Toronto Ontario, February 27, 2018 - Nautilus Minerals Inc. (TSX:NUS, OTC:NUSMF 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.
- 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* o US$1.36/lb Cu for the entire deposit o 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.