Nautilus Minerals’ vision of mining the ocean floor for gold, copper and silver has taken a major leap forward with the settlement of a long standing dispute with the Papua New Guinea (PNG) government.
Nautilus has pioneered the idea of commercial deep sea mining, winning the world’s first ocean floor mining lease from PNG and being granted an environmental permit for the project. Production should have started by the end of 2013 but has been delayed by a two year dispute over project funding. An arbitrator found in Nautilus’ favour in October last year.
The settlement announced by Nautilus gives PNG an initial 15% stake in the Solwara 1 Project, in the Bismarck Sea, north of PNG, with an option to take another 15% stake within 12 months. A US$7 million non refundable deposit has been paid for the initial 15% stake.
PNG, through a subsidiary of state oil company Petromin, has until 31 July to secure funding of US$113 million for its 15% share of the capital needed to complete the development phase of the project up to first production. Once funding is secured Nautilus and PNG will form a joint venture for the on-going operation of the project.
Nautilus will then have six months to secure charter of a Production Support Vessel and secures intellectual property rights for PNG. After production starts Petromin’s subsidiary will contribute funds in proportion to its stake in the project.
Nautilus' CEO, Mike Johnston, said: "This step represents a major vote of confidence in Nautilus Minerals and the Solwara 1 Project. Through this joint venture, the State will provide a significant capital investment and will retain a direct interest in the long term success of the Project. We look forward to working closely with the State and Petromin on Solwara 1, which will generate significant economic activity within the State and the Province of New Ireland."
Nautilus is in discussions with potential vessel partners and is undertaking a tender process with shipyards experienced in building offshore construction vessels. Mr Johnston said it was intended to have a vessel solution in place before the end of the year.