VANCOUVER (miningweekly.com) – Cash-strapped marine mining pioneer Nautilus Minerals has pushed out the start of production from the offshore Papua New Guinea (PNG) Papua New Guinea (PNG)Solwara 1 project by about 12 months from the original schedule, citing a cash crunch.
In providing an update on company activities Friday, CEO Mike Johnston outlined the company’s revised plans, pending the company successfully raising the required capital by June 2017.
The revised work programme entails a more staged approach, moving the Nautilus equipment integration phase of vessel construction out until after the vessel has been delivered by Marine Assets Corporation and Fujian Mawei shipyard, in the fourth quarter of 2018. This will result in a 12-month delay to the original schedule, pushing first production out to the first quarter of 2019.
Johnston advised that the vessel, which had a keel-laying ceremony on June 10, continues under a revised schedule that splits the funding requirement into three or four “more manageable” chunks. Current estimates valued the first chunk of the financing required for the dewatering plant and derrick structure at about $50-million.
Meanwhile, all ‘below-waterline’ production equipment was completed in January and shipped to Oman, where it remains in storage. The company has received additional opportunities for the equipment’s wet testing phase, which management is looking at.
The subsea slurry and lift pump recently completed factory acceptance testing and will be delivered in November by GE Hydril. The riser system, also located in the US, is now complete and in storage.
Johnston said key minor contracts are continuing and all major outstanding contracts will probably be awarded to Chinese companies, including the derrick structure, the dewatering and flotation plants, and flexible hoses.
Work is also progressing on the production simulator and control systems, while the environmental monitoring and management plan, as well as associated baseline data collection activities are ongoing, to provide a detailed base data set with which to compare the impact of marine mining.
Johnston advised that Nautilus had about $51.4-million in cash at the moment. It recently signed a subscription agreement for about $20-million with its largest shareholders, Mawarid Offshore Mining and Metalloinvest Holding. Under the subscription agreement, the shareholders will buy shares on a private placement basis in monthly tranches from December 1, through to November 30, 2017, should Nautilus need capital.
Nautilus will hold an emergency shareholder meeting on October 26 to seek approval of the bridge financing, which will keep the project on track as Nautilus pursues further funding. Johnstone advised that discussions with other interested parties and stakeholders were ongoing.
“We do require more funding to cover the build and delivery of the project, to maintain and grow the project, and to commence deployment and operations at Solwara 1 by the end of Q1, 2019,” he stated.
The company has reduced staff levels by some 60%, maintaining only Johnston as president and CEO, as well as VP for PNG operations Adam Wright, in its executive management structure.
The company is now looking to achieve its next milestones, including completing an environmental monitoring and management plan in the first quarter of 2017, a vessel launch at the end of the second quarter 2017, additional finance by mid-2017, the second dry docking of the production vessel in the third quarter of 2017, and committing to contracts for the dewatering plant and derrick structure by the fourth quarter 2017.
Further, the company is busy modifying its exploration drill rig to significantly reduce costs. It plans to explore initial targets on water by year-end, pending financing.
Meanwhile, Nautilus is maintaining all its PNG political and social licences in good standing, Johnston said.
Nautilus formed a joint venture company with PNG’s nominee, Eda Kopa (Solwara), in December 2014 to mine high-grade polymetallic seafloor massive sulphide deposits. Nautilus has an 85% shareholding and Eda Kopa 15%.
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.