Tuesday, July 17, 2012

Sea Bed Mining Begins

 The bottom line is that sub sea mining of high grade deposits is feasible. The first build out is now underway. First delivery is as little as twelve months away although I suspect that sometime inside twenty four months is realistic.

The maps show us that this all entails a massive increase in global ore reserves that will be ample for centuries. As also mentioned, these ores are superior to landlocked ores in terms of damage and handling.

Unsurprisingly national governments are putting their ore in in terms of locking up mining rights and all that. Of course there is plenty to go around and mining will be dictated by price rather than supply limitations. We were not having any problem establishing new on land supply, but the fear was always there. This permanently solves the problem although high metal prices may be be necessary.

Gold and Mineral Rush on the Ocean Floor

JULY 11, 2012

Nautilus Minerals (ocean floor mining company) has an agreement with Tongling Nonferrous Metal Group for 1.1 million tonnes per annum (subject to +/- 20% variation) of Solwara 1 material for a period of three years on a take or pay basis, commencing upon the first delivery of product from Solwara 1, targeted in Q4 2013. The agreement is equal to 5% of the world's copper production.

    They are developing the ability to extract high grade material on one deposit and move to the next deposit 100kms away and extract ore in a matter of days

    * they will be able to extract ore with minimal overburden, stripping and waste

    * They are using robots to drill one mile below the ocean surface

    * some of their deposits have over 30% copper

    * They have been able to discover a new mineralized system every three days

    * Production plan for Solwara project off of Papua New Guinea- 1.3 million tons/year containing 80,000 tonnes Cu and approx 150,000 – 200,000oz gold

    Nautilus plans to start mining next year but also cites possible delays. It is building robots up to 25 feet tall that are to collect sulfides and pump them to the surface. Barges are then to carry the seabed minerals to Rabaul, a Papua New Guinea port some 30 miles away.

    China and Other Countries Rushing for the Last Redivision of the World

    China, the world’s largest consumer of gold, copper and many other industrial metals, has shown little interest in waiting for declarations of success. When the seabed authority adopted rules for sulfide prospecting in May 2010, Beijing’s representative filed the country’s application on the same day.

    China does its mineral hunting from ships. It is also developing a submersible known as Jiaolong, after a mythical sea dragon, that can carry three people down deep enough to investigate the sulfide areas.

    Last year, it signed a contract with the authority for exclusive sulfide rights to 3,860 square miles, about the size of Puerto Rico, on a volcanic rift nearly two miles below the Indian Ocean. Jin Jiancai, secretary general of China’s ocean mineral resources agency, told reporters that such deposits “will help China meet the increasing demand” for refined metals. 

    Russia joined the high-seas rush in 2011, and France and South Korea in May. Recently, Seoul also cut a deal for sulfide prospecting in the waters of Fiji, letting it tap the mineral bounty of Pacific volcanism.

    John R. Delaney, an oceanographer at the University of Washington who has studied the volcanic springs for decades, said the threat of environmental harm from seabed mining probably centered less on the high-seas projects of developed states than those in the territorial waters of the Pacific islanders.

“They’re more worried about their economies than the environment,” he said in an interview.

Dr. Cherkashov of the minerals society played down the environmental concerns, saying
one reason for the global rush is that seabed mining has a relatively low impact compared with land operations.

“It’s first come, first get,” he said of the multiplying claims. The wide maneuvering for the most promising sites, he added, represents “the last redivision of the world.”

April 23, 2012

Nautilus Minerals signs landmark offtake agreement for Solwara

Toronto, Ontario, 23 April, 2012 -- Nautilus Minerals Inc. ("Nautilus" or the "Company") today announced it has signed a binding heads of agreement with Tongling Nonferrous Metals Group Co. Ltd ("Tongling") for the sale of the product extracted from the Company's Solwara 1 deposit located in the Bismarck Sea, Papua New Guinea ("PNG").

The agreement provides for the purchase by Tongling of 1.1 million tonnes per annum (subject to +/- 20% variation) of Solwara 1 material for a period of three years on a take or pay basis, commencing upon the first delivery of product from Solwara 1, targeted in Q4 2013 in accordance with a notification mechanism and includes an option to agree an extension of the arrangement.

"The quality of this relationship with China's
largest importer of copper concentrates provides further evidence that there is considerable interest in the high grade massive sulphides being found by the emerging seafloor resource production industry," said Nautilus CEO Stephen Rogers.

The material will be imported into China by Tongling and then processed through its facilities in the city of Tongling alongside the Yangtze River. After production of a copper concentrate it will be smelted in Tongling's industrial complex. The purchase price to be paid by Tongling will be based on the quality of the copper concentrate produced.

The agreement includes a mechanism for an early payment of 90% of the price upon loading of the export vessel in PNG. Final payment is based on the recovery of copper, gold and silver reporting to the copper concentrate with deductions for capped logistics and processing costs, smelter treatment and refining charges (TC/RCs), allowances for plant fixed capital recoveries and Tongling's tolling fee on concentrator plant processing costs. TC/RCs are based on Asian International benchmarks with a premium payable for the achievement of target metal recoveries.

The price payable for all metals will be set by the London Metal Exchange (LME) for copper and London Bullion Market Association (LBMA) for silver and gold with the initial payment for all metals based on the average of the month preceding the shipment and final payment on a four month Quotational Period.

Further value may be realised through a 50%/50% profit sharing scheme based on incremental by-product revenue realised in China, including gold bearing pyrite. Material from the process can be roasted in China to produce gold and sulphuric acid and the remaining calcine may be sold to cement manufacturers or as iron ore fines. With minimal waste Tongling's process brings significant benefits consistent with Nautilus' commitment to minimise environmental impacts. 

The Company will issue a bank guarantee to Tongling in three stages over nine months, which will not exceed approximately US$11.5 million, as a security for 50% of Tongling's concentrator investment costs commencing at the first order of major equipment.

Nautilus CEO Stephen Rogers said the Company was looking forward to working with Tongling to realise the full potential of the high grade material extracted from Solwara 1. "We have now closed the value chain on the project, established our first customer for seafloor massive sulphides and look forward to building a long term relationship with Tongling," he said.

Nautilus is currently progressing the build of equipment, including the Seafloor Production Tools and Production Support Vessel (as those terms are used in the Company's Annual Information Form), for the Solwara 1 Project. 

About Tongling Nonferrous Metals Group Co. Ltd

Tongling Nonferrous Metals Group Co., Ltd., together with its subsidiaries, engages in the copper smelting, copper ore mining, processing of copper products and other related businesses primarily in the People's Republic of China and has a revenue in excess of US$11.2 billion. They are one of the world's leading copper and zinc smelting groups. The company produces gold concentrates containing silver, copper, sulfur, and other elements; iron concentrates; sulfur fine sand products; single-sulphide, iron ore, and iron pellets; copper cathodes; copper flat wires; oxygen-free copper rods; phosphor copper anodes; precision brass sheets and strips; copper sheets and strip classes; lead frame strip classes; phosphor bronze tins; brass rods; self-adhesive and lubricating cables; and resistant wires. It also offers sulfuric acid, copper sulfate, and nickel sulphate. The company was formerly known as Anhui Tongdu Copper Co., Ltd. and changed its name to Tongling Nonferrous Metals Group Co., Ltd. in September 2007. Tongling Nonferrous Metals Group Co., Ltd. was founded in 1992 and was listed on Shenzhen Stock Exchange in 1996. It is headquartered in Tongling City, China. Tongling Nonferrous Metals Group Co., Ltd. is one of the companies with the most complete industry chain in China. In 2011, the copper contained in the self-produced copper concentrate is 48,500 tons, the copper cathodes produced is 854,400 tons, the sulfuric acid produced is 2,067,000 tons, and the gold produced is 11.15 tons. The core business of Tongling is copper smelting. As of the end of 2011, Tongling has total assets of US$5,117 million, net assets of US$1,814 million, sales revenue of US$11.218 billion and total profits of US$296 million.

For more information please refer to www.nautilusminerals.com

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