MAC: Mines and Communities

PNG: Seabed mining, a risky investment

Published by MAC on 2011-01-25
Source: Postcourier, Financial Post, Reuters (2011-01-19)

Proposed mining of the deep sea-bed is attracting growing opposition. See: Ocean exploration reaches perilous new depths

Already, the Canadian company Nautilus Minerals has been granted permission to proceed with massive excavation offshore of Papua New Guinea: Papua New Guinea gives green light to deep-sea mineral mine

Is it too late to halt the project?

One of the country's leading newspapers urged the government to reconsider its position.

ESPAÑOL

Seabed mining, a risky investment

Editorial

Postcourier (PNG)

19 January 2011

So the government of Papua New Guinea has gone ahead and granted a deep sea mining lease to Nautilus Minerals to develop its copper-gold project in the Manus Basin. We are told that the 20 year lease covers an area of about 60 square kilometers around the Solwara 1 project. The stretch of sea in the Manus Basin is very deep but, again, we are led to believe that Nautilus, using state-of art- technology, has been exploring the sea floor for mineral deposits. And from the studies, the project aims to produce about 80,000 tonnes of copper, along with 150,000 to 200,000 ounces of gold annually from the project.

We are told that the project is estimated to cost about K1.04 billion and the PNG government has retained an option to take up to a 30 percent stake in the project as a joint venture partner. This option, we understand, is exercisable within one month. Should the government decide to exercise this option; it will contribute funds to the project in proportion to its interest, including its share of the costs incurred to date.

It is quite interesting to read that the government is interested in taking up equity in the seabed mining project.

The idea might be noble, given that we all like to make some money in any resource project that takes off in this country, however deep sea mining is something new. It is a new frontier as there are not many projects like this around the world that we can learn from.

The Minister for Mining, John Pundari and his department must come clear and tell us if we, as a country, understand what we are entering into. The people of this country have a right to know before the Government squanders tax payer's money on, what we firmly believe, is an ill informed decision.

It is public knowledge that exploration activity has been pursued in the Manus basin by Nautilus and its joint ventures partners for some years.

From this work, the assay values of surface samples collected through remotely operated vehicle and dredging looks promising.

This is confirmed by independent expert opinions we have sought. The same experts tell us that similar conclusions are also drawn for samples collected through shallow exploratory drill holes but the most important question is whether it has sufficient reserves or resources to develop a seabed mining.

We are informed that from submersible observation of submarine hydrothermal deposits around the Pacific Rim and East Pacific Rise, it is recognised that the distribution of the sulfide chimneys or sulfide mound are irregular and it is quite impossible to do block modeling to quantify the resources.

Furthermore the super high grade does not quantify a resource to make it economical viable, we are told. When we go back a few years ago, drilling of the Pacmanus site in Manus Basin by Ocean Drilling Program (ODP) failed to discover massive sulphide deposits below the chimney structures. This is found to be true in similar observations that are made at other sites around the world.

What Papua New Guinea needs to know is whether there are sufficient resources in the Solwara 1 project for the government to be talking about taking equity in the project?

This is a question that needs to be addressed by the geological informed staff of the Minerals Resources Authority (MRA) and the Department of Mining.

The other question we have that needs to be answered as well is the high lead and arsenic content in the sulfide chimneys in the Manus Basin.

Did MRA did a due diligence check on the environmental implication for such heavy and toxic elements? We urged the Government not to be deceptive when it comes to dealing with resources on the ocean floor.

We are talking about hard rock and it is not manganese noodles or submarine placer deposits like those of the West African coast where it can be easily mined by dredging.


Nautilus awarded underwater mining permit

By Peter Koven

Financial Post (Canada)

17 January 2011

The first ever underwater copper-gold mining operation has taken a big step towards becoming a reality.

On Monday, Nautilus Minerals Inc. said that it secured a mining lease from the government of Papua New Guinea (PNG) to develop its much-hyped Solwara 1 project about 1,600 metres underwater in the Bismarck Sea. The stock soared more than 20% on the news in mid-afternoon trading on the Toronto Stock Exchange.

Offshore oil and gas drilling has been around for decades, but Nautilus is the first company to take a serious shot at mining metals underwater. The big advantage over mining on land is grade: the Solwara 1 resource has a monster grade of 6.8% copper, which means costs are potentially very low. On land, a grade of 1% would be more typical.

Nautilus chief executive Steve Rogers said in an interview that the company has worked nearly two years to get its mining lease, a period in which the PNG government did very thorough due diligence.

"We consider today to be a bit of an historic moment," he said.

"This is the first time a seafloor massive sulphide mining permit has been granted."

However, there is still work to do before the project can become a reality. The capital cost of Solwara 1 is estimated to be about US$385-million, and Nautilus is looking for a strategic partner to help it shoulder the load and bring some added value to the project as well. Mr. Rogers said Nautilus is in discussions with two potential partners and expects to conclude a deal in the "near future." The PNG government also has an option to take a stake of up to 30% of Solwara 1, which it has to exercise in the next month. Mr. Rogers expects that the government will participate in some way. If it does, it will be responsible for its share of the development costs.

Assuming all goes as planned, Mr. Rogers hopes to get Solwara 1 in production in the second half of 2013.

In order to mine the ocean floor, Nautilus is developing seafloor production tools using similar technology to the offshore oil and gas sector. It will be integrated into a large vessel which will be sent out to the project site. The company plans to simply cut the rock underground and then pump it to the surface as a slurry.

Major mining companies Teck Resources Ltd., Barrick Gold Corp. and Anglo American PLC have taken an interest in what Nautilus is doing and have purchased stakes in the company.


Nautilus gets deep-sea copper-gold project mining lease offshore PNG

Undersea mining company, Nautilus, says it has won right to develop Papua New Guinea off-shore copper-gold project. In discussion with potential strategic partners.

Reuters

17 January 2011

TORONTO - Nautilus Minerals said on Monday the government of Papua New Guinea has granted it a deep sea mining lease to develop its copper-gold project in the southwestern Pacific Ocean, sending its shares up more than 15 percent.

Toronto-based Nautilus, which is focused on exploring the sea floor for mineral deposits, said the 20-year lease covers an area of nearly 60 square kilometers around its Solwara 1 project.

The Papua New Guinea government has retained an option to take up to a 30 percent stake in the Solwara 1 project as a joint venture partner, the company said in a statement.

The option is exercisable within one month. If exercised the government will contribute funds to the project in proportion to its interest, including its share of the costs incurred to date, the company said.

Shares of Nautilus rose 35 Canadian cents to C$2.55 Monday morning on the Toronto Stock Exchange.

(Reporting by Euan Rocha; Editing by Frank McGurty)

Home | About Us | Companies | Countries | Minerals | Contact Us
© Mines and Communities 2013. Web site by Zippy Info