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 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 resource grading 6.4% copper and 4.6 g/t gold, and 1.3-million tonnes of inferred resource 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 most terrestrial mines.

The depth and relative competence of the massive sulphide deposit do not make it amenable to extraction using dredge technology.

Mining equipment has been designed, constructed and tested. The equipment is mobile and is expected to be reusable 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 (PSV) – 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 29 months.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has a net present value, at a 15% discount rate, of $56-million and an internal rate of return of 28%.

Value
The project is estimated at $530-million.

Duration
The PEA targets first production starting in the third quarter of 2019.

Latest Developments
Nautilus Minerals has entered into a loan agreement with Deep Sea Mining Finance, formalising the previously disclosed secured structured credit facility of up to $34-million.

The loan will be used to fund Nautilus’ working capital requirements and enable the company to continue advancing its Solwara 1 project company seeking the remaining project financing of $350-million that is required to complete Solwara’s development.

Meanwhile, Nautilus has started wet testing its new seafloor diamond drill rig, which it has developed to relieve the drilling requirements of its future exploration programmes.

The rig, nicknamed the “Hobbit” scout rig, has so far successfully met design targets in a series of land-based trials, largely focused on rod handling, functional drilling and landing stability tests.

The wet test programme will occur over a two-week period, and will expand the testing parameters to include submerged operations and mechanical endurance.

Forward exploration is a pivotal part of the Nautilus business, with its pioneering teams overcoming traditional functional limitations and high fees in seafloor drilling, with its new scout rig.

The scope of the testing is to check the operational functionality of the drill rig’s control systems, landing capability, hydraulic functions, video survey systems and drilling cycle time/performance, in a submerged environment.

The testing will also consider the system’s ability to sustain simulated offshore operations at optimal productivity levels while familiarising personnel with all aspects of the equipment and operations in a reduced cost environment.

The rig design uses Nautilus’ industry-leading seafloor drilling experience to produce a rig that has improved landing and drill-cycle capabilities, combined with simplified control systems, as well as umbilical, and launch and recovery requirements that will allow for deployment from cheaper vessels. This will result in significantly reduced drilling costs.

Importantly, the improved rig capabilities are also expected to translate into improved access to sites through the rig's greater stability and smaller footprint, relative to systems available in the current commercial market.

Further, Nautilus will then consider deploying the rig on its South Pacific tenements on successful completion of the trials, subject to raising further funding.

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.