Name and Location
Solwara 1 seafloor copper/gold project, Papua New Guinea (PNG).

Client
Prospective marine miner Nautilus Minerals formed a joint venture (JV) company with PNG’s nominee, Eda Kopa (Solwara), in December 2014 to mine high-grade polymetallic seafloor massive sulphide (SMS) 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.

Project Description
Nautilus Minerals is pioneering the concept of mining the ocean bed for copper, gold, zinc and silver.

The company is exploring for high-grade polymetallic SMS deposits at 1 600 m below the surface of the Bismarck Sea, off the coast of PNG, within the Western Pacific Ocean’s Rim of Fire. The operation aims to produce ore at a rate of more than 1.3-million tons a year, with the capacity to ultimately ramp up to 1.8-million tons a year of dewatered ore, which will be delivered to the Port of Rabaul.

As of November 25, 2011, the Solwara 1 project had an indicated mineral resource of one-million tons, grading 7.2% of copper, 5 g/t of gold, 23 g/t of silver and 0.4% of zinc. Its inferred resource comprised 1.54-million tons, grading 8.1% of copper, 6.4 g/t of gold, 34 g/t of silver and 0.9% of zinc.

Net Present Value/Internal Rate of Return
Not stated.

Value
The total capital cost for the system to deliver dewatered ore on board barges to the Port of Rabaul, including a 17.5% contingency, is estimated at $383-million.

The operating cost, excluding contingency, is estimated at $237 000/d, or about $64/t of mined ore, transported to the port based on a production rate of 1.35-million tons a year. With a 10% contingency, these operating costs become $261 000/d, or about $70/t.

Duration
First production from Solwara is expected in 2016.

Latest Developments
Nautilus has signed agreements with engineering firm United Engineering Services (UES) to provide support services associated with wet-testing the company’s seafloor production tools (SPTs) and storing the equipment as it gets delivered from various suppliers before being integrated onto the company’s production support vessel (PSV).

Three STPs are being tested first. The SPTs are due for delivery from the Soil Machine Dynamics facility, in Newcastle upon Tyne, UK, early this year.

Each machine is undergoing rigorous commissioning and factory acceptance testing that has been conducted in dry conditions on land.

Once delivered, the SPTs will also undergo extensive wet-testing at Duqm port, in Oman, which is designed to provide a submerged demonstration of the fully assembled SPTs.

On completion of the wet-testing, the SPTs will be stored at UES facilities in Duqm for preservation and maintenance until integration on the PSV, which is expected to occur in 2017.

Nautilus CEO Mike Johnston has said the company is looking forward to the next phase of development to wet-test its equipment as the company works towards getting seafloor operations under way in the first quarter of 2018.

Key Contracts and Suppliers
Soil Machine Dynamics (construction and supply of two remote-operated SPTs); Technip (engineering, procurement and construction management services for the RALS components of the deep-water Solwara 1 mining and extraction system, comprising subsea pumps, a riser pipe, a riser handling system and associated deck equipment); North Sea Shipping Holding (supply of a specialist marine support vessel); Harren & Partner (supply of a platform supply vessel); GE Oil & Gas (supply of a subsea slurry lift and pump); SRK Consulting, Ausenco, Clough Engineering and Mineralurgy (offshore production system definition and cost study); Golder Associates (mineral resource estimate); Parsons Brinckerhoff (dewatering study); and Pells Sullivan Meynink (geotechnical laboratory testing programme and on-board ship laboratory, advice on rock mass and material parameters, as well as slope-stability analysis for mining).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Nautilus Minerals investor relations and communications VP Joe Dowling, tel +61 7 3318 5544 or email jjd@nautilusminerals.com.
Soil Machine Dynamics, tel +44 191 234 2222, fax +44 191 234 0444 or email info@smd.co.uk.
Technip, tel +33 1 47 78 24 00.
North Sea Shipping Holding, tel +47 55 08 88 00.
Harren & Partner, tel +49 421 46 86 0 or fax +49 421 46 86 586.
GE Oil & Gas, tel +1 203 373 2211.
SRK Consulting, tel +1 604 681 4196, fax +1 604 687 5532 or email info@srk.com.
Ausenco, tel +675 3256 033 or fax +675 3250 091.
Clough Engineering, tel +61 8 9281 9281, fax +61 8 9281 9943 or email clough@clough.com.au.
Mineralurgy, tel +61 7 3381 9295.