AFTER receiving a favourable decision on arbitration with the State of Papua New Guinea, Nautilus Minerals aims to bring the Solwara 1 polymetallic seafloor massive sulphide deposit into production as soon as possible. In light of the arbitrator’s award, Nautilus will work with the government to move the seafloor project forward.
Nautilus’ interim CEO Mike Johnston says, “Our immediate plan is to complete the build of the seafloor production equipment. The critical path for the project remains the vessel. Now that we have received the arbitration decision we are in a better position to select a shipyard and finalize the vessel financing structure.”
Nautilus is the first company to explore the ocean floor for polymetallic seafloor massive sulphide deposits. Nautilus was granted the first mining lease for such deposits at the prospect known as Solwara 1, in the territorial waters of Papua New Guinea, where it is aiming to produce copper, gold and silver. The company has also been granted its environmental permit for this site.
Nautilus also holds about 500,000sqkm of highly prospective exploration acreage in the western Pacific - PNG, Solomon Islands, Fiji, Vanuatu and Tonga - as well as in international waters in the eastern Pacific.
Using existing technologies from the offshore oil & gas, dredging and mining industries, Nautilus plans to extract high grade seafloor massive sulphide systems on a commercial scale. Nautilus has been working over the past number of years on the building of the seafloor production system.
In early October the company announced that the arbitrator Murray Gleeson AC QC had 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 then issued the State with a notice requiring completion to occur on October 23. It estimated the total amount payable at completion to be about US$118 million. However, on October 24 the company advised that the State had not yet completed the purchase. It said it was “in discussions with senior officials of the State and it remains Nautilus’ preference to resolve these matters amicably with the State”.