Key points
- Jan De Nul will construct, own and operate the 191-metre vessel, to be named the Jules Verne, at its own cost, with completion expected in 2009.
- The ship will mine Solwara 1 in up to 1,700 metres of water, and Nautilus will provide about $120-million (U.S.) in capital for subsea miners, umbilicals, pumps and an 1,800-metre riser pipe.
- The heads of agreement sets a mining and delivery rate of 58 euros ($75 U.S.) per ton based on 1.8 million tons per year, with a detailed works contract to be formalized by July 1, 2007.
- Ausenco estimated a two-million-tonne-per-year land-based concentrator and port facility in PNG would cost about $160-million (U.S.), with operating costs of $13.70 (U.S.) per tonne of ore treated.
Nautilus Minerals Inc. has entered in to a heads of agreement with Belgium-based Jan De Nul, one of the world’s leading international dredging companies. Under the agreement, Jan De Nul 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.
David Heydon, Nautilus chief executive officer, comments: “This agreement with one of the world’s leading dredging companies is a major milestone in the project. Jan De Nul 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 — the creation of a whole new industry. We have seen how the offshore oil and gas industry has evolved since its early days to the point where society is now reliant on offshore oil/gas to meet its needs. Likewise, sea floor resources may one day be critical for society to meet its future needs for copper and zinc.”
Mr. Heydon adds: “Jan De Nul is committing significant capital to build this specialized mining ship. This agreement lays off the capital for the mining ship — our largest and longest lead time item — and puts us on track of our goal of production by end 2009. We chose Jan De Nul to partner with us on this exciting project as they have the world’s most modern fleet, the largest dredgers in the world and are recognized as the innovators in the dredging industry.”
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 sea floor in up to 1,700 metres of water.
The plan calls for the copper-gold material to be dredged from the sea floor 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.
Jan De Nul 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 (U.S.)) for two subsea miners, power umbilicals, pumps, 1,800-metre riser pipe and related handling equipment. Jan De Nul would reimburse Nautilus over time for this capital by rebating 6.5 per cent 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 58 euros ($75 (U.S.)) for mining and delivery of the ore to the concentrator, based on an annual production of 1.8 million tons per year or 6,000 tons per day, allowing for two months of annual service and maintenance of the offshore mining spread. The contract mining costs are fixed at 2009, with a 1-per-cent compounding escalation for 2010 onward. The fuel price component of the above mining costs is based on an August, 2006, price and the terms provide for a variation, both up and down, from this level. It is proposed to formalize a detailed works contract by July 1, 2007, and the heads of agreement contemplates that the term of the works contract could be for an initial eight million tons, renewable thereafter annually at Nautilus’s election.
Mr. Heydon comments: “Having Jan De Nul involved not only removes a major capital item for Nautilus but, importantly, provides the operational expertise for the project, avoiding the learning curve and gradual ramp-up of the mining rate Nautilus would face if it had chosen to mine itself. It allows Nautilus to concentrate its expertise and capital on discovering and proving up further deposits in the western Pacific.”
To integrate with the offshore mining, order-of-magnitude (plus or minus 35 per cent) capital and operating costs for a PNG land-based concentrator have been estimated by Ausenco, a leading Australian engineering and project delivery firm. The indicative cost for a two-million-tonne-per-year concentrator, associated port facility and other directly related infrastructure was estimated at $160-million (U.S.) (excluding land acquisition, site devolvement and access, environmental requirements and owner costs), with an operating cost of $13.70 (U.S.) per tonne ore treated, based on recent experience on similar projects and assuming normal recoveries in a typical flotation plant.
Nautilus is currently looking at options to finance the project, including a financing and listing on the Alternative Investment Market in London and an offtake agreement to finance the concentrator.
Nautilus has 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 in Stockwatch on Aug. 18, Nautilus has appointed a country manager in PNG to manage the process of applying for the requisite permits from the PNG government.
