Name of the Project
Solwara 1 seafloor copper/gold project.

Location
Bismarck Sea at Papua New Guinea (PNG).

Client
Prospective marine miner Nautilus Minerals formed a joint venture (JV) company with PNG’s nominee, Eda Kopa (Solwara), in December 2014 to mine high-grade polymetallic seafloor massive sulphide (SMS) deposits.

Nautilus formed the JV after receiving $113-million that had been placed into escrow in May 2014, after completing the sale of 15% of its Solwara 1 project to Eda Kopa.

Nautilus has an 85% shareholding and Eda Kopa 15%.

Project Description
Nautilus Minerals is pioneering the concept of mining the ocean bed for copper, gold, zinc and silver. The company’s objective is to develop the world's first commercial high-grade seafloor copper/gold mine and launch the seafloor resource production industry.

The company is exploring for high-grade polymetallic 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 aims 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.

A production support vessel (PSV) will be used as the base for seafloor operations planned at the Solwara 1 project site.

As of November 25, 2011, the Solwara 1 project had an indicated mineral resource of one-million tons, grading 7.2% copper, 5 g/t gold, 23 g/t silver and 0.4% zinc. Its inferred resource comprised 1.54-million tons, grading 8.1% copper, 6.4 g/t gold, 34 g/t silver and 0.9% zinc.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
Not stated.

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

The operating cost, excluding 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. With a 10% contingency, these operating costs become $261 000/d, or about $70/t.

Duration
Production is expected in the first quarter of 2019.

Latest Developments
Construction of Nautilus’s production support vessel has passed the 75% completion mark.

The in-hold cargo handling systems have all been fabricated, assembled and installed in the four holds of the vessel. This has allowed for the installation of deck blocks and close out of the deck of the vessel in preparation for the derrick installation.

Sichuan Honghua Petroleum Equipment Co has made good progress with the work on derrick and associated substructure. This equipment is required for the deployment of the subsea slurry lift pump and riser. The derrick substructure has been installed. The derrick tower has been fully assembled at the yard, with installation to occur on the vessel after the Chinese New Year. The riser storage and handling system is expected to be delivered to the yard at the end of February, with assembly and subsequent installation in March 2018.

Progress continues on marine systems, with all the ship’s engines run and load-tested in December. The installation of electrical equipment and transformers for the seafloor production tools is ongoing. The 200T and 100T ship’s cranes have been installed on the deck, along with one of the seafloor production tools’ maintenance cranes.
Nautilus has also nnounced the completion of submerged trials for its seafloor production tools in PNG.

Key Contracts and Suppliers
Soil Machine Dynamics (construction and supply of two remote-operated SPTs); 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 marine support vessel); Harren & Partner (supply of a platform supply vessel); GE Oil & Gas (supply of a subsea slurry lift and pump); 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, as well as slope-stability analysis for mining).

On Budget and on Time?
The project is facing a 12-month delay to the original schedule.

Contact Details for Project Information
Nautilus Minerals investor relations and communications VP Joe Dowling, tel +61 7 3318 5544 or email jjd@nautilusminerals.com.