Nautilus Minerals has signed a binding agreement with Tongling Nonferrous Metals Group for up to 4 million tonnes of material from the company’s Solwara 1 deposit in Papua New Guinea’s Bismarck Sea.
The landmark three-year contract provides for Tongling to purchase between 900,000 tonnes and 1.3 million tonnes of material from the deposit each year, from the first delivery which is scheduled to take place in quarter 4 of 2013.
“The quality of this relationship with China’s largest importer of copper concentrates provides further evidence that there is considerable interest in the high grade massive sulphides being found by the emerging seafloor resource production industry,” says Nautilus chief executive officer Stephen Rogers.
Tongling will import the product into China for processing through its facilities in the city of Tongling near the Yangtze River. The copper concentrate will then be smelted in the local industrial complex, with the purchase price determined on the quality of the copper concentrate produced.
The agreement also includes a mechanism for an early payment of 90% of the price upon loading of the export vessel in Papua New Guinea. Further value may be realized through a 50-50 profit sharing scheme based on incremental by-product revenue realized in China, including gold bearing pyrite. Material from the process can be roasted in China to produce gold and sulphuric acid and the remaining calcine may be sold to cement manufacturers or as iron ore fines. With minimal waste Tongling’s process brings significant benefits consistent with Nautilus’ commitment to minimize environmental impacts.
Stephen Rogers says the company is looking forward to working with Tongling to realize the full potential of the high grade material extracted from Solwara 1. “We have now closed the value chain on the project, established our first customer for seafloor massive sulphides and look forward to building a long term relationship with Tongling,” he said.
Nautilus is progressing the build of equipment, including the Seafloor Production Tools and Production Support Vessel for Solwara 1.
Tongling, formerly known as Anhui Tongdu Copper, and its subsidiaries engage in the copper smelting, copper ore mining, processing of copper products and other related businesses primarily in China and has revenue in excess of US$11.2 billion.