World's First Seafloor Mine Receives Potential Lifeline in Papua New Guinea

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Researched by Industrial Info Resources Australia (Perth, Australia)--Nautilus Minerals (TSX:NUS) (Toronto Canada) announced that, through a share placement, it has raised $39.33 million before expenses to continue development of the Solara 1 seafloor mine off the coast of Papua New Guinea. If completed, Solara 1 will be the world's first seafloor mine.

With more than two-thirds of the planet's surface covered with water and predictions that the mineral wealth held in the seafloor could dwarf that of known land deposits, it was only a matter of time before serious efforts to try to unlock this wealth would occur. The possibility of mining the ocean floor was first discussed as far back as the 1960's, but due to the large capital expenditures required and lack of existing underwater mining technology, no companies have managed to bring an underwater project into production. Nautilus Minerals is the first company to actually begin construction of a "Seafloor Production System," but the company was stopped in its tracks in June 2012 following a dispute with the government of Papua New Guinea over ownership and funding for the project.

Nautilus had been eager to resolve the dispute as quickly as possible, as it had already begun construction on much of the major equipment. But the disagreement dragged on, and in November 2012 Nautilus announced that it had instructed all awarded contractors to suspend construction of the equipment until the matter could be resolved. Since that time, the project has remained in a state of limbo as Nautilus has continued to negotiate with the Papua New Guinea government and attempted to raise funds to enable the construction to continue.

With the recent announcement of the successful fundraising, it seems, at least in some capacity, that Nautilus will now be able to continue where it left off in November. Nautilus officials have stated that "the net proceeds from the offering will be used by the company to continue funding its three key contracts related to the Seafloor Production System."

While it seems that the equipment construction will now be able to continue, the dispute with the Papua New Guinea government will continue until at least September this year. An arbitration hearing between the two parties is scheduled to commence August 26, and there is no guarantee that this hearing will be successful, which could mean that the project will be delayed even further. While construction of the Seafloor Production System is set to recommence, construction of the floating production and storage vessel will not begin until the dispute is fully resolved.

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