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
Nautilus Minerals has arranged bridge financing of about $7-million from Deep Sea Mining Finance to assist the company's immediate working capital requirements.
The loans will also enable the Canadian company to make the payments required to continue with the development of its novel seafloor production system, which will be used at the Solwara 1 copper/gold project.
The loans bear interest at 8%/y, payable bi-annually in arrears, with a one-year maturity date.
The bridge loans are expected to form part of a larger, secured and structured credit facility of up to $34-million, to be provided by the lender for the company, on terms currently being negotiated between the company and Deep Sea Mining Finance.
Nautilus has also announced that it has entered into a funding mandate agreement with M Horn & Co, which has been tasked with securing the remaining $350-million required to complete development of Solwara 1.
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.