Name of the Project

Solwara 1 seafloor copper/gold project.

Location

The project is located in the Bismarck Sea of Papua New Guinea (PNG).

Client

Nautilus Minerals and the PNG government.

Project Description

The Solwara 1 project is a deep-sea mining project, where construction of a commercial-scale mining operation to extract deep-sea metallic mineral resources is well advanced.

A preliminary economic assessment (PEA)has determined that the project is economically viable.

The target mineral resources at Solwara 1 are located on the seafloor, about 1 550 m below sea level, and are covered with a thin layer of unconsolidated sediment.

The extraction of 900 000 t of indicated mineral resources grading 6.4% copper and 4.6 g/t gold, and 1.3-million tonnes of inferred resources grading 7% copper and 5.5 g/t gold (undiluted), has been scheduled. 

There are no mineral reserve estimates for Solwara 1 and the potential viability of the mineral resources has not yet been supported by prefeasibility or feasibility studies.

A peak production rate of about 3 200 t/d is planned. 

The conceptual plan envisions recovery of an estimated 130 000 t of copper and 180 000 oz of gold from Solwara 1. 

The plan further envisages the extraction of indicated and inferred mineral resources containing copper and gold at copper grades significantly higher than those of most terrestrial mines.

The depth and relative competence of the massive sulphide deposit means that it is not amenable to extraction using dredge technology. 

Sediment removal, mechanical rock cutting and the transfer of fragmented cuttings to a vessel on the ocean surface by pump and riser comprise the chosen mining method.

Mining equipment has been designed, constructed and tested. 

The mining equipment is mobile and is expected to be reused at future deep-sea mining projects.

Sediment removal, rock cutting, and the transfer of fragmented cuttings to surface are performed by three seafloor production tools and a positive displacement pump, collectively known as the seafloor production equipment. The equipment will be remotely controlled by operators located on board a surface vessel stationed over the deposit.

The production support vessel – a hybrid of a mobile offshore drilling unit, a cargo ship and various special-purpose ships – will generate power, house the mining crew, provide a platform for the launch, recovery and servicing of the seafloor production tools, and provide a place for dewatering and temporary storage of mineralised material before shipment to offtakers for further processing, smelting and precious metals recovery.

Solwara 1 is scheduled to be in production for a period of 29 months.

Potential Job Creation

Not stated.

Net Present Value/Internal Rate of Return

Project value has a net present value, at a 15% discount rate, of $56-million and an internal rate of return of 28%.

Value

Project value is estimated at $530-million.

Duration

The PEA targets first production at the start of the third quarter of 2019.

Latest Developments

A production support vessel is being constructed in China. 

The launch of the vessel is scheduled for the first quarter of this year. 

Integration of the vessel’s systems will continue after the launch. Commissioning and sea trials are scheduled for completion in the second quarter of 2019.

Meanwhile, Nautilus has secured a further bridge loan as much as $34-million from Deep Sea Mining Finance to tide the company over until it is able to start undersea mining at the Solwara 1 project.

To date, Nautilus has received bridge loans from the lender totalling $6.65-million.

Together with the most recent advance of $1.9-million, Nautilus has issued Deep Sea Mining Finance a further 8.16-million warrants of the company, bringing the total to 28.57-million share purchase warrants. 

Each warrant entitles the lender to buy one common share of the company at C$0.17 for a period of five years from the date of issuance.

The bridge loans will assist Nautilus’s immediate working capital requirements and facilitate the payments required to continue the development of the unique seafloor production system. 

The loans bear interest at 8% a year, payable biannually in arrears. with a one-year maturity date.

Deep Sea Mining Finance is a private company owned 50% by USM Finance, which is a subsidiary of USM Holdings – an affiliate of Metalloinvest Holding (Cyprus) and Mawarid Offshore Mining, a subsidiary of MB Holding Company, which comprise the two insiders of the company.

Solwara is fully permitted; however, Nautilus still needs to raise $243-million to meet the expected upfront capital requirement.

Key Contracts and Suppliers

None stated.

On Budget and on Time?

Too early to state.

Contact Details for Project Information

Nautilus Minerals, tel +1 416 551 1100 or 

email investor@nautilusminerals.com.