Name of the Project
Solwara 1 seafloor copper/gold project.

Location
The project is located in the Bismarck Sea of Papua New Guinea (PNG).

Client
Nautilus Minerals and the PNG government.

Project Description
The Solwara 1 project is a deep-sea mining project where construction of a commercial-scale mining operation to extract deep-sea metallic mineral resources is well advanced.

A preliminary economic assessment has determined that the project is economically viable.

The target mineral resources at Solwara 1 are located on the seafloor, about 1 550 m below sea level, and are covered with a thin layer of unconsolidated sediment.

The extraction of 900 000 t of indicated mineral resource grading 6.4% copper and 4.6 g/t gold, and 1.3-million tonnes of inferred resource grading 7% copper and 5.5 g/t gold (undiluted), has been scheduled. There are no mineral reserve estimates for Solwara 1 and the potential viability of the mineral resources has not yet been supported by prefeasibility or feasibility studies.

A peak production rate of about 3 200 t/d is planned. The conceptual plan envisions recovery of an estimated 130 000 t of copper and 180 000 oz of gold from Solwara 1. The plan further envisages the extraction of indicated and inferred mineral resources containing copper and gold at copper grades significantly higher than most terrestrial mines.

The depth and relative competence of the massive sulphide deposit do not make it amenable to extraction using dredge technology.

Mining equipment has been designed, constructed and tested. The equipment is mobile and is expected to be reusable at future deep-sea mining projects.

Sediment removal, rock cutting and the transfer of fragmented cuttings to surface are performed by three seafloor production tools and a positive displacement pump, collectively known as the seafloor production equipment. The equipment will be remotely controlled by operators located on board a surface vessel stationed over the deposit.

The production support vessel (PSV) – a hybrid of a mobile offshore drilling unit, a cargo ship and various special purpose ships – will generate power. It will also house the mining crew; provide a platform for the launch, recovery and servicing of the seafloor production tools; and provide a place for dewatering and temporary storage of mineralised material before shipment to offtakers for further processing, smelting and precious metals recovery.

Solwara 1 is scheduled to be in production for 29 months.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has a net present value, at a 15% discount rate, of $56-million and an internal rate of return of 28%.

Value
The project is estimated at $530-million.

Duration
The PEA targets first production starting in the third quarter of 2019.

Latest Developments
Nautilus Minerals has received a loan from Deep Sea Mining Finance for $650 000 under a previously announced credit facility of up to $34-million between the company, two of its subsidiaries and the lender.

Pursuant to the agreement, Nautilus has issued an additional 2 792 096 warrants in connection with the $650 000 loan to Deep Sea Mining Finance. Each such warrant entitles the lender to buy one common share of the company at a price of C$0.17 for five years from the date of issuance of the warrant.

To date, the company has issued 56 701 028 share purchase warrants to Deep Sea Mining Finance in connection with loans, totalling $13.2-million.

The loans will fund working capital requirements and enable Nautilus to continue to advance the Solwara 1 project continuing to seek the remaining project financing of up to about $350-million required to complete the development.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Too early to state.

Contact Details for Project Information
Nautilus Minerals, tel +1 416 551 1100 or email investor@nautilusminerals.com.