Nautilus Minerals plans to use tracked robots to cut gold/copper ore from the sea floor at its Solwara 1 project in the territorial waters of PNG and pump it up to the surface ship. The company expects to place an order during the first quarter of 2014 for a vessel that will separate ore from seawater.  1

The company has quotes ranging from $180 million to $260 million for the ship, chief financial officer Shontel Norgate said during a call with investors last week. She said the vessel would take two to three years to build, depending on which shipyard gets the order.

“We’ll firm that up more over the next couple of months. Nautilus plans to use tracked robots to cut ore from the sea floor and pump it up to the surface ship. The vessel will remove water from ore pumped up from the ocean floor and transfer the mineral to a transport ship,” she said.

Nautilus won leasing rights in January 2011 from the government of Papua New Guinea to explore for gold and copper off the nation’s coast. The company has an agreement to supply ore to Chinese copper refiner Tongling Nonferrous Metals Group Co.

Shontel Norgate said Nautilus was open to funding the vessel with partners or paying for it alone. The company would pay 20% to 30% of the cost through equity and the rest would be debt-financed.

“We want to get the best mix of cost, schedule and risk mitigation,” chief executive officer Michael Johnston said during the call.

Meanwhile, Nautilus has announced that the arbitrator, the Honourable Murray Gleeson AC QC, has issued an award in Nautilus’ favour in respect of the issues that were the subject of the Notice of Arbitration initiated by the Independent State of Papua New Guinea.

The arbitrator’s award includes:

  • A declaration that the State was in breach of the State Equity Option Agreement signed by the parties in March 2011 in failing to complete the purchase of a 30% interest in the Solwara 1 project on November 7, 2011.
  • An order that the State is required to comply with its obligations under the agreement to complete the purchase of the 30% interest in the Solwara 1 project and pay 30% of all project expenditure incurred to date within a reasonable time after the award.

Nautilus has issued the State with a notice requiring completion to occur on October 23, 2013. Nautilus estimates the total amount payable by the State at completion to be about US$118 million, including interest. Under the applicable arbitration rules the arbitrator's decision is final and binding.

Nautilus looks forward to bringing the Solwara 1 project into production and will work with the State in order to move the project forward in light of the arbitrator’s award.

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