Nautilus Minerals has released the results of an independent definition and cost study by SRK (Australia) of the proposed offshore production system to be deployed at Nautilus’ Solwara 1 project in the territorial waters of Papua New Guinea. The system is based on various technologies utilized in the oil and gas, mining and dredging industries but modified for the offshore production system.

The principal operations of the system include seafloor cutting and gathering, recovery of mineralized material as a slurry to surface, slurry dewatering, discharge of mineralized material to transportation barges, and transport of the mineralized material about 50 km to the Port of Rabaul.

Seafloor cutting is proposed to be undertaken by two large robotic machines that would excavate material from the seafloor by a continuous cutting process, not unlike coal or other bulk continuous mining machines on land. A preparatory machine, called an auxiliary miner, would deal with rough terrain and create benches for a bulk miner to mine. The auxiliary miner would operate on tracks with spud assistance and have a boom-mounted cutting head for flexibility. The bulk miner would have higher cutting capacity but would be limited to working benches created by the auxiliary miner. Both machines would leave cut material on the seafloor for collection by a gathering machine, also a large robotic vehicle, which would collect the cut material by drawing it in as a seawater slurry through internal pumps. The slurry would exit the gathering machine through a flexible pipe for transfer to a riser and lift system (RALS).

The RALS would comprise a large pump and rigid riser pipe hanging from a vessel. The proposed pump is a positive displacement type designed and built by GE Hydril, Houston, Texas, USA. The pipe would be deployed to the seabed by a large derrick and draw-works system onboard the vessel.

On deck, the slurry would pass through a dewatering plant. Dewatered material would be discharged to a transportation barge moored alongside. Used seawater would be pumped back to the seafloor through the riser pipes and would provide the hydraulic power to operate the RALS pump. The barges would transport the material to a stockpile location in the Port of Rabaul.

Capital costs for the offshore production system, including those associated with barging to the Port of Rabaul, are estimated at $383 million, including a 17.5% contingency. Average operating costs up to the Port of Rabaul are estimated at $70/mt, including a 10% contingency, based on a 1.35-million-mt/y production rate. The study indicates production commencing at a rate of 1.2 million mt/y (dry equivalent) but notes that the system will have the capacity to ramp up to 1.8 million mt/y. The study estimates that, once approved by the Nautilus board of directors, it would take 30 months to build the offshore production system and begin commercial production.

Subject to securing adequate financing to advance the project to commercial production, Nautilus anticipates that board approval for the offshore production system may be received before the end of 2010. Nautilus does not intend to complete a formal feasibility study or define a large, long-life resource or reserve before it proceeds with the completion of the equipment build and commencement of production at Solwara 1.

Management considers that the company’s interests will be best served by first demonstrating that existing technologies can be adapted to cut and recover highgrade seafloor massive sulphides from the deep ocean.