Tag Archives: experimental seabed mining

PNG’s losses from Solwara 1 currently over K350 million

Solwara 1 is chewing its way through PNG taxpayer funds at an alarming rate

In 2014, the State borrowed US$120 million [K375 million] from BSP to buy a 15% stake in the proposed Solwara 1 seabed mine.

Nautilus Minerals says US$113 million from the loan was paid to the company in December 2014.

It is not clear what has happened to the other US$7 million, the balance of the funds borrowed, but at the moment the government’s investment in Solwara 1 is not looking like a very good bet.

While the State’s partner, Nautilus Minerals is on financial life support and haemorrhaging senior staff, the State has written down its investment by over K260 million.

The latest financial report from Eda Kopa (Solwara) Limited, which holds the State’s interest in Solwara 1, shows that while the company still owes K376.8 million to BSP, it is valuing its assets, the 15% stake in Solwara 1, at just K113.7 million.

Above: Excerpt from the Annual Return for Eda Kopa (Solwara) Limited

As well as the K260 million write down in value, it is estimated the State is paying around K29 million a year to BSP in interest payments. This is calculated from the indicative interest rate of 7.75% shown in the financial report of Eda Kopa’s parent company, Kumul Minerals Holdings Limited.

So, not only has PNG already LOST K260 million on its investment in Solwara 1, it has also paid around K90 million in interest payments to BSP (2015-2017) and is still paying an additional estimated K29 million a year.

How many nurses, health centre workers or teachers could that money have paid for instead?

Looking deeper into the company records of Eda Kopa (Solwara), there are also some other interesting numbers lurking there.

In April 2014, Eda Kopa (Solwara) registered a charge in favour of BSP for up to K2.275 BILLION or US $875 million, (which ever is the higher).

Above: Excerpt from the Registration of Charge document

In November 2014, a second charge was registered by Eda Kopa (Solwara). This time a cross charge with Nautilus Minerals in the sum of K10 BILLION.

Above: Excerpt from the Registration of Charge document

The existence of both these substantial charges is verified by Deed documents [BSP Deed – 1mb, Nautilus Deed – 7mb] executed by the parties

Above: Excerpt from the Deed for the K2.275 billion charge

Above: Excerpt from the Deed for the K10 billion charge

Does anyone trust Eda Kopa (Solwara) to be playing around with such enormous potential liabilities?


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Filed under Financial returns, Papua New Guinea

Nautilus Minerals says it doesn’t know very much at all

According to Nautilus Minerals, although it has successfully tested its mining machines in a giant puddle, there is an awful lot it does NOT know about its proposed Solwara 1, experimental seabed mine in Papua New Guinea.

Indeed, it is hard to find anything the company does know with any certainty.

Nautilus Minerals admits it does not know:

1. If its mining machines will work on the seafloor

Nautilus says there are “risks relating to the performance of the Seafloor Production Tools include the risk of equipment failing to perform to design specifications when operated at the Solwara 1 Project, as the machines have not yet been tested at depths similar to depths present at the Solwara 1 Project”.

2. If it can raise the money it needs to even start mining

The risks related to continuing the Company’s operations and advancing the development of the Solwara 1 Project include “the risk that the Company will be unable to obtain at all or on acceptable terms, and within the timeframes required, the remaining financings necessary [$300 million] to fund completion of the build, testing and deployment of the Company’s seafloor production system

3. If it can fix the failed funding for its mining support ship

The Company may “be unable to rectify or arrange for the rectification of the default under the shipbuilding contract for the construction of the Production Support Vehicle (as announced on 11 December 2017)

4. Whether its other contractors can do their part on time

Nautilus says that “agreements with third party contractors for building slots within certain timeframes are not secured as required”.

5. Whether the mine is economically viable

Nautilus does not even know if the mine is economically viable:

“As the Company has not completed an economic study in respect of the Solwara 1 Project, there can be no assurance that the Company’s production plans will, if fully funded and implemented, successfully demonstrate that seafloor resource production is commercially viable”

6. What the environmental impacts will be

Nautilus Minerals doesn’t even know what the environmental impacts of any mining will be: “the actual impact of any SMS mining operations on the environment has yet to be determined” says the company.

On top of all this, yesterday we revealed that Nautilus apparently doesn’t know that the company it thought was its partner in the Solwara 1 mine, holding a 15% stake, actually doesn’t exist any more… oops!

Maybe all these unknowns explain why Nautilus Minerals can’t find anyone dumb enough to finance its plans – except, of course, the PNG government!

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Filed under Environmental impact, Financial returns, Papua New Guinea

Nautilus Minerals working with ghosts

Nautilus Minerals has been going through a rough time recently, so rough the company is now claiming to be working in partnership with a ghost, a company that no longer exists.

Nautilus Minerals wants to be the first to mine the seabed, but has been on financial life support since last year, unable to raise the $300 million it needs to complete its preparations for mining. In the meantime it is being kept alive only by a series of short-term loans from its major shareholders.

To make matters worse, in November last year, the company supposed to be supplying the mining support vessel, the key piece of infrastructure for a seabed mining operation, cut off funding for the ship build.

With no money and no ship and forced to close its Papua New Guinea offices, perhaps it is no surprise senior staff have started bailing too. First, Chairman Russell Debney, on December 27  and then President, PNG Operations, Adam Wright.

But even given this alarming state of affairs, industry observers have been shocked to see Nautilus Minerals claiming, in its official Toronto Stock Exchange notices that it is still [12 February] working “closely with its partner Petromin”.

Clearly that statement can’t be true as Petromin is dead, it was extinguished by the Kumul Minerals Holdings Authorization Act of 2015. The Act replaced Petromin with Kumul Minerals Holdings Limited.

Kumul Mineral Holdings extract showing Petromin ceased to exist in December 2015

How could Nautilus Minerals not know that its partner in the Solwara 1 mine had been abolished by an Act of Parliament and replaced?

Whether a case of ignorance or sloppy management of its stock exchange statements, claiming to be working closely with a ghost is not a good look.

And there is more bad news for Nautilus. Unfortunately, the replacement of Petromin by Kumul Mineral Holdings just further undermines Nautilus’ lack of financial credibility, as Kumul Minerals Holdings is effectively bankrupt.

Kumul Minerals Holdings Annual Return for 2016, reveals a loss for the year of K354.7 million and total liabilities that exceed the total assets by K218.1 million.

Kumul Mineral Holding Ltd Annual Return 2016, page 11

This raises the question of whether Nautilus Minerals has informed its shareholders and the stock exchange of its partners financial strife and the ‘material uncertainty‘ it will be able to ‘realise its assets and settle its liabilities‘?

But then again, they are all probably reading this blog anyway!

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Filed under Mine construction, Papua New Guinea

Nautilus Minerals misleads the world over machine testing

This Auxiliary cutter has been tested in a large puddle NOT the extreme conditions it will face at 1500 metres

Nautilus Minerals has been proudly trumpeting to the world the successful completion of the ‘submerged trials’ of its giant mining machines. Nautilus though has been carefully to omit one crucial fact about these ‘successful trials’, they have been conducted in a large puddle NOT in the extreme conditions of pressure, cold and darkness the machines will experience at a depth of 1500m.

Nautilus still has no idea if the machines can work in those conditions, just as it has no idea what the environmental impacts of the proposed strip mining will be… 

Submerged Test of Seafloor Mining Tools Completed

Maritime Executive | 12 February 2018

Nautilus Minerals has successfully completed submerged trials of its seafloor production tools in Papua New Guinea.

The company plans to use the tools to cut and extract high grade copper and gold from the seafloor at the Solwara 1 Joint Venture’s project site in the Bismarck Sea. Solwara 1 is expected to be the world’s first commercial high-grade seafloor copper-gold mine project. The site has indicated resources of one million tons grading 7.2 percent copper, five grams (0.18 ounces) of gold per ton, 23 grams (0.81 ounces) of silver and 0.4 percent zinc. Inferred resources add 1.5 million tons of 8.1 percent copper, 6.4 grams of gold, 34 grams of silver and 0.9 percent zinc.

Each of the machines, a bulk cutter, an auxiliary cutter and a collection machine, weighs around 250 tons. All three will operate at depths of around 1,500 meters (4,900 feet) in temperatures of 2.6 degrees Celsius. The machines are designed to break rock with much greater force than land machines and must operate at low temperatures to avoid overheating.

The Collecting machine

The auxiliary cutter prepares the rugged seabed for the more powerful bulk cutter. These two tools gather the excavated material; the third, the collecting machine, will collect the cut material by drawing it in as seawater slurry with internal pumps and pushing it through a flexible pipe to the subsea pump and on to the support vessel above via the riser and lifting system.

The machines will be remotely controlled from a purpose-built vessel. The vessel is being built by China’s Fujian Mawei Shipbuilding and will measure 227 meters (750 feet) in length and 40 meters (130 feet) in width and will have accommodation for up to 180 people. It will generate approximately 31MW of power. 

Completing the trials in PNG allowed Nautilus to work closely with its partner Petromin, government officials and community leaders from coastal villages geographically closest to the Solwara 1 site the opportunity to witness the equipment in action.

The equipment is now being prepared for shipment to China where it will be integrated onto the support vessel [when and if it is ever completed].

Earlier this month, the Government of Papua New Guinea granted a two year exploration license to Nautilus. Work done in the area by the company has identified numerous exploration targets with similar geology to the deposits found at Solwara 1. 


Filed under Mine construction, Papua New Guinea

Seabed minerals [mining] company to visit Cook Islands

Seabed Minerals Authority mining operations commissioner Paul Lynch says ‘exploration’ is very different from the ‘exploitation’ the EU Parliament wants to stop.

Jonathan Harwood | Cooks Island News | February 12, 2018

Representatives from United States-based company Ocean Minerals LLC (OML), which has an option on exploring the possibility of seabed mining in Cook Islands waters, are to visit Rarotonga next month.

Last year, the company signed a deal worth $100,000 to reserve an area of around 23,000 square kilometres containing high-value polymetallic (manganese) nodules for up to 18 months.

They have until April next year to make an application to begin exploration work within the Cook Islands EEZ.

The visit comes soon after the European Parliament called for a moratorium on seabed mining.

In January it passed a resolution that “calls on the (European) Commission and (European Union) member states to support an international moratorium on commercial deep-sea mining exploitation licenses until such time as the effects of deep-sea mining on the marine environment, biodiversity and human activities at sea have been studied and researched sufficiently and all possible risks are understood.”

Paul Lynch, commissioner of the Seabed Minerals Authority in the Cook Islands said any mining operations in local waters remained a long way off.

And he explained that “exploitation”, which is what European legislators want to halt, was very different to “exploration”, which is what is currently being considered for the Cook Islands.

Exploration involves short term scientific research to understand the viability of any mining proposal, and also involves assessing what impact it might have on the seabed and environment. Exploitation is the final stage and involves the actual removal of minerals from the seabed and could last for many decades.

Indeed, a desire to understand the effects of deep-sea mining or exploitation could be interpreted as a call for more knowledge to be gained from exploration projects.

Lynch said he was confident that the Cook Islands was approaching the issue in a responsible way, having passed the Seabed Minerals Act in 2009 – the world’s first national legislation dedicated to regulating seabed minerals activities.

“We have a world class regulatory framework to deal with the potential risks. And that is why we want to first seek exploration applications, over the next three to five years, so we can see if it is viable for the country, in terms of benefits and sustainability. The contractor also needs to determine its own costs and benefits perspective.”

He added that any subsequent mining operations were still five to eight years away and would adhere to “best international practice and high environmental principles in collaboration with Marae Moana”.

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Filed under Cook Islands, Exploration

This Deep-Sea Creature Lays Its Eggs on Hydrothermal Vents—A First

The Pacific white skate lay its eggs on superheated hydrothermal vents, and then may wait more than four years for the eggs to hatch. PHOTOGRAPH BY JULYE NEWLIN, OCEAN EXPLORATION TRUST

Yet another scientific discovery lays bare the myth that ‘nothing lives down there’ and further reinforces that we just don’t know what could be lost if Nautilus Minerals is allowed to carry out its proposed open cut strip mining operation on the sea floor

Jason Bittel | National Geographic | February 8, 2018

The world’s most patient mom may be a deep-sea octopus that tends her eggs for nearly 4.5 years. But now, there may be a new contender for her throne.

Scientists have caught a rare glimpse of another deep-sea dweller that may also spend four or more years nursing its eggs, and it does it in an even more unusual place: on hydrothermal vents, where hot water spews from the ocean floor.

It’s called the Pacific white skate (Bathyraja spinosissima), a bone-white, bug-eyed relative of sharks that can live almost two miles (2,900 meters) underwater.

Deep-sea skates, which are shark relatives that resemble rays, lay large eggs that can take years to hatch in cold water. 

In June of 2015, scientists piloting a remotely operated vehicle through the depths of the Galapagos Marine Reserve discovered mounds upon mounds of Pacific white skate egg-casings littered atop a hydrothermal vent. Using the submarine’s robotic arm, the scientists plucked four of the yellow-green egg-cases—each about the size of a deflated football—and brought them back to the surface for DNA analysis.

This the first time skates have been found to use hydrothermal vents as nurseries, and the scientists suspect the animals are laying their eggs here for a reason.

It takes longer for eggs to incubate in cold water, so the skates may be warming them up on the vents, says Dr. Pelayo Salinas-de-León, a National Geographic Society Explorer who led the study, described in the journal Scientific Reports.

The team estimates that, like the deep-sea octopus, Pacific white ray egg cases may require more than four years to hatch, judging by the incubation time of a closely related skate in the Berendt Sea and the depth and temperature of the water surrounding the vent.

And that’s a “very conservative” estimate, adds Salinas-de-León, who is also a marine scientist with the Charles Darwin Foundation and National Geographic’s Pristine Seasinitiative.

A Whole New World

Since hydrothermal vents were first discovered in 1977, scientists have found crabs, anemones, mollusks, and shrimp inhabiting these seemingly inhospitable environments.

But until now, no one would have included skates on that list, says Dr. Lisa Levin, a professor of biological oceanography at the University of California, San Diego.

The Pacific white skate is the first animal found to be laying its eggs on a hydrothermal vent. PHOTOGRAPH BY JULYE NEWLIN, OCEAN EXPLORATION TRUST

“We know so little about the functions of these systems that finding a new function, like being a nursery habitat, is very important,” says Levin.

Interestingly, Levin says there have been a handful of sightings of skate eggs near cold seeps, which are similar to hydrothermal vents but lack heat and emit methane.

The water shooting out of a hydrothermal vent can exceed 750 degrees Fahrenheit (400°C), Salinas-de-León says, but as soon as it hits the near-freezing water of the deep sea, that plummets to just 36°F.

But even just a few degrees of warmth around the mouth of the vents could be enough to reduce the skate eggs’ incubation time by months or even years, says Salinas-de-León.

The only other animals known to use Earth’s warmth for egg incubation are the mound-building megapode birds of Southeast Asia and Australia and a group of nest-building neosauropod dinosaurs from the Cretaceous Period, he says.

Plumes In Peril

You might think that a bubbling cauldron at the bottom of the ocean would be relatively safe from humans and our impacts, but even these remote areas are threatened.

Hydrothermal vents are being targeted for deep seabed mining, and the oil and gas industry drills on the margins of methane cold seeps.

The water shooting out of a hydrothermal vent can exceed 750 degrees Fahrenheit, or 400°C. PHOTOGRAPH BY JULYE NEWLIN, OCEAN EXPLORATION TRUST

The new findings suggest that skates may be more at risk for overfishing than previously thought, since exceptionally long incubation times mean the animals’ populations can’t bounce back quickly.

“The idea of skates using heat to incubate their young, much like some dinosaurs, is likely to invoke fascination and maybe even a little sympathy,” says Sonja Fordham, president and founder of the conservation organization Shark Advocates International.

“We hope that exciting new findings like those in this paper can help to spark greater interest in skates and, in turn, a greater constituency for conserving them,” says Fordham.

Salinas-de-León, too, sees the discovery as a mandate to protect these unique and relatively unexplored ecosystems.

“We hardly know anything about the deep sea, and we are fishing, and mining, before we even get a chance to even document what species live down there and what unique behaviors [they] could reveal [to] us,” he says.

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Filed under Environmental impact, Pacific region, Papua New Guinea

Nautilus Granted New Exploration License; Includes New Targets

Despite the company’s financial collapse and near universal opposition to experimental seabed mining from local people, churches, politicians, scientists and the global community, the PNG government is still backing Nautilus Minerals

Nautilus Minerals Inc. | Globe Newswire | February 09, 2018

Nautilus Minerals is pleased to announce that the Government of Papua New Guinea has granted a two year Exploration License to Nautilus which will allow the Company to conduct exploration activities on this area within the southeast Bismarck Sea.

The Exploration License EL2537 covers 2,558 km2, including the same prospective geology that hosts Nautilus’ Solwara 1 deposit. The area was selected based on reconnaissance sampling and survey completed in 2017. Nautilus gratefully acknowledges assistance in this area by the PNG Geological Survey.

Mike Johnston, Nautilus’ CEO commented: “The granting of this Exploration License is excellent news. Work done in the area by the Company has identified numerous exploration targets with similar geology to our Seafloor Massive Sulfide deposits found at Solwara 1. The work completed last year reconfirms the significant exploration potential for deep sea minerals over expansive yet unexplored metallogenic provinces. Our team has worked very hard to improve exploration efficiency; covering larger areas at lower costs, and the results at hand show that this approach is bearing fruit.”

Subject to receiving additional funding under the Company’s previously announced bridge loans and potential credit facility transaction, Nautilus aims to test and progress these targets as soon as practicable, in order to advance the Company’s plans of increasing its current resource portfolio to support future seafloor mining operations. PNG is renowned for hosting large mineral deposits and the same tectonics that drive mineralization at the nearby Bougainville and Lihir deposits, is also believed to drive seafloor mineralisation at Solwara 1 and 12, placing this exploration license in a favorable location (see Links section below for maps of the license and exploration targets). Nautilus looks forward to sharing the results once exploration commences.

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Filed under Exploration, Papua New Guinea