BARRIE, Ontario (miningweekly.com) - Construction for the world’s first deep-sea mining project, off the Papua New Guinea (PNG) coast could begin by year end with first production in early 2013, an executive at TSX- and Aim-listed Nautilus Minerals said on Tuesday.
The company first aims to sign an agreement with a strategic funding partner, and will begin development on the $383-million Solwara 1 “almost immediately” thereafter, business development vice-president Scott Trebilcock said.
“Our executives based in Australia are actively flying around that part of the world pursuing partner discussions,” he noted.
“We continue to be in agreement development stage.”
The company had been trying to secure a strategic partner for the Solwara 1 copper gold massive-sulphide project since late 2009, and the complexity and pioneering nature of project had meant that finding the partner with the right fit was a long process.
“Several potential partners have been right to the wedding chapel,” said Trebilcock, adding that they had opted out.
Still, interest was strong, including from Chinese companies, and Nautilus was in “agreement development stage” with several potential partners.
Nautilus was looking at two deal structures with potential partners. The first was a traditional mining joint venture, where both companies would jointly own the operator of Solwara 1.
The second, less traditional, route would be to partner witha ship owner or operator to build and put on the vessel all the mining equipment and then that company would contract Nautilus to do the extraction.
“That type of agreement would bring down our capital cost,” Trebilcock said.
Nautilus was talking to “several” mining companies and service providers to the offshore oil and gas industry.
Mining major Anglo American, an 11% Nautilus shareholder, may be interested in further partnership, Trebilcock said: “I wouldn’t totally rule them out.”
Nautilus has a technological collaboration agreement with Anglo American.
TSX-listed Teck Resources is a 6% shareholder, with which Nautilus shared a “far more advanced relationship”, said Trebilcock.
Russian firm Gazmetall owns 21% of the company, though is “purely an equity holder”.
According to an independent SRK study into the Solwara 1 project released in June, the operation could produce 80 000 to 100 000 t/y of copper and 150 000 oz to 200 000 oz/y of gold. Trebilcock noted it would take about six months to reach full production from when the first ore was mined.
Solwara 1’s deepest point is 1 600 m below sea level.
Nautilus would “absolutely” be looking to build its own mill in PNG, Trebilcock asserted.
“The PNG government would also like that,” he said.
The company has already bought the land - an old palm oil plantation with potential for a deep-water port nearby.
It would aim to build its own a mill soon after Solwara 1 was in production, once the viability of mining the sea bed at depth had been proved.
In June, Nautilus signed a contract with TSMarine to provide drilling services to further explore the sea bed around PNG’s coast.
Nuatilus had effectively halted work on the Solwara 1 project when global equity markets hit the wall at the end of 2008, but activity began again towards the end of last year.
The company was trading up 1% on the TSX at C$1,89 a share on Tuesday afternoon, giving the company a market value of C$294-million.