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