Nautilus Minerals intent on deep sea mining, despite cancelling government agreement, says its CEO.

During a conference call last night, the interim President and Chief Executive Officer of Nautilus Minerals, Mike Johnston, said the Canadian company still intends to develop the Solwara I deep sea bed mine project, despite terminating its agreement with the PNG Government.

Nautilus has announced the termination after the government failed to complete its purchase of 30% of the Solwara 1 Project, as ordered by an independent arbitrator last October.

The PNG Government signed an agreement in March 2011 to exercise its option to take a 30% shareholding in the world’s first sea bed mining project in the Bismarck Sea, off the north coast of Papua New Guinea. However, it failed to complete the purchase and, in June 2012, took Nautilus to compulsory arbitration.

The binding ruling ordered the PNG government to pay US$118 million by 23 October 2013, which it failed to do.

Johnson said terminating the agreement means that the PNG Government has forfeited its right to participate in the project, and to any equipment, intellectual property and licences.

There was too much uncertainty created by the state’s continued non-performance and Nautilus could not continue to carry the share of development costs on behalf of the state, he said.

‘The mining lease and environment permit remain valid in PNG and Nautilus remains committed to PNG and the local communities in which it operates.

‘Nautilus’ preference is still to achieve an amicable resolution of the issues with the state.

‘We are now also free to look at other funding and development options … an essential part of our plan going forward is look at securing additional funding.’

Given it instigated the arbitration last year, many in the mining industry are puzzled by the PNG Government’s inaction. It had yet to respond to the Nautilus announcement at the time of writing.