Name and Location
Solwara 1 seafloor copper/gold project, Papua New Guinea (PNG).

Client
Nautilus Minerals (70%) and the government of PNG (30%).

Project Description
Nautilus Minerals is pioneering the concept of mining the ocean bed for copper, gold, zinc and silver.

The company is exploring for high-grade polymetallic seafloor massive sulphide (SMS) deposits at 1 600 m below the surface of the Bismarck Sea, off the coast of PNG, within the Western Pacific Ocean’s Rim of Fire. The operation is planned to produce ore at a rate of more than 1.3-million tons a year, with the capacity to ultimately ramp up to 1.8-million tons a year of dewatered ore, which will be delivered to the Port of Rabaul.

Value
The total capital cost for the system to deliver dewatered ore on board barges to the Port of Rabaul, including a contingency (17.5%), is estimated at $383-million.

The operating cost, excluding the contingency, is estimated at $237 000/d, or about $64/t of mined ore, transported to the port based on a production rate of 1.35-million tons a year. Allowing for a 10% contingency, these operating costs become $261 000/d, or about $70/t.

Duration
The project is targeted to begin commercial production in late 2013.

Latest Developments
Nautilus has reported that the PNG government has paid $113-million into escrow, representing the balance of the State’s 15% share of capital required to complete the Solwara 1 offshore project up to first production.

At the end of last month, Nautilus announced that it had resolved the dispute with the State and signed an agreement with the State’s nominee, Eda Kopa (Solwara) Limited, a subsidiary of Petromin PNG Holdings, enabling the project to move forward toward production.

With Eda Kopa having paid its share of the project development capital, Nautilus’ focus now shifts to chartering a production support vessel and securing certain intellectual property rights within six months for Eda Kopa. The funds will be released to Nautilus when both conditions have been met.

The company is in discussion with potential vessel partners, while also undertaking a tender process with shipyards experienced in building offshore construction vessels.

Key Contracts and Suppliers
Soil Machine Dynamics (construction and supply of two remote-operated SMTs); Technip (engineering, procurement and construction management services for the RALS components of the deep-water Solwara 1 mining and extraction system, comprising subsea pumps, a riser pipe, a riser handling system and associated deck equipment); North Sea Shipping Holding (supply of a specialist MSV); Harren & Partner (supply of a PSV); GE Oil & Gas (supply of a SSLP); SRK Consulting, Ausenco, Clough Engineering and Mineralurgy (offshore production system definition and cost study); Golder Associates (mineral resource estimate); Parsons Brinckerhoff (dewatering study); and Pells Sullivan Meynink (geotechnical laboratory testing programme and on-board ship laboratory, advice on rock mass and material parameters and slope-stability analysis for mining).

On Budget and on Time?
Nautilus has put the project on hold, owing to a dispute with its joint venture partner.

Contact Details for Project Information
Nautilus Minerals investor relations and communications VP Joe Dowling, tel +61 7 3318 5544 or email jjd@nautilusminerals.com.
Soil Machine Dynamics, tel +44 191 234 2222, fax +44 191 234 0444 or email info@smd.co.uk.
Technip, tel +33 1 47 78 24 00.
North Sea Shipping Holding, tel +47 55 08 88 00.
Harren & Partner, tel +49 421 46 86 0 or fax +49 421 46 86 586.
GE Oil & Gas, tel +1 203 373 2211.
SRK Consulting, tel +1 604 681 4196, fax +1 604 687 5532 or email info@srk.com.
Ausenco, tel +675 3256 033 or fax +675 3250 091.
Clough Engineering, tel +61 8 9281 9281, fax +61 8 9281 9943 or email clough@clough.com.au.
Mineralurgy, tel +61 7 3381 9295.