A disagreement between Nautilus Minerals and the State of Papua New Guinea may be referred for arbitration if the current dispute resolution process is unsuccessful. The company is disputing its obligations under an agreement with the State regarding the Solwara 1 project, which was signed in March 2011.
Under the agreement, the State exercised its option to acquire a 30% interest in the project through its subsidiary Petromin PNG Holdings. It claims Nautilus hasn’t met certain obligations which are necessary for completion of the agreement. This claim is refuted by Nautilus.
The agreement terms include Petromin paying its share of costs incurred in the development and completion of the project in the Bismarck Sea, in order to acquire its interest. Until the dispute is resolved, project completion will be delayed and may not occur, leaving Nautilus to carry the costs.
This may lead to Nautilus needing to slow or defer the build program for project equipment, which would have consequential impacts on the scheduled commencement of operations and overall costs for Solwara 1.
Nautilus is the first company to explore the ocean floor for polymetallic seafloor massive sulphide deposits. It is aiming to produce copper, gold and silver Solwara 1, in the territorial waters of Papua New Guinea. The company has been granted all necessary environmental and mining permits.
Last month the Canadian-listed company signed a three year contract with Tongling Nonferrous Metals for up to 4 million tonnes of material from the project, with the first delivery scheduled to take place in quarter 4 of 2013.