors with respect to any matter identified in sections 2 or 5 where: (i) good corporate governance practices or industry norms dictate that it is appropriate to do so; or (ii) upon the recommendation of the Governance, Nomination and Remuneration Committee.
10.	Corporate Governance Matters
10.1	Receiving recommendations from the Governance, Nomination and Remuneration Committee and making determinations with respect to:

	(a)	Review and assessment of its own performance, that of its committees and individual directors.
	(b)	The independence of directors.
	(c)	The balance of interests between shareholders, employees, customers and the community.
	(d)	The group's overall corporate governance arrangements.

11.	Policies
11.1	Approval of policies and certain procedures, including:

	(a)	Charter;
	(b)	Health and safety policy;
	(c)	Environmental policy;
	(d)	Community policy;

---

5

	(e)	Whistleblower Procedure;
	(f)	Disclosure and Insider Trading procedure; and
	(g)	Charitable donations procedure.

12.	Other
12.1	The making of any cash political donations.
12.2	Approval of the appointment of the group's principal professional advisers.
12.3	Prosecution, defence or settlement of litigation.
12.4	Approval of the overall levels of insurance for the group including Directors' & Officers' liability insurance and indemnification of directors.
12.5	Major changes to the rules of the group's pension scheme, or changes of trustees or, when subject to the approval of the company, changes in the fund management arrangements.
12.6	Any changes to this Board Mandate.

---

---

 

CONSENT OF INDEPENDENT AUDITOR

We hereby consent to the incorporation by reference in this registration statement on Form F-7 of Nautilus Minerals Inc. (“the Company”) of our report dated March 30, 2015, relating to the consolidated financial statements of the Company as at December 31, 2014 and December 31, 2013 and for the years then ended.

We also consent to the reference to us under the heading “Auditors, Transfer Agent and Registrar” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

Chartered Professional Accountants
Vancouver, British Columbia
February 10, 2016

---

---

February 10, 2016

 

CONSENT OF THORSTEINSSONS LLP

We have acted as special Canadian tax counsel to Nautilus Minerals Inc. (the “Company”) in connection with the rights offering by the Company described in the registration statement on Form F-7 (the “Registration Statement”) filed with the Securities and Exchange Commission under the United States Securities Act of 1933, as amended. We hereby consent to the references to our name and the inclusion of our opinion in the Registration Statement.

We also consent to the reference to us under the heading “Interest of Experts” in such Registration Statement.

 

Yours truly,

THORSTEINSSONS LLP

Per:  /s/ Richard B. Wong
              Richard B. Wong

 

 

---

---

CONSENT OF IAN LIPTON

I am a Principal Geologist with AMC Consultants Pty. Ltd., having been involved in preparing a report dated March 23, 2012 entitled “Mineral Resource Estimate, Solwara Project, Bismarck Sea, PNG” (the “Solwara 1 and 12 Report”) for Nautilus Minerals Inc. (the “Company”) as described in the Annual Information Form (“AIF”) of the Company dated March 30, 2015.

I refer to the registration statement on Form F-7 (the “Registration Statement”) relating to the rights offering by the Company, filed with the Securities and Exchange Commission under the United States Securities Act of 1933, as amended. I hereby consent to the use of the Solwara 1 and 12 Report which is incorporated in the Registration Statement by reference to the AIF.

I also consent to the reference to me under the heading “Interest of Experts” in such Registration Statement by reference to the AIF.

---

---

MINERALURGY PTY. LTD.

	A. C.N. 094 603 166
	A. B.N.58 094 603 166

Consultants to the mining, metallurgical and process industries

Tel +61 – (0)7 3870 7024

Fax +61 -(0)7 3870 7606

PO Box 818

Toowong

Queensland 4066

AUSTRALIA

CONSENT OF PETER MUNRO

I am a Senior Principal Consulting Engineer with Mineralurgy Pty. Ltd., having been involved in preparing a report dated March 23, 2012 entitled “Mineral Resource Estimate, Solwara Project, Bismarck Sea, PNG” (the “Solwara 1 and 12 Report”) for Nautilus Minerals Inc. (the “Company”) as described in the Annual Information Form (“AIF”) of the Company dated March 30, 2015.

I refer to the registration statement on Form F-7 (the “Registration Statement”) relating to the rights offering by the Company, filed with the Securities and Exchange Commission under the United States Securities Act of 1933, as amended. I hereby consent to the use of the Solwara 1 and 12 Report which is incorporated in the Registration Statement by reference to the AIF.

I also consent to the reference to me under the heading “Interest of Experts” in such Registration Statement which is incorporated by reference to the AIF.

---

---

CONSENT OF PHIL JANKOWSKI

I am an Associate Consultant to SRK Consulting (Australasia) Pty. Ltd., having been involved in preparing a report dated March 23, 2012 entitled “Mineral Resource Estimate, Solwara Project, Bismarck Sea, PNG” (the “Solwara 1 and 12 Report”) for Nautilus Minerals Inc. (the “Company”) as described in the Annual Information Form (“AIF”) of the Company dated March 30, 2015.

I refer to the registration statement on Form F-7 (the “Registration Statement”) relating to the rights offering by the Company, filed with the Securities and Exchange Commission under the United States Securities Act of 1933, as amended. I hereby consent to the use of the Solwara 1 and 12 Report which is incorporated in the Registration Statement by reference to the AIF.

I also consent to the reference to me under the heading “Interest of Experts” in such Registration Statement which is incorporated by reference to the AIF.

---

---

CONSENT OF JAMES JONATHAN LOWE

I am Vice President of Strategic Development & Exploration at Nautilus Minerals Inc. (the “Company”), having been involved in preparing a report dated March 23, 2012 entitled “Mineral Resource Estimate, Solwara Project, Bismarck Sea, PNG” (the “Solwara 1 and 12 Report”) for the Company as described in the Annual Information Form (“AIF”) of the Company dated March 30, 2015.

I refer to the registration statement on Form F-7 (the “Registration Statement”) relating to the rights offering by the Company, filed with the Securities and Exchange Commission under the United States Securities Act of 1933, as amended. I hereby consent to the use of the Solwara 1 and 12 Report which is incorporated in the Registration Statement by reference to the AIF.

I also consent to the reference to me under the heading “Interest of Experts” in such Registration Statement which is incorporated by reference to the AIF.

---

---

CONSENT OF MATTHEW NIMMO

I am an independent Consulting Geologist, having been involved in preparing a report dated March 20, 2013 entitled "Updated NI 43-101 Technical Report, Clarion-Clipperton Zone Project, Pacific Ocean" (the “Updated CCZ Report”) for Nautilus Minerals Inc. (the “Company”) as described in the Annual Information Form (“AIF”) of the Company dated March 30, 2015.

I refer to the registration statement on Form F-7 (the “Registration Statement”) relating to the rights offering by the Company, filed with the Securities and Exchange Commission under the United States Securities Act of 1933, as amended. I hereby consent to the use of the Updated CCZ Report which is incorporated in the Registration Statement by reference to the AIF.

I also consent to the reference to me under the heading “Interest of Experts” in such Registration Statement which is incorporated by reference to the AIF.

---

---

CONSENT OF CHARLES MORGAN

I am a Senior Environmental Planner with Planning Solutions Inc., having been involved in preparing a report dated March 20, 2013 entitled "Updated NI 43-101 Technical Report, Clarion-Clipperton Zone Project, Pacific Ocean" (the “Updated CCZ Report”) for Nautilus Minerals Inc. (the “Company”) as described in the Annual Information Form (“AIF”) of the Company dated March 30, 2015.

I refer to the registration statement on Form F-7 (the “Registration Statement”) relating to the rights offering by the Company, filed with the Securities and Exchange Commission under the United States Securities Act of 1933, as amended. I hereby consent to the use of the Updated CCZ Report which is incorporated in the Registration Statement by reference to the AIF.

I also consent to the reference to me under the heading “Interest of Experts” in such Registration Statement which is incorporated by reference to the AIF.

---

---

CONSENT OF DAVEY BANNING

I am an independent Consulting Geologist, having been involved in preparing a report dated March 20, 2013 entitled "Updated NI 43-101 Technical Report, Clarion-Clipperton Zone Project, Pacific Ocean" (the “Updated CCZ Report”) for Nautilus Minerals Inc. (the “Company”) as described in the Annual Information Form (“AIF”) of the Company dated March 30, 2015.

I refer to the registration statement on Form F-7 (the “Registration Statement”) relating to the rights offering by the Company, filed with the Securities and Exchange Commission under the United States Securities Act of 1933, as amended. I hereby consent to the use of the Updated CCZ Report which is incorporated in the Registration Statement by reference to the AIF.

I also consent to the reference to me under the heading “Interest of Experts” in such Registration Statement which is incorporated by reference to the AIF.

---