JdN and Nautilus in mining venture

Nautilus Minerals Inc in Vancouver, Canada, has entered in to a Heads of Agreement with Belgium based Jan De Nul (JdN), one of the world’s leading international dredging companies. Under the agreement, JdN will construct at its cost, a specialized deep-sea mining vessel for Nautilus’s Solwara Project in Papua New Guinea (PNG). The 191 metre vessel, to be named the “Jules Verne”, is expected to be completed in 2009 to meet Nautilus’s targeted, subject to PNG government approval, end 2009 date to commence mining operations. (Image of ship

JdN will join Nautilus in its plans to be the first to mine the deep oceans of the world for copper, gold and zinc. Such a move represents the dawn of a new era in mining and the creation of a whole new industry which, like the development of the offshore oil and gas industry, may one day be critical for society to meet its future needs for copper and zinc.

The “Jules Verne” will be a dynamically positioned ship capable of deploying mining equipment, pumps and riser pipes for the operations at Solwara 1, which lies on the seafloor in up to 1,700 metre of water. The plan calls for the copper and gold material to be dredged from the seafloor and pumped to the mining vessel where it would be transferred to barges for transport to a land based concentrator which would produce a gold-rich copper concentrate for dispatch to copper smelters.

JdN will build, own and operate the mining ship, and will provide barges, tugs and operational capability in its role as mining contractor for the Solwara 1 Project. Nautilus would provide the capital (budget estimate $120 million) for two sub sea miners, power umbilicals, pumps, 1,800m riser pipe and related handling equipment. JdN would reimburse Nautilus over time for this capital by rebating 6.5% of each monthly contract mining invoice, effectively purchasing the equipment from Nautilus.

Ore production rates and consequently mining costs will vary due to natural variations in material hardness across the deposit, the Heads of Agreement anticipates a per ton rate of $75 for mining and delivery of the ore to the concentrator, based on an annual production of 1.8 million tones per annum or 6,000 tonnes per day allowing for two months annual service and maintenance of the offshore mining spread. It is proposed to formalize a detailed Works Contract by 1st July 2007 and the Heads of Agreement contemplates that the term of the Works Contract could be for an initial 8 million tonnes, renewable thereafter annually at Nautilus’s election.

Nautilus is currently looking at options to finance the project, including a financing and listing on the Alternative Investment Market in London and an off-take agreement to finance the concentrator. Nautilus has also commenced baseline environmental studies and is currently seeking tenders from internationally renowned environmental consultants to undertake an Environmental Impact Assessment and complete an Environmental Impact Statement. As announced on 18 August, Nautilus has appointed a country manager in PNG to manage the process of applying for the requisite permits from the PNG Government.