Nautilus Minerals' plan to open a new frontier of seafloor resource production has taken a major step forward, with the formation of a strategic partnership with German shipping company Harren & Partner.
A joint venture company is to be formed to own and operate a production support vessel which will serve as the operational base for Nautilus to produce high grade copper and gold ore at its first development project, Solwara 1, in the Bismarck Sea of Papua New Guinea.
The vessel will be the floating platform for the mobilization and remote operation of production machinery operating on the seafloor at water depths of about 1600 metres. The seafloor production tools will cut and gather ore which will be pumped in slurry form to the production support vessel, where it will be processed through a dewatering plant before transfer to barges for transport and subsequent treatment.
Under the terms of the strategic partnership, Harren will design and construct the vessel at a cost of about US$167 million, with delivery scheduled for the first half of 2013.
On delivery, the vessel will be sold to the vessel joint venture in which Harren will hold a 50.01% interest. The remaining 49.99% of this JV will be controlled by Nautilus through a holding company in which the PNG government owns a 5% stake through its wholly-owned company Petromin PNG Holdings.
The vessel JV will charter the vessel to the mining joint venture, in which Nautilus holds a 70% stake and Petromin holds a 30% stake, to carry out its seafloor production operations, for a period of eight years, at an average daily rate of US$70,000.
Harren will provide crewing, logistics and ship management services to the vessel JV which will be on charged at a daily rate of US$10,000 to the mining JV. The mining JV will provide a charterer's guarantee to the vessel JV for an initial value of US$10 million reducing over a five year period to US$2.5 million.
Nautilus CEO Stephen Rogers says, “This transaction is a major step forward in the development of the seafloor resources industry.
“Through this joint venture with Harren, we will secure a state of the art vessel to operate on this ground-breaking project. This will ensure that we have the best available equipment and the greatest operational efficiency and flexibility in bringing Solwara 1 into production.
“It brings to the project the extensive shipping expertise and experience of Harren, which operates a fleet of 56 vessels around the world. In addition, an important aspect of the transaction is that it provides access to bank funding through the joint venture vehicle, enhancing capital flexibility for the project.”