FREE ARTICLE PREVIEW: You are enjoying a free sample of exclusive
subscriber content. There is a limit of three free articles per week.

DAILY NEWS Apr 24, 2014 6:40 PM - 0 comments

Nautilus settles dispute with PNG government

TEXT SIZE bigger text smaller text

VANCOUVER — Shares of explorer Nautilus Minerals (TSX: NUS; US-OTC: NUSMF) were on the rise following an agreement with the Papua New Guinean (PNG) government that could set the development stage at the company’s Solwara 1 undersea polymetallic project.

Nautilus is planning on extracting high-grade seafloor massive-sulphide systems around 30 km from PNG's coastline and within its territorial waters. In March 2011 the independent state signed an option to acquire a 30% stake in Solwara 1 in exchange for covering 30% of the project’s costs up to that date as well as 30% of any future costs.

A dispute arose in mid-2012 when Nautilus claimed it had yet to receive any funds from the PNG government, which drove it to start a resolution process that concluded on Oct. 3, 2013, when an arbitrator ordered the state to comply with its obligations under the project agreement. The ruling dictated that the PNG authorities issue payment by Oct. 23, 2013, with the company estimating total amount payable at roughly US$118 million.

Nautilus reported it did not receive the requisite funds by the deadline, and opted to terminate its agreement with PNG in accordance with the option conditions. It took an additional two months, but on April 24 the company announced it had independently resolved the issue and inked a re-structured agreement with the government that should enable "[Solwara 1] to move forward toward production with the full support of the state."

Under the re-designed option, PNG will take an initial 15% stake in the project. The government can opt to take up to an additional 15% interest within one year of signing, and will pay Nautilus a non-refundable deposit for its initial 15% interest of US$7 million. The agreement is also conditional on the government securing its 15% share of the requisite development capital — which is pegged at US$113 million — by the end of July.

Meanwhile, Nautilus had been working on the development of its seafloor production tools (SPTs), which include a bulk cutter, auxiliary cutter, and collecting machine. The excavation and collection process is being split into three stages, which will each be carried out by a different vehicle.

The auxiliary cutter is designated as a "pioneering machine," which prepares the sea bed for the more powerful bulk cutter. The two machines gather excavated material, while the collecting machine will harvest the cut material by drawing it in as seawater slurry with internal pumps and pushing it through a flexible pipe to the subsea pump and on to the production ship via a riser system.

Solwara 1 is situated roughly 1,600 metres below the Bismarck Sea and hosts indicated resources of 1 million tonnes grading 7.2% copper, 5 grams gold per tonne, 23 grams silver and 0.4% zinc. Inferred resources tack on 1.5 million tonnes of 8.1% copper, 6.4 grams gold, 34 grams silver and 0.9% zinc.

"This step represents a major vote of confidence in Nautilus and the Solwara 1," noted interim president CEO Mike Johnston in the release. "[We're] now focusing on securing a suitable vessel arrangement and continuing discussions with potential vessel partners while also undertaking a tender process with shipyards experienced in building offshore construction vessels. [We] intend to have a vessel solution in place before the end of the year."

Shares of Nautilus jumped 70%, or 16.5¢, following the news before closing near a 52-week high at 40¢ at the time of writing on 5.4 million share trade volumes. The company maintains 441 million shares outstanding for a $176.3 million press-time market capitalization. The company reported working capital of $36 million at the end of 2013 after closing a $40 million rights offering in mid-June wherein it issued 200 million shares at a price of 20¢ per share.

© 1915 - 2016 The Northern Miner. All Rights Reserved.

Related News
Nautilus targets 2018 for undersea mining
Nautilus settles dispute with PNG government
TSX moves up, April 21-25
Related Press Releases
Nautilus Minerals Files Preliminary Prospectus for C$103M Rights Offering
Nautilus Completes Assembly of the SSLP and Commences FAT
Nautilus Takes Delivery of Seafloor Production Tools


Nautilus is planning on extracting high-grade seafloor massive-sulphide systems around 30 km from PNG's coastline. Credit: Nautilus Minerals
Nautilus is planning on extracting high-grade seafloor ...

Companies in This Story

Nautilus Minerals Inc

Properties in This Story

Solwara 1 Project

Monitor These Topics
More Topics »

Horizontal ruler
Horizontal Ruler

Post A Comment

Note: By submitting your comments you acknowledge that Northern Miner has the right to reproduce, broadcast and publicize those comments or any part thereof in any manner whatsoever. Please note that due to the volume of e-mails we receive, not all comments will be published and those that are published will not be edited. However, all will be carefully read, considered and appreciated.

Your Name (this will appear with your post) *

Email Address (will not be published) *

Comments *

* mandatory fields