Nautilus closes Port Moresby office

nautilus headerInsider

Nautilus Minerals has sacked twenty-six people from their organisation. All of the Port Moresby office employees have been made redundant, AGAIN, and the POM office is closing its doors, AGAIN.

This will be the third time this has happened (redundancies), yet the Executive Committee look like they are sitting pretty YET AGAIN. In all probability MB Holdings will probably buy out the company and see it forward from here.

The employees, the shareholders and the people of PNG have been taken for a ride AGAIN.

Someone should look into the way Nautilus Minerals has been operated over the past 10 years and look closely at how money has been spent on things such as travel, furnishings for offices, nepotism and cronyism, where did the $10M dollars actually go, and how was it possible that Shontel Norgate made a transfer without checking the banking details, and, why was she allowed to keep her job after losing such a huge amount of money???????

The excessive travelling of staff, to and from Moresby office and Brisbane office and the appointment of unqualified people to positions such as CSR Specialist. It is time to stop trusting the individuals from Nautilus (or any other company for that matter) who operate under the concept of White Privilege and realise that if Nautilus Minerals (or whatever form it takes from this point on) or any other company that wishes to exploit the riches and people of PNG, had better start acting in a manner that actually reflects the so called values of the company.

“Nautilus Cares”,  pffff, Yeah Right….

It truly has been a race to the bottom, just not the one we expected to see!

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Frieda Mine Road Construction a Threat to Upper Sepik Environment

frieda road sepik

William H. Townsend, Ph.D., P.E.

It is clear that constructing the Frieda Mine Access Road from Nikie to Kubkain by way of Yabatawe in East Sepik Province will have major impact on the forest along the road, which runs through several Sanio-Hiyewe communities. By damaging their sago and other food sources, a sustainable food supply will be threatened in this challenging environment.

I lived with the Saniyo-Hiyewe for 20 months in 1966-1967 and shorter periods between 1980 and 1984. One of my activities during this time was mapping ridges, swamp forests, and paths between villages. Another was weighing food and measuring sago stands.

In 1981 through 1984 I served the PNG Government as its technical advisor on the Ok Tedi Mine, reporting to the Secretary of Minerals and Energy and the Secretary of Finance. As a civil engineer, I was responsible to monitor construction of the mine and report on OTML’s progress as it affected local facilities and environmental impact. 

Responding to a Directive from Parliament in 1982, I did an inspection of the Access Road from Kiunga to Tabubil and reported back to Parliament. This inspection revealed that the construction of the road through rain forest was slower and more difficult than anticipated. The side cast method of road construction used there discarded topsoil away from the roadway, pushing it into the adjacent forest.  (See photo.)

If the same construction methods for mine access roads are used on the Frieda Mine that were used in Western Province, runoff will deposit materials that will damage the prime sago areas, which have taken generations to develop, and other food sources. Damage to the fragile forest during construction would take decades to remediate and restore sustainable living to the people of the Upper Sepik tributaries.

While commentators are rightly concerned about the massive damage that occurs from riverine disposal of mine wastes during production or through the failure of poorly constructed tailings dams after mine closure, vigilance is also necessary from the beginning of construction. Environmental damage from construction shortcuts is especially likely during the pre-production and early production phases, before the project returns a profit, as Ok Tedi should have taught us all.

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Papua New Guinea-Bougainville mine row intensifies

o'neill in parliament

Rowan Callick | The Australian | 23 August 2016

Papua New Guinea Prime Minister Peter O’Neill has escalated his feud with Bougainville’s President, insisting his cabinet’s offer to hand over a key parcel of shares in Bougainville Copper to mine landowners is final.

“The distribution of shares for Bougainvilleans will be done by themselves,” Mr O’Neill said.

President John Momis had “furiously” rejected the PNG plan, announced by Mr O’Neill to the parliament last week, to transfer to “the landowners and the people of Bougainville” the 17.4 per cent parcel recently given to the national government by Rio Tinto, the former owner.

If combined with the further 36.4 per cent parcel given by Rio to the Autonomous Bougainville Government led by Mr Momis, this gives the island a controlling stake over the mine — which still contains copper and gold worth about $50 billion, but is estimated to cost upwards of $6.5bn to reopen.

However, if the 17.4 per cent parcel is given to a Bougainvillean splinter group that is at odds with the autonomous government — and several remain, leftovers from the civil war of 1989-2001 — then that group would hold a veto power over further development in the island.

The mine is widely seen as the key potential income source for the island, whether Bougainvilleans choose in their 2019 referendum to seek independence from PNG or to remain autonomous within PNG.

Mr Momis said he was “angry because it’s the ABG that speaks for the people of Bougainville”.

“Mr O’Neill has rejected my advice,” he said. “He is interfering in Bougainville. He acts in the same high-handed manner as the colonial administration and BCL when the mine began. That caused the Bougainville crisis.”

Mining legislation passed by the Bougainville parliament already provides landowners with “full decision-making involvement and a good revenue share, if mining resumes”, he said.

Mr O’Neill responded yesterday:

“We have had enough of this nonsense and attempts manipulate the peace process for political gain.

“I have deliberately given these shares to the people so that the ABG does not have outright control of 53.8 per cent of the mine. The ABG is very welcome to participate in the consultation process with the landowners, but these shares will go to the people who have a direct stake in the mine.”

The legislation guarantees landowners 5 per cent free equity in the operating company once the mine starts producing again — which, Mr Momis said, would be worth much more than the 17.4 per cent being handed to them by Mr O’Neill since the cost of re-opening the mine would fall on existing shareholders, “dramatically diluting” their equity.

“The future of (mine site) Panguna is Bougainville’s most sensitive issue,” Mr Momis said. “I have explained to the PM several times why it is vital the ABG holds the Rio shares in Bougainville Copper Ltd.”

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Nautilus offered short lifeline but cancels contracts and slashes staff by 60%

rio banner seabed mining

Prospective experimental seabed mining company, Nautilus Minerals, has secured an offer of  $20 million in bridge funding, but its continuing financial crisis means it is cancelling contracts and slashing staff numbers [see announcement below].

The $20 million will be raised through a share issue to existing shareholders Mawarid Offshore Mining and Metalloinvest, but is still subject to shareholder approval.

The $20 million will allow Nautilus to survive for a few more months while it continues to search for the substantial additional funds, believed to be at least $200 million, it needs to even get close to starting mining in Papua New Guinea.

Even if new funding is found, the start of mining operations at Solwara 1 has already been pushed back at least 12 months to 2019.

In the meantime Nautilus is:

* Slashing staff numbers by 60%

* Terminating four members of its senior executive team including the Chief Financial Officer and two Vice-Presidents

* Terminating all new contacts for the construction of mining equipment

* Putting existing machinery into storage

* Stopping the construction of its mining support vessel once the hull is completed

Nautilus says the complete suspension or termination of the whole Solwara 1 Project remains a serious option as there are no guarantees it will be able to raise any further funding.

The announcement of the short-term bridge funding comes at a time when Nautilus is facing almost universal opposition to its mining plans.

Nautilus Obtains Bridge Financing and Restructures Solwara 1 Project Delivery
Marketwired | 22 August 2016
Nautilus Minerals Inc. (the “Company” or “Nautilus”) announces that it has signed a subscription agreement (the “Subscription Agreement”) with Mawarid Offshore Mining Ltd. (“Mawarid”) and Metalloinvest Holding (Cyprus) Limited (“Metallo,” and together with Mawarid, the “Purchasers”) under which the Purchasers have agreed to purchase such number of common shares of the Company that will raise gross proceeds of up to US$20 million.
Mike Johnston, Nautilus’ CEO commented “the Company appreciates the ongoing support of its two major shareholders through this bridge financing arrangement, especially given current market conditions. We are also heartened by the continued support of all of our key stakeholders, in particular, our joint venture partner in the Solwara 1 Project, the Independent State of Papua New Guinea’s nominee and our vessel contractors, Marine Assets Corporation and Fujian Mawei shipyard. The global interest in seafloor mining continues to grow, and Nautilus remains the industry leader in this expanding field.”
As previously disclosed, the Company requires significant additional funding in order to complete the build and deployment of the seafloor production system to be utilized at the Solwara 1 Project by the Company and its joint venture partner (as to 15%), the Independent State of Papua New Guinea’s nominee.
The gross proceeds available under the Subscription Agreement will provide the bridge financing necessary to enable the Company to operate and to carry on the Project as described in detail below, while it continues to explore additional financing, joint ventures or other transactions that provide the funding required in order to complete the development of the Solwara 1 Project. There can be no assurances that the Company will be successful in securing any such transactions.
Pursuant to the Subscription Agreement, the shares will be purchased on a private placement basis and will close in tranches, on a monthly basis, during the period from December 1, 2016 through to November 30, 2017 (the “Financing Period”), at the election of the Company.
The Company will determine the amount of funds to be raised under each tranche during each month of the Financing Period, subject to the limitations of receiving maximum subscription proceeds of US$2 million per month and an aggregate maximum total amount of US$20 million during the entire Financing Period.
Shares will be issued under each tranche at a price that is equal to the volume weighted average trading price of the Company’s common shares on the Toronto Stock Exchange (the “TSX”) for the 10-day period immediately prior to the date the Company issues the Purchasers a notice that the tranche will proceed. Closing of the bridge financing remains subject to the approval of the TSX.
As the Purchasers are related parties to the Company, Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions and the rules of the TSX require that shareholder approval be obtained in order for the issuance of shares in the bridge financing to exceed 25% of the Company’s market capitalization or 10% of the Company’s current number of outstanding shares.
The Company plans to hold an extraordinary general meeting of its shareholders on October 26, 2016 in order to seek approval of the bridge financing. Further information regarding the terms of the bridge financing and the relationship between the Company and the Purchasers will be included in the information circular to be mailed to the Company’s shareholders and filed on SEDAR in connection with the meeting of shareholders.
For the purposes of the additional funding required and in order to continue operating during the Financing Period, the Company will implement a restructuring plan that involves the following:

  • Completing the Company’s three key equipment contracts and storing that equipment when delivered, which includes:
    • the Seafloor Production Tools and associated equipment being supplied by Soil Machine Dynamics;
    • the Riser Pipe being supplied by General Marine Contractors; and
    • the subsea slurry lift pump being supplied by GE Hydril.
  • Marine Assets Corporation continuing the construction of the production support vessel at the Fujian Mawei Shipyard up to the completion of the hull, with further construction dependent upon the Company securing additional funding.
  • Undertaking, with its joint venture partner, the activities necessary to maintain the good standing of the Mining Lease and Environmental Permit for the Solwara 1 Project, including the completion of Environmental Management and Monitoring Plans, as well as the completion of local community projects in the regions of Papua New Guinea closest to the Solwara 1 Project area.
  • Terminating other contracts for the construction of any seafloor production equipment that are in the early stages of development and not entering into any new construction contracts until additional funding is secured.
  • Reviewing the joint venture’s remaining development, testing and operations plans to take account of current market conditions.
  • Reducing Company staff numbers by approximately 60% to maintain the key resources required to implement the above activities, whilst ensuring project and corporate knowledge is retained. In this regard, the remaining members of the Company’s executive management team, who will be responsible for implementing the restructuring plan, are:
    • Mike Johnston, President & CEO; and
    • Adam Wright, Vice President — PNG Operations.
  • Staff reductions will include the departure of the following members of the Company’s executive management team by September 2, 2016:
    • Shontel Norgate, Chief Financial Officer;
    • Kevin Cain, Vice President — Projects;
    • Jonathan Lowe, Vice President — Strategic Development and Exploration; and
    • Karen Hauff, General Counsel / Company Secretary.

The Company previously disclosed that in the event that the required funding is secured and the Company is able to continue development of the Solwara 1 Project, the schedule would be delayed. The Company has now secured the necessary bridge financing to facilitate the time required to secure that additional required funding. If the additional required funding is secured by June 2017 and subject to ongoing detailed planning, the Company could be in a position to commence the initial deployment and testing operations at the Solwara 1 Project by the end of Q1 2019.
There can be no assurances that the Company will be able to obtain the necessary project financing on acceptable terms or at all. Failure to secure project financing may result in the Company taking various steps aimed at maximizing shareholder value, including suspending or terminating the development of the Solwara 1 Project, and engaging in various transactions including, without limitation, asset sales, joint ventures and capital restructurings. The Company will provide updates as circumstances warrant. Any transaction(s) will be subject to all necessary stock exchange and, if applicable, shareholder approvals, as well as compliance with all other regulatory requirements.

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PNG warns Momis over Bougainville share row

Papua New Guinea Prime Minister, Peter O'Neill (left) and the Bougainville President, John Momis (right) Photo: AFP/RNZI

Papua New Guinea Prime Minister, Peter O’Neill (left) and the Bougainville President, John Momis (right) Photo: AFP/RNZI

Radio New Zealand | 22 August 2016

The Papua New Guinea Prime Minister Peter O’Neill has warned Bougainville’s John Momis not to play politics over Bougainville Copper Limited shares.

Mr O’Neill sparked fury in President Momis last week by handing the national government’s shares in BCL to landowners on Bougainville rather than to the Autonomous Bougainville Government.

Mr Momis said this threatened the peace process and he said his government could well pull BCL’s exploration licence, which would make the shares worthless.

Mr O’Neill said Mr Momis was trying to manipulate the peace process for political gain.

He said the ABG was very welcome to participate in the consultation process with the landowners, but the shares would go to the people who had a direct stake in the mine.

Mr O’Neill said the views of the National Executive Council were final.

He said the government was committed to advancing the peace process, and not play petty politics that could only undermine peace.

Mr O’Neill said he gave the shares to the landowners so that the ABG could not have outright control of the mine.

He said this was better for transparency, and ensured that shares were in the hands of the traditional people to whom they belonged.

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Calls to halt Australia’s McArthur River mine operations over safety and remediation concerns

The McCarthur river mine in the Northern Territory has been plagued by technical, social and environmental issues since it began in the 1990s. Photograph: Ilya Naymushin/Reuters

The McCarthur river mine in the Northern Territory has been plagued by technical, social and environmental issues since it began in the 1990s. Photograph: Ilya Naymushin/Reuters

Report demands mining stop until it can be determined how and at what cost the operation can be made safe

Michael Slezak |The Guardian | 21 August 2016

The huge McArthur river mine must stop operations until a public commission of inquiry is set up and has examined whether it can be made safe and at what cost, according to an independent report being released on Monday.

Based on the limited public data on the mine, up to $1bn will need to be spent to safely remediate the site, according to Gavin Mudd from Monash University and the Mineral Policy Institute, who wrote the report.

The McArthur River mine in the Gulf of Carpentaria is one of the world’s largest zinc, lead and silver mines. It has been plagued with technical, social and environmental issues since it began in the 1990s.

It has involved the diversion of the McArthur River in the Northern Territory, and resulted in fish eaten by the traditional owners being contaminated.

The piles of waste rock that are dumped alongside the open-cut pit have been reacting with the air and smouldering, giving off toxic fumes.

Mudd says the technical and environmental problems caused by the mine have been a result of the environmental assessments underestimating the difficulties faced by the site.

For example, the smouldering of the waste rock shows that the concentration of dangerous acid-forming rock is much higher than originally thought.

Mudd showed that in 2005 an environmental impact statement estimated that the dangerous rock type made up just 11% of the waste.

But in 2015, an independent monitoring report found that more than 90% of the waste rock was the dangerous acid-forming type, partially explaining why the mounds of waste had been smouldering.

Mudd said that despite being asked by both government authorities and community groups, Glencore, which operates the mine, has not released information about how much waste rock is actually produced.

Mudd says this has made it difficult to assess exactly how the site can be rehabilitated: “We can’t be clear on that because they haven’t published a lot of the data.”

Based on the amount of ore thought to be left at the site, Mudd estimates there could be another 30 years of mining there. He said what happens to the site after that needs to be decided ahead of time and planned for both technically and financially.

Mudd found that, given the high proportion of acid-forming rock in the waste product, the company’s plan to leave a giant open pit in the ground, and a giant pile of waste rock along site it, was not viable.

With that much acid-forming rock, there wouldn’t be enough clay to properly encapsulate the mound and it would leach acid into the environment for years or centuries.

Mudd said the only viable option was to insist the company backfill the pit. He said that would minimise the amount of acid that would leach into the environment in the long term.

In Australia, very few mines have been properly backfilled, and none the size of the McAurthur mine has.

Mudd said it could cost as much as $1bn to move the dirt from the mound into the pit and properly rehabilitate the site: “That’s just the cost of doing business.”

Ensuring the company has put aside enough money to cover that was one of Mudd’s key recommendations.

Currently the size of the company’s rehabilitation bond is unknown, and a recently leaked government report from Queensland revealed that rehabilitation bonds regularly fall short of the actual cost.

Mudd called for a public commission of inquiry set up under the Northern Territory’s inquiries act to be set up “immediately”. It could consider how, if at all, the site could be made safe, and how much it would cost.

“Until then, mining should stop,” he said.

Glencore has been contacted for comment.

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Miringtoro slams Momis over Rio share transfer reaction

MP Jimmy Miringtoro

The reaction from Momis has been ‘shameful’ says Miringtoro

MINISTER MIRINGTORO RESPONDS TO THE ATTACKS ON THE NATIONAL GOVERNMENT BY PRESIDENT MOMIS OVER THE TRANSFER TO THE LANDOWNERS OF RIO TINTO’S BCL SHARES

Jimmy Miringtoro MP | 21 August 2016

I, as the member for Central Bougainville elected by the people of Central Bougainville into the National Parliament of Papua New Guinea, am concern[ed] about the continued media attacks by the ABG President John Momis regarding the transfer of 17.4% shares to landowners and people of Bougainville, by the National Government. As far as I know during his meeting with the Prime Minister which was attended by the Regional Member for Bougainville and Minister for Bougainville Affairs, Joe Lera, the President Momis agreed to the share distribution to the Landowners and ABG.

The 17.4% BCL share equity in effect were gifted to the National Government by Rio Tinto. It was therefore was the prerogative of the Prime Minister to give the shares to the landowners as a token of goodwill. ABG on the other hand was offered 36% percent by Rio Tinto through the National Government, making it a majority shareholder. This distribution of shares was tabled and approved by the cabinet on the 11th of August 2016.

I don’t see any logic in the President’s Statement that such a move is a threat to the Peace Agreement. In my [opinion] it is a step in the right direction in strengthening the peace by addressing one of [the] root causes of the Bougainville Crisis, by giving shares to landowners who had been deprived of proper compensation, for permanent damage to their land and their environment. Even any attempt by BCL to clean up the mess will not restore it to it’s original state.

Firstly let me remind the good President that in the 20 years when the mine was in operation during his terms in office as a Senior Minister and Statesman, he never made any effort to negotiate for equitable benefits to landowners from the proceeds from the mine through ownership of shares in BCL. Needless to say that during that time Panguna mine was one of the most profitable mines in the world and the shares were worth their weight in gold. Today we have to put up with childish bickering from the President over shares that are worthless unless there is mining operations churning out profits.

The President goes on to say that the ABG Mining Law gives landowners full decision-making involvement and good revenue sharing opportunity if mining resumes. That is untrue.

Firstly the mining law was written by an organization that has a reputation of undermining rights of indigenous people and liberalizing economies in the Third World for take over by large corporations.

Secondly, the Mining Law violates the United Nations Charter on the Rights on Indigenous People especially the concept of “Free Prior Informed Consent” or FPIC.

The Mining Law should have gone under the scrutiny of the landowners via independent legal consultations. The whole matter was virtually dropped on the people in the mine-affected areas of Central Bougainville and also the people of Bougainville at large.

As the mandated Member of the National Parliament, representing the landowner of Central Bougainville, I have consulted with the Prime Minister prior to making the decision to give the shares to the landowners. It is the only way justice can be served to people who have not lost their land, their environment which is their livelihood, but also their lives.

The President’s outbursts are shameful because he was the one who stirred up the landowner sentiments to cover up his failures at the national level, in securing better outcomes for the landowners in the mine affected areas. He verbally attacked BCL in 1989 and came up with a dream he called “The Bougainville Initiative” in which he tried to bring in another company to replace BCL as the miner at Panguna.

The President can start to make peace with the people of Panguna and Bougainville by admitting that he had failed them. He should apologize to them for the sufferings and miseries they faced when they chose to take up arms because he did not hear their cries as their leader and representative in the National Parliament. He could have prevented the war if he had been honest right from the start.

The President must now talk with the Landowners about the shares instead of making unnecessary attacks on the National Government, which has done its part. The giving of shares to landowners and ABG is an indication that the Government has a genuine concern for the welfare of the landowners. It anticipates further negotiations and discussions with ABG and landowners to decide how best to work together for the benefit of all parties.

However, up till now President Momis has proven that he is incapable of running a Government which is struggling with the delivery of services to the population and the management of funds given to it. His Mining Law has proven ineffective in preventing BCL from exiting without meeting it’s obligation to clean up the mess it left behind. The only option left now is to make the landowners shareholders of mine, as they cannot be compensated for the loss and damages they have suffered. Court battles that the President is hinting at can take years and there is no guarantee that they will be won and may meet the similar fate to the class action previously lodged in the USA. In addition, it is highly questionable at this point in time who will meet the legal costs of the legal challenge against Rio Tinto.

The Bougainville Peace Agreement deliberately steered clear of the mining issue because it was a very sensitive and emotional issue owing to the fact that it was viewed by many as the root cause of the conflict that led to loss of many lives and properties. ABG’s premature effort to reopen mining in Bougainville when the wounds of the war were still fresh and people are still deeply divided was always going to create problems for ABG and the National Government. Over the years, ABG has been crying for money which it cannot manage as it was indicated in audit report from Auditor Generals Office.

Currently we have complaints from the President about the shares. How can his inappropriate Mining Law protect landowner interests when the law gives ultimate power back to ABG and not the landowners. A law which carries jail terms and monetary penalties against landowners who disrupt mining operations if the mining company did not respond to their grievances. Is this the sort of law to protect rights of the landowners?

I recommend that the President cede control of Bougainville to someone who has the energy, commitment and vision to move Bougainville forward instead of wasting time trying to kick up a dead horse. I see nothing wrong with building wealth for the landowners who can then contribute meaningfully to Bougainville’s economy instead of them being spectators all the time.

Our people are tired of vague idealism by those who live in utopia that has brought no tangible benefits to us but continued exploitation by foreigners.

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