Seabed mining threat recedes - for the momentPublished by MAC on 2008-12-22
Anger on the part of Indigenous communities in Papua New Guinea, over the likely impacts of proposed seabed mining, has been mounting. See: http://www.minesandcommunities.org//article.php?a=8706
Faced with the "unprecedented speed and severity of the global economic downturn" Nautilus Minerals - the leading company in the "field" - has said it will adopt a "more cautious strategy" in pushing ahead with what would be the world's first Large scale seabed sulphide mine. .
The Solwara 1 project is not now expected to deliver its first ore output until 2011 and Nautilus has reduced its existing workforce by a third.
Nautilus Announces Deferral of Solwara 1 Mining System Equipment Build
17th December 2008
TORONTO, ONTARIO - Nautilus Minerals Inc. today announces it has decided to adopt a more cautious strategy and to preserve its strong cash position by delaying the construction of the equipment for the Solwara 1 mining system. This decision is driven both by the challenges and opportunities presented by the unprecedented speed and severity of the global economic downturn and the uncertainty in the financial and commodity markets. The Company will continue to move forward with permitting for its Solwara 1 Project, as well as with various engineering and testing activities. In addition, the Company will continue with its focused exploration program to increase its resource base.
Nautilus' CEO, Stephen Rogers, commented: "Given market conditions, the Board of Directors and management have undertaken a thorough review of all operations. Directors and management require greater certainty that all elements needed to progress the project to completion are in place before making major equipment expenditures. Deferring the equipment build for the mining system is a difficult yet appropriate decision to preserve our strong cash position, which stood at US$266.6 million as at September 30, 2008. It also provides an opportunity to realise cost savings and possible benefits presented by the current market downturn.
These may include reduced material and equipment costs, faster manufacturing times and lower logistics costs given a less heated market. The Company remains committed to its objective of developing the world's first seafloor massive sulphide recovery operation. We will be positioned to promptly restart the equipment build as soon as the Board of Directors and management consider market and contract conditions are suitable."
To preserve capital, contracts and purchase orders will be suspended or terminated depending on their criticality to the revised development program. All of the supplier agreements contain provisions for termination without penalty. The Mining Support Vessel agreement announced on June 20, 2008 is in the process of being terminated. The Company will now revisit the market to find alternative tonnage.
As a result of this decision, the Company will today reduce its workforce by approximately 30% to a level that will allow it to preserve cash while continuing to actively seek approval for its Solwara 1 Mining Licence application and for its environmental permit. Ongoing consultation activities with our stakeholders, including local communities relating to permitting and the Solwara 1 Project will continue.
TheCompany will also continue engineering work on the Solwara 1 mining system to enable a prompt restart when conditions allow. Additionally we will further our exploration activities to build on our pipeline of seafloor resources.
As a consequence, the Board believes that the previously announced timetable for first ore production at the Solwara 1 Project is likely to be delayed beyond December 2010. The Company will update the market on the new timeline milestones for production at Solwara 1 once market conditions stabilise.
The measures announced today are to ensure that Nautilus is well positioned to benefit from current opportunities as the global economy recovers. With its strong balance sheet, Nautilus will be able to resume its equipment construction programs with renewed momentum.