Market watchers eye with interest

Baeau Tai
Nautilus Minerals has emerged from a period of rapid development and progress that has caught the attention of market watchers in a major way. And it is not about to stop now.

In July, Nautilus made four announcements on the developments taking place at its Solwara project in Papua New Guinea in the western Pacific, along the “Rim of Fire”.

Under its aggressive exploration programme planned for 2007/2008, Nautilus has been granted 11 new exploration licences covering an area of 21,386 square kilometres within the territorial waters of PNG.

Along with the granting of 11 licenses, Nautilus has received advice from the Mineral Resources Authority of PNG the renewal of EL1374 for a further two years, effective from September 10, 2006.

“The granting of the first of our eighty-one exploration licence applications made in late 2006 ensures that we maintain a pipeline of acreage to explore so we can build on the phenomenal exploration discovery rate we achieved earlier this year when we found four new high grade sulphide mineralisation systems over a four-week period (Solwara 5, 6, 7 and 8),” said chief executive David Heydon.

“The area of exploration licences granted or under application in PNG covers an area larger than Greece, and maintains our first mover advantage as the leading company in the world for the exploration, discovery and development of high grade seafloor massive sulphide systems,” he said.

Heydon said eight of the licences granted are subject to an agreement with Teck Cominco.

As part of this agreement, Teck Cominco has seconded certain personnel to Nautilus to assist with its US$20 million exploration programme. Teck Cominco has also agreed to fund up to US$2 million of tenement/licence fees and rentals along with US$10 million of exploration, R&D, and the development of specialised technical equipment to further improve the cost of discovery of these seafloor massive sulphide systems.

Nautilus has assembled a strong management team and pre-eminent board of directors to drive its unique exploration development play. It has also built up key technical alliances with leading engineering and offshore equipment supplies. With the granting of the 11 exploration licences, Nautilus has appointed four senior deep sea experts to its Solwara 1 project development team led by Steve Rogers, Nautilus chief development officer.

The new team has significant experience in mine development, project management, deep sea robotics, seabed mining, and maritime commercial support which provides Nautilus with inhouse management expertise required to develop the 2mtpa Solwara 1 copper/gold project. It was early last month when Nautilus reported significant massive sulphide drill intercepts at Solwara 1.

Since drilling commenced on June 14, 2007 at Solwara 1, 29 holes have been completed for a total of 305.8 metres with an average massive sulphide core recovery of 72%. Nautilus also reports high grade assay results for its recently discovered Solwara 8 Prospect. “The results of the drilling at our Solwara 1 project demonstrate that we have a strong mineral system persisting at this depth. This is in addition to the system of high grade massive sulphide spires that are often 10 metres high above the system currently being drilled,” said Heydon.

“We are actively promoting the development of new tools for this new industry. In less than a year , we have, with Remote Operated Vehicle (ROV) builder Perry Slingsby Systems and operator Canyon Offshore, taken the ROV Drill from the drawing board to operational status. These new remote-controlled drills operating in water depths of up to 1,800 metres are providing good core recovery, allowing us to define the mineralised system at Solwara 1, and providing quality samples for resource evaluation, metallurgical and geotechnical studies.

“We are also impressed with the results from Solwara 8 where the 12 surface samples taken from Solwara 8 averaged 16.9 g/t gold, 6.1% copper, 32.5% zinc, and 328 g/t silver, with individual samples returning up to 34% copper and 50.7% zinc.

“This confirms that we have yet another high grade gold-copper-zinc system, supporting the hit rate during the target testing phase of this year’s programme of four systems discovered in four weeks,” Heydon added.
Nautilus took over the offshore development aspects of the Solwara project after an agreement with Belgium-based dredging company, Jan De Nul, lapsed.

On October 2006, Nautilus announced it had reached a heads of agreement with Jan de Nul with a view to formalising a detailed work contract by July 1, 2007.

Rogers will now deal directly with the suppliers of the specialised equipment required for mining and raising the ore. Nautilus will retain international engineering contractors to act as owner’s engineers in the development programme.

Whilst the agreement with Jan de Nul called for the construction of a new build ship, the Company is now scoping other mining platforms including the modification of existing vessels and barges to suit its planned production rates and development timeline. Heydon said this may be a more flexible and cost effective solution than the previous approach.

Nautilus is the first company to commercially explore the ocean floor for high grade gold-copper-zinc-silver seafloor massive sulphide deposits. Its main focus for 2007 is the Solwara 1 Project, located between the island chains of New Britain and New Ireland provinces. Nautilus is listed on the TSX Venture Exchange and on AIM, and has among its largest shareholders four of the world’s largest international resource companies, including Anglo American (6.4% holding), Teck Cominco (5.8%) and Epion (16.8%) and Barrick Gold (3.7%).