Name of the Project
Solwara 1 seafloor copper/gold project.

Location
Bismarck Sea at 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.

Nautilus has an 85% shareholding and Eda Kopa 15%.

Project Description
Nautilus Minerals is pioneering the concept of mining the ocean bed for copper, gold, zinc and silver. The company’s objective is to develop the world's first commercial high-grade seafloor copper/gold mine and launch the seafloor resource production industry.

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.

A production support vessel (PSV) will be used as the base for seafloor operations planned at the Solwara 1 project site.

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

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
Not stated.

Value
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
Production is expected in the first quarter of 2019.

Latest Developments
Testing the fleet of underwater machines that Nautilus Minerals will use to mine the Solwara 1 gold/copper project, has, so far, delivered results meeting or exceeding design parameters, the company has reported.

Nautilus completed submerged trials of the collecting machine and auxiliary cutter late last year.

To date, the bulk cutter has completed commissioning of the power and control system, on-shore and submerged functions testing and submerged endurance trials. The remaining trials will focus on overall cutting performance – a key criteria for this machine.

According to Nautilus, an ongoing analysis of the results to date indicates that the seafloor production tools can perform to design specifications, with the machine components all functioning as designed in submerged conditions.

The cutting performance of the auxiliary cutter has been particularly positive, the company has said, having cut about 770 t of material during trials. The Nautilus site team has commented that the material appears at least three times harder than the mineralised material at Solwara 1 – even after allowing for the hyperbaric effect on material located at seafloor depths of the Solwara 1 project, which are far greater than the depths at which the trials have previously been conducted.

The company intends to provide a comprehensive analysis once all testwork and data analysis is complete.

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?
The project is facing a 12-month delay to the original schedule.

Contact Details for Project Information
Nautilus Minerals investor relations and communications VP Joe Dowling, tel +61 7 3318 5544 or email jjd@nautilusminerals.com.