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

Location
Bismarck Sea at Papua New Guinea.

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 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 Nautilus’s 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.

Jobs to be Created
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
The construction of Nautilus’s PSV in China is progressing.

Construction of the vessel’s steel blocks in the dry dock is about 60% completed.

The thruster rooms (aft hull blocks) have recently been lifted into position on the vessel. Construction of the accommodation module is progressing rapidly, with many blocks being assembled alongside the dry dock. It was expected to be lifted onto the vessel by the end of November.

In September, Nautilus announced a revised work programme pending the company’s successfully raising the required capital by June 2017. It entails a more staged approach, postponing the Nautilus equipment integration phase of vessel construction until after the vessel has been delivered in the fourth quarter of 2018, resulting in a 12-month delay to the original schedule and postponing first production until the first quarter of 2019.

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 has faced significant delays and financial hardship.

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.