VANCOUVER (miningweekly.com) – Toronto-based Nautilus Minerals has published a new preliminary economic assessment (PEA) for its Solwara 1 seafloor copper/gold project, located in the Bismarck Sea offshore Papua New Guinea (PNG).
The Toronto-based prospective marine miner reported an undiscounted after-tax net cash flow of $179-million and a discounted (15%) net cash flow of $56-million a year. The internal rate of return for the base case is 28%, but it rises to 40% using average forward curve metal prices for copper and gold, the company advised earlier this week.
Prepared by AMC Consultants, the PEA models first production starting in the third quarter of 2019, and also shows that the project has a high fixed cost component at about 52%, which is mainly tied to the production support vessel. Nautilus advised that the project is highly leveraged to metal grade, metal prices, equipment utilisation and production rates.
Following a 15-month ramp-up period to the base-case steady state of 3 200 t/d, Nautilus expects to produce payable metal of about 20 000 t of copper and 29 000 oz of gold per quarter, at C1 costs of $1.36/lb copper for the entire deposit, or $0.80/lb copper at the projected steady state.
"Expected 'steady-state' C1 operating costs of $0.80/lb copper sit comfortably in the lower half of the first quartile of the production curve, and highlight the potentially seriously disruptive nature of seafloor mining to the world's mining industry. These are very competitive capital and operating costs, and have additional room to move," CEO Mike Johnston noted.
However, Nautilus pointed out that the maximum capacity of the production system is designed at about 6 000 t/d. AMC believes that it is realistically possible to achieve a steady-state production rate of 4 500 t/d, which would lower the C1 costs to around $0.63/lb copper, net of by-products, which falls well within the lower half of the first quartile of the world copper production curve.
The PEA was based on updated mineral resource containing 1.03-million tonnes grading 7.2% copper, 5 g/t gold, 23 g/t silver and 0.4% zinc in the indicated category, using a 2.6% copper cutoff. The Solwara 1 and 1 North projects also hold 1.54-million tonnes grading 8.1% copper, 6.4 g/t gold, 34 g/t silver and 0.9% zinc in the inferred category.
Nautilus previously formed a joint venture (JV) company with PNG's nominee, Eda Kopa (Solwara), in December 2014 to mine high-grade polymetallic seafloor massive sulphide deposits. Nautilus formed the JV after receiving $113-million that had been placed into escrow in May 2014, after completing the sale of 15% of its Solwara 1 project to Eda Kopa.
Nautilus has an 85% shareholding and Eda Kopa 15%.
Solwara is fully permitted, however, Nautilus still needs to raise $243-million to meet the expected upfront capital requirement.
Nautilus will make use of a suite of seafloor production tools that has recently completed submerged trials in PNG. Construction of Nautilus' production support vessel had also recently passed the 75% completion mark.
Nautilus is pioneering the undersea mining method, and expects to leverage the seafloor production system's very small environmental footprint, the lack of tailings, and industry leading operating and capital costs to its advantage and lead the world in creating a new industry.