A pioneering deep-sea mining operation is a big step closer to reality after the Papua New Guinea (PNG) government granted a mining lease to Nautilus Minerals (NUS-T, NUS-L) for its Solwara 1 copper-gold project in the Bismarck Sea.
The company aims to mine high-grade copper and gold from the seafloor at a depth of about 1.5 km, with everything but the financing now in place to move ahead with the project.
The PNG government has already issued an environmental permit and the company released an independent definition and cost study last June. That study projected that mining could start within 30 months of Nautilus securing funding, expected through a joint venture.
With roughly US$180 million in cash and equivalents as of September 2010, the company needs to raise roughly another US$200 million to cover the costs outlined in the study. Nautilus has foregone a full feasibility study in favour of pushing ahead with the project because it is too unusual to bother with detailed predictions.
It plans to mine the mineralized material that sits directly on the seafloor with an assortment of robots, lift systems, and a processing vessel that will dewater the material before transferring it to shore by barge.
Through a drill program only 8 to 10 metres deep, Nautilus established an indicated resource of 870,000 tonnes grading 6.8% copper, 4.8 grams gold per tonne and 23 grams silver per tonne, and an inferred resource of 1.3 million tonnes of 7.5% copper, 7.2 grams gold and 37 grams silver.
Nautilus has recently released several results from a US$7-million drill program pushing as deep as 40 metres. Results have included 7.6 metres of 12% copper, 19.2 metres carrying 9.4% copper and 8.2 metres averaging 14.1% copper. Several shorter drill intercepts exceeded 20% copper.
Nautilus' share price climbed 68¢ to a 52-week closing high of $2.88 in two days of trading after the mining lease news. The company has a 52-week low of $1.31 and 155.5 million shares outstanding.
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