Nautilus Minerals Inc. (TSX:NUS) (OTC:NUSM)
(Nasdaq Intl Designation) (the
"
Company" or "
Nautilus") is
pleased to announce the results of a Preliminary Economic
Assessment ("PEA") prepared by AMC Consultants Pty Ltd (“AMC”),
contained in an independent National Instrument 43-101 ("NI
43-101") technical report, for the development of the Solwara
1 Project in the Bismarck Sea of Papua New Guinea (“PNG”).
The PEA details the proposed production system
and methodology, and provides estimates of operating costs, CAPEX
to completion, metal production, and cash flows.
Highlights include:
- Solwara 1 is fully permitted
- PNG Government is a 15% partner
- 15 month ramp up to “steady state” production (~3,200
t/mth)
- Steady-state payable metal production per quarter ~ 20 kt Cu
and 29 koz Au
- C1 costs*
- US$1.36/lb Cu for the entire deposit
- US$0.80/lb Cu when at projected “steady state” (3,200 t/d)
- Undiscounted post-tax net cash flow of US$179
million
- Discounted net cash flow, discounting at 15% per annum, of
US$56 million
- IRR base case 28%*, rising to 40% using average forward curve
metal prices for copper and gold during the production period (as
at the PEA's effective date)
- ~US$243 million of CAPEX remaining to be raised (subject to
financing) and spent until production commences
- Taxes and royalty payments from Solwara 1 are estimated to be
more than USD$100 million over the 3 year project life (including
ramp-up)
The PEA models first production starting Q3
2019, and also shows that the Project has a high fixed cost
component (~52%), largely vessel related, and is highly leveraged
to metal grade, metal prices, equipment utilization and production
rates. The maximum capacity of the production system is designed at
~6,000 tpd. AMC believes that if a steady-state production rate of
4,500 tpd is achieved, not an unreasonable target in their
assessment, then C1 costs would be expected to be lowered to around
USD$0.63/lb Cu (net of by-products), well in the lower half of the
first quartile of the world copper production curve.
Mike Johnston, Nautilus’ CEO commented: “We are
very excited by the results of the PEA. Expected C1 operating costs
at US$1.36/lb Cu for the entire project are in the lower half of
the cost curve, and include the 15 month ramp up period.
Expected “steady-state” C1 operating costs of US$0.80/lb Cu
sit comfortably in the lower half of the first quartile of the
production curve, and highlight the potentially seriously
disruptive nature of seafloor mining to the world's mining
industry. These are very competitive capital and operating costs,
and have additional room to move.”
The production systems on which the PEA is based
are currently under construction.
The Nautilus business model is based on using
the capital, IP, and know how that Nautilus has developed for the
Solwara 1 Project, and applying it to future discoveries at minimal
additional CAPEX cost, and with a much reduced “ramp up curve” for
subsequent projects.
The oceans have significant potential to provide
the key minerals (copper, gold, silver, zinc, nickel, cobalt and
manganese) needed by the world as it transitions to a low carbon
future based on electric vehicles and batteries. Nautilus’ seafloor
production system with its very small environmental footprint, lack
of tailings, and industry leading OPEX and CAPEX costs, will allow
the Company and its partner, Eda Kopa (Solwara) Limited to lead the
world in this exciting new industry.
About AMC and the Technical
Report
The Company’s subsidiary, Nautilus Minerals
Niugini Ltd, engaged AMC to undertake the PEA for the Solwara 1
Project and compile a technical report compliant with NI 43-101.
AMC is one of the world’s most trusted mining consulting companies
and operates from eight offices in Australia, Canada, Singapore,
Russia and the United Kingdom. It helps mining leaders find smarter
ways to mine and unearth hidden business value. AMC provides
specialist services in geology and mineral resource estimation,
mining engineering, mineral processing, geometallurgy, and
geotechnical engineering. Its global team of experts prepares mine
feasibility studies, conducts studies to optimize and improve
operating mines, and provides specialist technical reports for
corporate and financial transactions. AMC has a long track record
of producing high-quality results that provide confidence to
explorers, miners and investors.
The Company is today filing the technical report
dated February 27, 2018, prepared by AMC entitled "Nautilus Solwara
1 PEA". The authors of the technical report, all of whom are
"qualified persons" under NI 43-101, are Ian Thomas Lipton, Edward
Vincent Gleeson, and Peter Munro. The technical report will be
available under the Company's profile on the SEDAR website at
www.sedar.com as well as on the Company's website at
www.nautilusminerals.com.
About Solwara 1
The Solwara 1 Project is a deep-sea mining
project located in the Bismarck Sea of PNG. Construction of a
commercial-scale mining operation to extract deep-sea metallic
mineral resources is well advanced. Production has not yet
occurred.
The PEA is based on the existing mineral
resource estimate at the Solwara 1 Project. The Company cautions
that the PEA is preliminary in nature, that it includes inferred
mineral resources that are considered too speculative geologically
to have the economic considerations applied to them that would
enable them to be categorized as mineral reserves, and there is no
certainty that the PEA will be realized. A pre-feasibility study
has not been undertaken. Mineral resources that are not mineral
reserves do not have demonstrated economic viability.
All dollar amounts in this release are presented
in US dollars unless otherwise stated.
The results of the PEA represent forward-looking
information that are subject to a number of risks, uncertainties
and other factors that may cause results to differ materially from
those presented herein. See "Forward-Looking Statements" below.
Completion of the production system and initiation of mining
operations at the Solwara 1 Project are also dependent on the
Company raising the remaining capital required, and there can be no
assurances that this can be achieved.
All scientific and technical information
contained in this news release has been reviewed and approved by
Ian Lipton, Principal Geologist at AMC, who is a "qualified person"
under NI 43-101.
* Notes: The PEA is based on a
first production date of Q3 2019. The Company is currently
forecasting a Q2 2019 first production date (subject to financing),
but this is also subject to finalizing the ship build contract
delivery date between Mawei Shipyard and MAC, and finalizing the
integration philosophy and methodology (due early Q2 2018). The
PEA’s effective date is 1st January 2018. Metal prices used in the
PEA's base case were $7,319/t Cu, $1,200/Oz Au, $18.00/Oz Ag. The
upside case used copper and gold prices averaged over the forward
curve for the proposed production period (out to Q2 2022), on the
effective date (1st January 2018), and were estimated by AMC using
US$7,981/tonne Cu, and US$1,391/Oz Au prices. All other cost and
production parameters are detailed in the PEA.
C1 cash costs per pound is a financial
performance measure based on cost of sales and includes treatment
and refinement charges and by-product credits, but excludes the
impact of depreciation and royalties. C1 does not have any
standardized meaning under Generally Accepted Accounting Principles
(GAAP) or International Financial Reporting Standards, and may not
be comparable to similar measures of performance presented by other
companies.
For more information please refer to
www.nautilusminerals.com or contact:
Investor Relations
Nautilus Minerals Inc. (Toronto) Email:
investor@nautilusminerals.com Tel: +1 416 551 1100 |
|
The TSX does not accept responsibility
for the adequacy or accuracy of this press release.
Forward-Looking Statements
Certain of the statements made in this news
release contain "forward-looking information" within the meaning of
applicable Canadian securities laws and "forward-looking
statements" within the meaning of applicable United States
securities legislation. This information and these statements,
referred to herein as "forward-looking statements", are made as of
the date of this news release. Forward-looking statements relate to
future events or future performance and reflect current estimates,
predictions, expectations or beliefs regarding future events and
include, but are not limited to, statements with respect to the PEA
including estimated amount of future production; life of mine
estimates; and estimates of capital costs, operating costs and
economic returns from an operating mine at the Solwara 1 Project.
The cost information is also prepared using current values, but the
time for incurring the costs will be in the future and it is
assumed that costs will remain stable over the relevant
period.
All forward-looking statements are based on the
Company's or its consultants' current beliefs as well as various
assumptions made by and information currently available to them.
These assumptions include: the presence and continuity of metals at
the Solwara 1 Project at modelled grades; the geotechnical and
metallurgical characteristics of mineralised material conforming to
sampled results; the function, capacity and performance of various
equipment and machinery involved in the seafloor production system;
the availability of personnel and equipment at estimated prices;
currency exchange rates; metals sales prices; appropriate discount
rates applied to the cash flows in the economic analysis; tax rates
and royalty rates applicable to the proposed mining operation;
anticipated mining losses and dilution; metallurgical performance;
reasonable contingency requirements; receipt of regulatory
approvals on acceptable terms; the fulfilment of environmental
assessment commitments and arrangements with local communities; and
assumptions relating to the Company’s funding requirements and
progression of project funding. Even though our management believes
the assumptions made and the expectations represented by such
statements are reasonable, there can be no assurance that they will
prove to be accurate. Many forward-looking statements are made
assuming the correctness of other forward-looking statements, such
as statements of net present value and internal rate of return,
which are based on most of the other forward-looking statements and
assumptions contained herein. Reference should be made to the
entire technical report (at www.sedar.com) for all assumptions,
details and risks relating to the PEA.
By their very nature, forward-looking statements
involve inherent risks and uncertainties, both general and
specific, and risks exist that estimates, forecasts, projections
and other forward-looking statements will not be achieved or that
assumptions do not reflect future experience. We caution readers
not to place undue reliance on these forward-looking statements as
a number of important factors could cause the actual outcomes to
differ materially from the beliefs, plans, objectives,
expectations, anticipations, estimates, assumptions and intentions
expressed in such forward-looking statements. These risk factors
may be generally stated as the risk that the assumptions and
estimates expressed above do not occur as forecast, but
specifically include, without limitation: variations in the mineral
content within the material identified as mineral resources from
that predicted; variations in rates of recovery and extraction;
developments in world metals markets; increases in the estimated
capital and operating costs or unanticipated costs; the risk that
the seafloor production system will not operate as designed;
difficulties attracting the necessary work force; tax rates or
royalties being greater than assumed; changes in development or
mining plans due to changes in logistical, technical or other
factors; changes in project parameters as plans continue to be
refined; risks relating to receipt of permits and regulatory
approvals; delays in stakeholder negotiations; changes to the law
and regulations applicable to the project from what currently
exists; the effects of competition in the markets in which the
Company operates; operational and infrastructure risks; and
management's discretion to alter the Company's short and long term
business plans.
Please also refer to our most recently filed
Annual Information Form in respect of material assumptions and
risks related to the prospects of extracting minerals from the
seafloor and other risks relating to the Company's business and
plans for development of the Solwara 1 Project. Risks related to
continuing the Company's operations and advancing the development
of the Solwara 1 Project include the risk that the Company will be
unable to obtain at all or on acceptable terms, and within the
timeframes required, the remaining financings necessary to fund
completion of the build, testing and deployment of the Company's
seafloor production system; that the Company will be unable to
rectify or arrange for the rectification of the default under the
shipbuilding contract for the construction of the Production
Support Vehicle (as announced on 11 December 2017); and that
agreements with third party contractors for building slots within
certain timeframes are not secured as required.
The Company cautions that the foregoing list of
factors that may affect future results is not exhaustive. When
relying on our forward-looking statements to make decisions with
respect to the Company, investors and others should carefully
consider the foregoing factors and other uncertainties and
potential events. The Company does not undertake to update any
forward-looking statement, whether written or oral, that may be
made from time to time by the Company or on our behalf, except as
required by law.
About Nautilus Minerals Inc. Nautilus is the
first company to explore the ocean floor for polymetallic seafloor
massive sulphide deposits. Nautilus was granted the first mining
lease for such deposits at the prospect known as Solwara 1, in the
territorial waters of Papua New Guinea, where it is aiming to
produce copper, gold and silver. The Company has also been granted
its environmental permit for this site. Nautilus also holds highly
prospective exploration acreage in the western Pacific (granted and
under application), as well as in international waters in the
Central Pacific. A Canadian registered company, Nautilus is listed
on the TSX:NUS stock exchange and is also a member of the Nasdaq
International Designation program. Its corporate office is in
Brisbane, Australia. Its major shareholders include MB Holding
Company LLC, an Oman based group with interests in mining, oil
& gas, which holds a 29.3% interest and Metalloinvest, the
largest iron ore producer in Europe and the CIS, which has a 18.5%
holding (each on a non-diluted basis, excluding loan shares
outstanding under the Company’s share loan plan).