Nautilus Minerals Incorporated NI43-101 Technical Report 2010 PNG, Tonga, Fiji, Solomon Islands, New Zealand, Vanuatu and the ISA
Report prepared by
March 2011 Project Code: NAT007
SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report March 2011
Nautilus Minerals Incorporated NI43-101 Technical Report 2010 PNG, Tonga, Fiji, Solomon Islands, New Zealand, Vanuatu and the ISA NAT007
Document Reference: NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx
Nautilus Minerals Inc. Level 7, 303 Coronation Drive, Milton Qld 4064
SRK Consulting (Australasia) Pty Ltd 10 Richardson St, West Perth, WA 6005
Compiled by: Peer Reviewed by:
Bruce Sommerville
Phil Jankowski Bruce Sommerville Principal Consultant Principal Consultant
Email: [email protected]
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx │i SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report March 2011
SRK Report Client Distribution Record
Project Number: NAT007
Date Issued: 8 March 2011
Name/Title Company Jonathon Lowe Nautilus
This document is protected by copyright vested in SRK. It may not be reproduced or transmitted in any form or by any means whatsoever to any person without the written permission of the copyright holder, SRK.
Rev No. Date Revised By Revision Details 3 23 March 2011 Phil Jankowski Final version
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx │ii SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report March 2011
Summary
Nautilus Minerals Incorporated (Nautilus) is exploring mineral exploration tenements located in the Exclusive Economic Zones of Papua New Guinea (PNG), Tonga, Fiji, Solomon Islands, Vanuatu and New Zealand. These tenements are either known to host, or are considered prospective for, Cu-Zn-Ag-Au seafloor massive sulphide (SMS) mineralisation. SMS deposits are formed where hot hydrothermal fluids transporting metals mix with cold sea water on the seafloor. At present, more than 300 sites of hydrothermal activity and seafloor mineralisation are known globally.
On-land, volcanic-hosted massive sulphide (VHMS) deposits form a major part of the world’s reserves of copper, lead and zinc, as well as being significant producers of gold and silver. Notable examples include the deposits of the Iberian Pyrite Belt in Spain and Portugal, Kidd Creek and Noranda in Canada and Kuroko in Japan. The similarities between SMS deposits and many ancient VHMS deposits have led to the conclusion by geologists that VHMS deposits originally formed as SMS deposits.
In Papua New Guinea, as of 31 December 2010, Nautilus has 58 granted Exploration Licences, 54 Exploration Licence applications and one Mining Lease Application.
On the 29th December 2009, Nautilus received the Environmental Permit for the development of the Solwara 1 Project from the Department of Environment and Conservation (DEC) of Papua New Guinea for a term of 25 years, expiring in 2035. The Environmental Permit is a significant step towards the processing of Nautilus’ Mining Lease Application (MLA154).
As of the 31 December 2010, Nautilus has the following tenements in other SW Pacific countries: 16 granted Prospecting Licenses and a further 30 Prospecting License applications in the Kingdom of Tonga; 17 Special Prospecting Licence applications in Fiji; 25 granted Prospecting Licences and a further 61 Prospecting License applications in the Solomon Islands; 19 granted prospecting licences and a further 36 prospecting licence applications in Vanuatu; and a single Prospecting Permit application in New Zealand. These represent a total granted exploration area of 154,637km2 and a further 373,545km2 under application.
Following a drilling program during 2007, Golder Associates Pty Ltd (Golder) carried out a Mineral Resource estimate for the Solwara 1 deposit. The Mineral Resource (Lipton, 2008) estimate has been carried out to conform to the principles of the National Instrument 43-101 and is reported to contain an Indicated Resource of 870 kt at 6.8% Cu, 4.8 g/t Au, 23 g/t Ag and 0.4% Zn, and an Inferred Resource of 1,300 kt at 7.5% Cu, 7.2 g/t Au, 37 g/t Ag and 0.8% Zn. The Indicated Resources are composed of sea floor massive sulphides while the Inferred Resources includes lithified sediments and chimney material in addition to the seafloor massive sulphides.
Metallurgical testing of drilling samples from the Solwara 1 2007 drilling campaign indicated that the sulphides are largely coarse grained and should be relatively easy to process using conventional floatation technology. A saleable Cu-concentrate can be produced using standard processes, where part of the gold and silver should be recoverable; and that contaminants are generally below penalty levels.
In 2009, Nautilus completed a target generation and target testing program in the Bismarck Sea that identified and sampled nine new prospects, bringing the total number of prospects in the Bismarck Sea to 19 (Solwara 1 to 19). Six of these new prospects are SMS systems and 2 are sulphate rich hydrothermal systems with anomalous precious metals. One prospect was not sampled due to operational issues. High resolution bathymetry and geophysical data were acquired over selected Bismarck Sea prospects to aid in the planning of a core drilling program which commenced during November 2010 and is ongoing.
During 2008, a total of 18 SMS systems were defined in Tonga. Following this in 2009, Nautilus completed a target generation program in Tonga that generated 32 new exploration targets. These are largely plume targets, similar to those previously generated in PNG that have been demonstrated to host SMS mineralisation. Dredge sampling of some of these targets resulted in the discovery of SMS mineralisation; and a camera tow over another target recovered a high grade copper sample. Tonga has strong potential for further SMS discoveries in the future.
In 2009, Nautilus also acquired water column geochemical data in the Woodlark Basin and Solomon Islands in order to define prospective areas. Nautilus has continued to improve its technology for measuring water column geochemistry in order to identify anomalous plumes that may be related to active hydrothermal
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx │iii SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report March 2011 systems. In collaboration with academic research institutes, Nautilus has been able to participate in the deployment of autonomous underwater vehicles (AUV’s) and is able to efficiently identify prospective areas in its large tenement holdings.
In November 2010, Nautilus commissioned a drilling project to improve the resource and geotechnical understanding at Solwara 1. High resolution bathymetry and geophysical data were acquired previously, over selected Bismarck Sea prospects to aid in the planning of the drilling program. A total of 24 holes (SD165 to SD188) were completed at 17 planned sites for a total of 451.86 metres at Solwara 1, between 11 November and 31 December 2010 The drilling program will continue into 2011 and drill a combined length of 1,500 linear metres.
Building on the expertise developed in its pursuit of marine resource development, Nautilus has applied for 74,713 km2 of exploration licenses in the Clarion Clipperton Zone (CCZ). The Clarion Clipperton Zone contains significant accumulations of polymetallic nodules, which may become an important source of copper, nickel and cobalt in the future. Nautilus’ application to explore in the Clarion Clipperton Zone, which is administered by the International Seabed Authority, has been sponsored by the Kingdom of Tonga.
Nautilus has proposed additional exploration programs in the future to further assess their tenement holdings. In addition to the ongoing drilling project, Nautilus is planning several target generation cruises during 2011, focusing on the Bismarck Sea and Tonga. The target generation work is planned to involve shipboard multibeam in prospective areas currently lacking sufficient bathymetry; autonomous underwater vehicle (AUV) surveys over key targets identified previously; camera tows and seafloor sampling. Planning is also underway for a 3D seismic survey over Solwara 1, designed to improve the understanding of the detailed geometry of the sulphide mineralization and adjacent host rocks. Costings and program details for these proposed programs are yet to be finalized.
SRK Consulting (Australasia) Pty Ltd (SRK) is of the view that the tenements are sufficiently prospective to warrant exploration at the budgetary levels indicated, with the techniques and programs presented to SRK during the assessment. In SRK’s opinion the directors and staff of Nautilus have the appropriate technical and management expertise to manage the proposed exploration program.
For this independent geological assessment, SRK has:
Reviewed previous exploration works and technical literature. Conducted five site visits to some of the granted tenements in PNG and Tonga. Independently verified sampling procedures, sample integrity and sample security. Reviewed various company reports as appropriate. Reviewed the proposed exploration program for 2011.
Nautilus has formulated a development plan for the Solwara 1 deposit. The proposed production system comprises the Production Support Vessel; Seafloor Production Tools; Riser and Lift System and onboard Dewatering Plant. After extraction, the ore will be transported to a concentrator facility located outside PNG.
In December 2008, due to reduced commodity prices, Nautilus terminated some of its supply contracts and partially suspended others. Since then, Nautilus has continued with development work with ongoing selective engineering and where appropriate, it has restarted suspended contracts and placed new contracts associated with long lead critical items; Nautilus intends to recommence the remaining facets of the project when conditions are appropriate.
This Report conforms to the reporting requirements of National Instrument 43-101 (Standards of Disclosure for Mineral Deposits) and 43-101F1 guidelines provided by the Canadian Securities Administrators.
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Table of Contents
Summary ...... iii
List of Abbreviations ...... xiii 1.1 Scope of Work ...... 1 1.2 Sources of Information ...... 1 1.3 Site Visits ...... 2 1.4 Qualifications of SRK and Authors ...... 2 1.5 Statement of SRK Independence ...... 2 1.6 Warranties ...... 3 1.7 Consents ...... 3 1.8 Units ...... 3
2. Reliance on Other Experts ...... 4
3. Property Description and Location ...... 5 3.1 Papua New Guinea ...... 5 3.1.1 Tenement Details ...... 5 3.1.2 Exploration Licences ...... 9 3.1.3 Mining Leases ...... 10 3.1.4 Tenement Survey ...... 10 3.1.5 State’s Section 17 Right ...... 10 3.1.6 Royalty ...... 10 3.1.7 Environmental Deposits ...... 10 3.1.8 Legal requirements ...... 11 3.2 Tonga ...... 12 3.2.1 Tenement Details ...... 12 3.2.2 Rights of a Holder of a PL ...... 12 3.2.3 Royalty ...... 12 3.2.4 Environmental Liabilities and Permits ...... 12 3.3 Fiji ...... 15 3.3.1 Tenement Details ...... 15 3.3.2 Rights of a Holder of an SPL ...... 15 3.3.3 Royalty ...... 15 3.3.4 Environmental Liabilities and Permits ...... 15 3.4 Solomon Islands ...... 17 3.4.1 Tenement Details ...... 17 3.4.2 Environmental Liabilities ...... 17 3.5 New Zealand ...... 21 3.5.1 Tenement Details ...... 21 3.5.2 Royalty ...... 21 3.5.3 Environmental Liabilities and Permits ...... 21 3.6 Vanuatu ...... 23 3.6.1 Tenement Details ...... 23 3.6.2 Rights of a holder of a PL ...... 23 3.6.3 Royalties ...... 23 3.6.4 Environmental Liabilities ...... 23 3.7 Clarion Clipperton Zone (CCZ) ...... 26 3.7.1 Tenement Application Details ...... 26 3.7.2 International Seabed Authority (ISA) ...... 27 3.7.3 United Nations Convention of the Law of the Sea (UNCLOS) ...... 27 3.7.4 Permitting Regime ...... 27
4. Accessibility, Climate, Local Resources, Infrastructure, Physiography and Environment ...... 29
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4.1 Papua New Guinea ...... 29 4.1.1 Location ...... 29 4.1.2 Physiography ...... 29 4.1.3 Climate ...... 29 4.1.4 Wind ...... 29 4.1.5 Waves, tides and currents ...... 30 4.1.6 Volcanism ...... 31 4.1.7 Tectonics and seismicity ...... 31 4.1.8 Environment Act 2000 ...... 31 4.1.9 Key environmental regulations ...... 31 4.1.10 Other relevant legislation ...... 32 4.1.11 International standards and conventions ...... 32 4.1.12 Nautilus mandated requirements ...... 32 4.1.13 Default or voluntary codes and guidelines ...... 32 4.1.14 Environmental Impact Assessment ...... 33 4.1.15 Specialist studies conducted ...... 36 4.1.16 Potential impacts ...... 37 4.1.17 Impact mitigation ...... 38 4.1.18 Environmental management system ...... 39 4.1.19 Waste management ...... 39 4.1.20 Socioeconomic environment ...... 40 4.1.21 Conclusions ...... 41 4.2 Tonga ...... 42 4.2.1 Accessibility ...... 42 4.2.2 Climate ...... 42 4.3 Fiji ...... 44 4.3.1 Accessibility and Infrastructure ...... 44 4.3.2 Climate ...... 44 4.4 Solomon Islands ...... 45 4.4.1 Accessibility and Infrastructure ...... 45 4.4.2 Climate ...... 45 4.5 New Zealand ...... 46 4.5.1 Accessibility and Infrastructure ...... 46 4.5.2 Climate ...... 46 4.6 Vanuatu ...... 47 4.6.1 5.6.1 Accessibility and Infrastructure ...... 47 4.6.2 Climate ...... 47 4.7 Clarion Clipperton Zone (CCZ) ...... 48 4.7.1 Accessibility and Infrastructure ...... 48 4.7.2 Climate ...... 48
5. History ...... 49 5.1 Papua New Guinea ...... 49 5.2 Fiji ...... 51 5.3 Tonga ...... 51 5.4 Solomon Islands ...... 52 5.5 New Zealand ...... 52 5.6 Vanuatu ...... 52 5.7 Clarion Clipperton Zone (CCZ) ...... 54
6. Geological Setting ...... 55 6.1 Bismarck Sea ...... 55 6.1.1 Solwara 1 ...... 56 6.1.2 Solwara 2 and 3 (EL 1383) ...... 58 6.1.3 Solwara 4 ...... 59 6.1.4 Solwara 5 ...... 62 6.1.5 Solwara 6 ...... 62 6.1.6 Solwara 7 ...... 62
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6.1.7 Solwara 8 ...... 62 6.1.8 Solwara 9 ...... 63 6.1.9 Solwara 10 ...... 63 6.1.10 Solwara 11a to 11i ...... 63 6.1.11 Solwara 12 ...... 63 6.1.12 Solwara 13 ...... 63 6.1.13 Solwara 14 ...... 64 6.1.14 Solwara 15 ...... 64 6.1.15 Solwara 16 ...... 64 6.1.16 Solwara 17 ...... 64 6.1.17 Solwara 18 ...... 64 6.1.18 Solwara 19 ...... 65 6.2 Woodlark Basin ...... 65 6.3 North Fiji Basin ...... 66 6.4 Lau Basin ...... 66 6.4.1 Tahi Moana 1 (CELSC Plume 12) ...... 67 6.4.2 Tahi Moana 2 (NVFR 3 Plume Target) ...... 68 6.4.3 Tahi Moana 3 (Misiteli #2/VFR Plume 042) ...... 68 6.4.4 Tahi Moana 4 (Telve Plume Target) ...... 68 6.4.5 Tahi Moana 5 (Misiteli Plume Target Area) ...... 68 6.4.6 Tahi Moana 6 (Si’i Si’i Plume Target) ...... 69 6.4.7 White Church ...... 69 6.4.8 NVFR Site 2 ...... 69 6.4.9 NVFR Site 3 ...... 69 6.4.10 Mariner (Mariner/FVR Plume 12-2) ...... 70 6.4.11 Hine Hina 1 ...... 70 6.4.12 Tui Malila 1 ...... 70 6.4.13 Maka ...... 70 6.4.14 Tunu-Sosisi ...... 70 6.4.15 Pia ...... 70 6.4.16 Niua...... 70 6.4.17 Tahi Moana 7 (North East Lau 5 Target) ...... 71 6.4.18 FRSC02 (North East Lau 11 Target) ...... 71 6.5 Solomon Islands ...... 71 6.6 New Zealand ...... 71 6.7 Vanuatu ...... 72 6.8 Clarion Clipperton Zone ...... 74
7. Deposit Types ...... 76 7.1 SMS Discovery and Global Distribution ...... 76 7.2 Characteristics of Terrestrial VHMS Deposits ...... 77 7.3 Formation and Morphology of SMS Deposits ...... 79 7.4 Polymetallic Nodule Deposits ...... 80 7.4.1 Discovery and Global Distribution ...... 80 7.4.2 Formation and Morphology of Polymetallic Nodule Deposits ...... 81
8. Mineralisation ...... 83 8.1 Solwara 1 ...... 83 8.2 Solwara 2 and 3 ...... 86 8.3 Solwara 4 ...... 86 8.3.1 Solwara 4a ...... 87 8.3.2 Solwara 4b ...... 87 8.3.3 Solwara 4c ...... 88 8.3.4 Solwara 4d ...... 89 8.3.5 Solwara 4e ...... 90 8.3.6 Solwara 4f ...... 90 8.4 Solwara 5 ...... 90 8.5 Solwara 6 ...... 90
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8.6 Solwara 7 ...... 91 8.7 Solwara 8 ...... 91 8.8 Solwara 9 ...... 91 8.9 Solwara 10 ...... 91 8.10 Solwara 11 ...... 91 8.11 Solwara 12 ...... 91 8.12 Solwara 13 ...... 92 8.13 Solwara 14 ...... 92 8.14 Solwara 15 ...... 93 8.15 Solwara 16 ...... 94 8.16 Solwara 17 ...... 94 8.17 Solwara 18 ...... 94 8.18 Solwara 19 ...... 94 8.19 North Fiji Basin ...... 94 8.20 Valu Fa Ridge (Southern Lau Basin, Tonga) ...... 95 8.20.1 Tahi Moana 1 ...... 96 8.20.2 Tahi Moana 2 ...... 96 8.20.3 Tahi Moana 3 ...... 96 8.20.4 Tahi Moana 4 ...... 97 8.20.5 Tahi Moana 5 ...... 97 8.20.6 Tahi Moana 6 ...... 97 8.20.7 White Church ...... 97 8.20.8 NVFR Site 2 ...... 97 8.20.9 NVFR Site 3 ...... 97 8.20.10 Mariner ...... 97 8.20.11 Hine Hina 1 ...... 97 8.20.12 Tui Malila 1 ...... 97 8.21 NE Lau Basin, Tonga ...... 97 8.21.1 Maka ...... 98 8.21.2 Tunu-Sosisi ...... 98 8.21.3 Pia ...... 98 8.21.4 Nuia...... 98 8.21.5 Tahi Moana 7 ...... 98 8.21.6 FRSC02 ...... 98 8.21.7 Kings Triple Junction ...... 98 8.22 Solomon Islands ...... 99 8.23 Vanuatu ...... 99 8.24 Clarion Clipperton Zone (CCZ) ...... 99
9. Exploration ...... 102 9.1 Exploration Strategy ...... 102 9.2 Project Generation ...... 102 9.3 Target Generation ...... 103 9.4 Target Testing ...... 103 9.5 Prospect Delineation ...... 103 9.6 Resource Evaluation ...... 103 9.7 Exploration Potential ...... 103 9.8 NOAA Tonga Target Generation Cruise (RV Kilo Moana) ...... 104
10. Drilling ...... 106 10.1 February 2006 Scout Drilling (DP Hunter) ...... 106 10.2 2007 Mineral Resource and Metallurgical Drilling (MV Wave Mercury) ...... 106 10.3 2008 Scout Drilling (MV NorSky) ...... 108 10.3.1 Program description ...... 108 10.3.2 Solwara 1 ...... 109 10.3.3 Solwara 5 ...... 110
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10.3.4 Solwara 10 ...... 111 10.3.5 Solwara 4 and 8 ...... 111 10.4 2010-2011 Mineral Resource Drilling (REM Etive) ...... 112
11. Sampling Method and Approach ...... 116 11.1 2005, 2006 and 2007 Grab Sampling ...... 116 11.2 2007 and 2008 Mineral Resource and Metallurgical Drilling (MV Wave Mercury and MV NorSky) ...... 116 11.3 2007 Drillhole Logging Procedures ...... 118 11.4 2010 Drillhole Logging Procedures ...... 118 11.5 2008 Solwara and Exploration Grab Sampling (MV NorSky) ...... 120 11.6 2008 Teck Exploration Grab Sampling (MV DeaSurveyor) ...... 122 11.7 2009 Solwara and Exploration Grab Sampling (MV Fugro Solstice) ...... 122 11.8 2009 Water Sampling ...... 122 11.9 Historic CCZ Sampling ...... 123
12. Sample Preparation, Analyses and Security ...... 125 12.1 Sample Retrieval ...... 125 12.2 Sample Preparation ...... 125 12.3 Handheld XRF ...... 125 12.3.1 Introduction ...... 125 12.3.2 Procedures ...... 125 12.4 Sample Preparation ...... 126 12.4.1 Dredging - March 2005 (MV Genesis) ...... 126 12.4.2 Grab Sampling - March 2006 (DP Hunter), July 2006 (RV Melville) ...... 127 12.5 Grab Sampling - 2007 (MV Wave Mercury) ...... 127 12.6 Grab Sampling - 2008 (MV NorSky) ...... 127 12.7 Grab Sampling - 2009 (MV Fugro Solstice) ...... 127 12.8 2007 Mineral Resource and Metallurgical Drilling (MV Wave Mercury) ...... 128 12.9 Sample Analysis ...... 128 12.9.1 2006 Programs ...... 128 12.9.2 2007 to 2009 Programs ...... 128 12.10 Metal analysis of particulate matter filtered from Niskin water samples ...... 130 12.11 Bulk density ...... 130 12.12 Sample Security ...... 130 12.13 2010-2011 Drilling (REM Etive) ...... 130 12.14 2010-2011 Drilling Programme ...... 132
13. Data Verification ...... 134 13.1 Quality Assurance/Quality Control ...... 134 13.2 Pulp Repeats ...... 134 13.3 Coarse Repeats ...... 137 13.4 Field Duplicates ...... 138 13.5 Blanks ...... 139 13.6 Certified Reference Materials ...... 140 13.7 Standard Reference Materials ...... 140
14. Adjacent Properties ...... 142 14.1 Neptune Minerals plc ...... 142 14.2 Bismarck Mining Corporation (PNG) Limited ...... 142 14.3 Bluewater Metals Pty Ltd ...... 142 14.4 Korea Ocean Research & Development Institute (KORDI) ...... 142 14.5 CCZ Exploration Areas ...... 142
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15. Mineral Processing and Metallurgical Testing ...... 144 15.1 Introduction ...... 144 15.2 1998 Testing ...... 144 15.3 2005 Testing ...... 145 15.4 2007 Testing ...... 145 15.5 2008 Testing ...... 146 15.6 2010 Testing ...... 147 15.7 Mineral Processing Design Basis ...... 148
16. Mineral Resource and Mineral Reserve Estimates ...... 150
17. Other Relevant Information ...... 152
18. Interpretation and Conclusions ...... 154
19. Recommendations ...... 155
20. Date and Signature ...... 157
21. References ...... 159
List of Tables
Table 3-1: Nautilus’ South West Pacific tenements and tenement applications ...... 5 Table 3-2: Nautilus’ PNG tenements and tenement applications ...... 7 Table 3-3: Nautilus offshore tenements and applications in the Kingdom of Tonga ...... 13 Table 3-4: Nautilus’ Fiji tenement applications ...... 16 Table 3-5: Nautilus’ offshore Prospecting Licenses in the Solomon Islands ...... 18 Table 3-6: Nautilus’ offshore tenement application in New Zealand ...... 21 Table 3-7: Nautilus’ Offshore tenements in Vanuatu ...... 24 Table 3-8: Application Areas and Block Numbers in the CCZ ...... 26 Table 4-1: Annual wave exceedence data against significant seastate ...... 31 Table 5-1: Summary of selected research cruises in and around Nautilus tenements ...... 50 Table 5-2: Summary of selected research cruises to the North Fiji Basin ...... 51 Table 5-3: Summary of selected marine science research cruises to the Lau Basin ...... 52 Table 5-4: Summary of selected marine science research cruises to Vanuatu ...... 53 Table 7-1: Average grade and tonnage data* for selected VHMS groups...... 78 Table 8-1: Average compositions of grab subsamples from the Solwara Project ...... 83 Table 8-2: Average results of 85 samples from Solwara 4c sulphide material ...... 88 Table 8-3: Summary of grab and dredge samples from the North Fiji tenements ...... 95 Table 8-4: Summary of grab and dredge samples from the Valu Fa tenements ...... 95 Table 8-5: Summary of grab samples from the NE Lau basin tenements ...... 99 Table 8-6: Summary of historic grab samples Zone A ...... 100 Table 8-7: Summary of historic grab samples Zone B ...... 100 Table 8-8: Summary of historic grab samples Zone C ...... 101 Table 8-9: Summary of historic grab samples Zone D ...... 101 Table 8-10: Historic grab samples Zone E ...... 101 Table 8-11: Historic grab samples Zone F ...... 101 Table 8-12: Summary of historic CCZ grab samples outside Nautilus’ Zones ...... 101 Table 10-1: Summary of 2008 scout drilling...... 109 Table 10-2: Solwara 1 North Zone 2008 drilling significant intersections...... 109 Table 10-3: Solwara 1 Resource Area 2008 drilling significant intersections...... 110 Table 10-4: Solwara 5 2008 drilling significant intersections...... 110
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Table 10-5: Solwara 10 2008 drilling significant intersections...... 111 Table 10-6: Solwara 4 and 8 2008 drilling significant intersections...... 111 Table 10-7: Solwara 1 2010 drilling significant intersections, up to SD187...... 115 Table 12-1: Niton handheld XRF elements and detection limits ...... 126 Table 12-2: Assayed elements, detection limits and analytical methods ALS Chemex ...... 129 Table 12-3: Dry bulk density grades assigned to stratigraphic domains ...... 130 Table 13-1: Grab sample pulp repeats Cu, Pb and Zn results ...... 134 Table 13-2: Grab sample pulp repeats Au and Ag results ...... 134 Table 13-3: Drillhole pulp repeats Au results ...... 136 Table 13-4: Grab sample coarse repeats Cu, Pb and Zn results ...... 137 Table 13-5: Grab sample coarse repeats Au and Ag results ...... 137 Table 13-6: Grab sample field duplicate repeats Cu, Pb and Zn results...... 138 Table 13-7: Grab sample field duplicate repeats Au and Ag results ...... 138 Table 13-8: Drillhole field duplicate repeats Cu, Pb and Zn results ...... 138 Table 13-9: Drillhole field duplicate repeats Au and Ag results ...... 139 Table 13-10: Grab sample blanks results ...... 139 Table 13-11: Drillhole sample blanks results ...... 139 Table 13-12: Reference Materials ppm grades and 95% Confidence Intervals...... 140 Table 13-13: Assay methods used for Standard Reference Material ...... 141 Table 13-14: Standard material grades and average of assays received ...... 141 Table 15-1: 2007 drill hole metallurgical samples with ore type descriptions ...... 145 Table 16-1: Mineral Resources for Solwara 1 (Lipton 2008) ...... 150
List of Figures
Figure 3-1: Nautilus’ tenements and tenement applications in the Bismarck Sea, PNG ...... 6 Figure 3-2: Nautilus’ tenements and tenement applications in the Woodlark Basin, PNG ...... 6 Figure 3-3: Nautilus’ Mining Lease Application (MLA 154) in the Bismarck Sea, PNG ...... 11 Figure 3-4: Nautilus’ Prospecting Licences in Tonga ...... 14 Figure 3-5: Nautilus Special Prospecting Licence Applications in Fiji ...... 16 Figure 3-6: Location of Nautilus’ tenements in the Solomon Islands ...... 20 Figure 3-7: Location of Nautilus’ tenements in the east Solomon Islands ...... 20 Figure 3-8: Location of Nautilus’ New Zealand tenement ...... 22 Figure 3-9: Location of Nautilus’ tenements in Vanuatu ...... 25 Figure 3-10: Location of Tongan Offshore Mining Limited’s Exploration Licence Applications...... 26 Figure 4-1: Average climate conditions for Rabaul, 1974-1994...... 30 Figure 4-2: Areas visited as part of stakeholder consultation program...... 35 Figure 4-3: Average climate conditions for Nuku’alofa (southern Tonga), 1971-2000...... 43 Figure 4-4: Average climate conditions for Niuafo’ou (northern Tonga), 1971-2000...... 43 Figure 4-5: Average climate conditions for Nadi, 1974-1994...... 44 Figure 4-6: Average climate conditions for Auki, 1962-2000...... 45 Figure 4-7: Average climate conditions for Tauranga (northern NZ), 1971-2000...... 46 Figure 4-8: Average climate conditions for Port Vila, Vanuatu ...... 47 Figure 5-1: Trial mining of nodules by the INCO consortium ...... 54 Figure 6-1: Major geological features and hydrothermal fields in eastern PNG ...... 55 Figure 6-2: Tectonic features summary in Central and Eastern Manus Basin ...... 56 Figure 6-3: Location of SMS occurrences Solwara 1 to 19...... 56 Figure 6-4: Schematic geology and locations of Solwara 1 and 4 with EL boundaries...... 57 Figure 6-5: Oblique view of the Solwara 1 area seabed showing Electromagnetic (EM) conductive areas in red ...... 58 Figure 6-6: Schematic Solwara 4 sea floor topography, geology and major prospects ...... 59 Figure 6-7: Schematic geology of the Solwara 4 with locations of hydrothermal fields ...... 60 Figure 6-8: Plan of Solwara 4a (Rogers Ruins) and Solwara 4b (Roman Ruins) ...... 61 Figure 6-9: Solwara 4b Section showing general geology and drill holes...... 61
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Figure 6-10: Bathymetry of the Woodlark Basin, showing the location of the active spreading centre. 66 Figure 6-11: Tectonic setting of the Lau Basin...... 67 Figure 6-12: Tectonic setting of the Tonga-Kermadec Arc ...... 73 Figure 6-13: Geological setting of Vanuatu ...... 74 Figure 7-1: Known hydrothermal systems and polymetallic massive sulphides deposits ...... 76 Figure 7-2: Comparison of Solwara 1 resource to Canadian VHMS deposits...... 79 Figure 7-3: Schematics of development of modern mound-chimney SMS deposit ...... 80 Figure 7-4: Formation model for CCZ polymetallic nodules ...... 81 Figure 7-5: Nodule pavement at depth within the CCZ...... 82 Figure 7-6: Polymetallic nodule growth process...... 82 Figure 8-1: Distribution of resource drilling at Solwara ...... 85 Figure 8-2: Schematic cross-section through the Solwara Deposit ...... 85 Figure 8-3: Schematic SW-NE cross section along the crest of Pual Ridge Solwara 4 ...... 87 Figure 8-4: Schematic map of Condrill core hole locations at Solwara 4b (formerly Roman Ruins)...... 88 Figure 8-5: Massive sulphide black smoker chimney Solwara 4c...... 89 Figure 8-6: Slice through chimney in Figure 8-5 with sample core holes ...... 89 Figure 8-7: Examples of chimney fields sampled at Solwara sites 5 through 8 ...... 93 Figure 8-8: Location of sampling sites from marine science research cruises in the Lau Basin ...... 96 Figure 8-9: Location of sampling sites in the CCZ...... 100 Figure 9-1: NE Lau Basin showing multibeam survey area ...... 104 Figure 9-2: Chimney cluster at Mata Tolu ...... 105 Figure 10-1: Submersible drilling rig (ROV T203) ...... 107 Figure 10-2: Submarine drilling video capture of ROV T203 ...... 107 Figure 10-3: Numbered Core Barrels ...... 108 Figure 10-4: Solwara 2008 drill program summary...... 109 Figure 10-5: ROVdrill 3 drilling rig being launched from the REM Etive...... 113 Figure 10-6: Drill location map Solwara 1 November-December 2010...... 113 Figure 11.1: Drill core mark up (hole SD 130) before sampling ...... 117 Figure 11-2: Core photos for hole SD 112 before (left) and after sample mark up (right)...... 117 Figure 11-3: Drill storage after sampling (Hole SD068) showing half core duplicate ...... 118 Figure 11-4: 2010 Logging codes ...... 119 Figure 11-5: ‘Geobox’ used to hold samples on the front of the ROV ...... 120 Figure 11-6: Chimney sample 20060 (Tahi Moana 1) being loaded into the ‘Geobox’ ...... 121 Figure 11-7: Chimney sample cage ...... 121 Figure 11-8: CTD sled with water bottles mounted inside the main frame...... 123 Figure 11-9: CCZ historic grab sample locations...... 124 Figure 12-1: Niton handheld XRF measuring cut face of chimney sample ...... 126 Figure 13-1: Original and pulp repeat Cu, Pb and Zn assays, Solwara grab samples ...... 135 Figure 13-2: Original and pulp repeat Au, Solwara grab samples ...... 135 Figure 13-3: Original and pulp repeat Ag, Solwara grab samples ...... 136 Figure 13-4: Original and pulp repeat Au assays, Solwara 1 drillholes ...... 137 Figure 14-1: Location map of the CCZ showing granted exploration tenements (contractor areas), applications and ISA Reserved Areas ...... 143 Figure 15-1: Location of the metallurgical test samples from drill holes ...... 146 Figure 15-2: Location of the metallurgical test sample from chimneys ...... 146
List of Appendices
Appendix1: Solwara 1 2010 Drill assay results
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List of Abbreviations
Abbreviation Meaning
°C degrees centigrade Australian and New Zealand Environment and Conservation ANZECC/ARMCANZ Council/Agriculture and Resource Management Council of Australia and New Zealand bcm bank cubic metre BD bulk density BSL below sea level C cohesion CAPEX capital expenditure Coffey Coffey Natural Systems (Australia) (now Coffey Environments) CSIRO Commonwealth Scientific and Industrial Research Organisation CTD conventional tailings disposal dB decibels DEC Department of Environment and Conservation DPS dynamic positioning system DTM digital terrain model E East EIA Environmental Impact Assessment EIR Environmental Inception Report EIS Environmental Impact Statement EMP Environmental Management Plan EMS Environmental Management System E–W east-west FoS Factor of Safety GBI geotechnical blockiness index GDM geotechnical domain model GIS geographic information system GSBW geotechnical safety berm width Hr hydraulic radius IFC International Finance Corporation IMO International Maritime Organisation IRA inter ramp angle k thousand kg kilogram kL kilolitre km kilometre km2 square kilometre KORDI Korea Ocean Research & Development Institute kt kilotonne
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Abbreviation Meaning
LOSA limiting overall slope angle m metre M million m RL metres reduced level m/s metre per second m3 cubic metre MARPOL International Convention for the Prevention of Pollution from Ships mE metres east mN metres north MRMR Mining Rock Mass Rating mS metres south Mt million tonnes Mtpa million tonnes per annum N North Nautilus Nautilus Minerals Incorporated NE northeast NGO Non Government Organizations NPV net present value NW Northwest OPEX operating expenditure OS oversize PGE platinum group element PMF probable maximum flood PNG Papua New Guinea Project Solwara 1 Project PSV Production Support Vessel Q Barton Q value Q’ modified Q value RALS Riser and Lifting System RMR rock mass rating ROM run of mine RQD rock quality designation S South SE Southeast SE southeast SI International System of Units SMS Seafloor Massive Sulphide SPT Seafloor Production Tool Convention for the Protection of the Natural Resources and Environment of SPREP the South Pacific Region SRK SRK Consulting (Australasia) Pty Ltd
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Abbreviation Meaning
S-SE South-Southeast SW southwest t tonne tpa tonnes per annum TSF tailings storage facility TTD thickened tailings disposal UNCLOS United Nations Convention on the Law of the Sea VHMS Volcanic-hosted massive sulphide W West WBS Work Breakdown Structure WHO World Health Organisation W-NW West-Northwest
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1. Introduction and Scope of Report
SRK Consulting Australasia Pty Ltd (“SRK”) has been commissioned by Nautilus Minerals Incorporated (“Nautilus”) to provide an independent technical assessment of mineral exploration tenements located in the maritime Exclusive Economic Zones of Papua New Guinea, Fiji, Tonga, Solomon Islands, New Zealand and Vanuatu. These tenements are either known to host, or are considered prospective for, Cu-Zn-Pb-Ag-Au SMS mineralisation.
1.1 Scope of Work
This Report covers the exploration potential, exploration targeting, completed exploration works and exploration program for the tenements held or applied for by Nautilus up to 31 December 2010. These tenements are located in the following regions:
the Bismarck Sea and Solomon Sea of Papua New Guinea; the Lau Basin of Tonga; the North Fiji Basin of Fiji; areas to the southwest and south of New Georgia Islands in the Solomon Islands; the Havre Trough of New Zealand; Vanuatu; and The Clarion Clipperton Zone in the East Pacific
Nautilus requested that this Report conform to the reporting requirements of National Instrument 43 101 (Standards of Disclosure for Mineral Deposits) and 43-101F1 guidelines provided by the Canadian Securities Administrators. This present Report is an update of a previous SRK Report entitled “Nautilus Minerals Inc. NI43-101 Technical Report 2009 PNG, Tonga, Fiji, Solomon Islands and New Zealand” (Jankowski, 2010), and includes additional information on exploration reconnaissance and drilling in the Bismarck Sea; exploration in Tonga; and exploration in the Solomon Islands.
For this Report, SRK has:
reviewed previous exploration works and technical literature; conducted six site visits to some of the granted tenements in PNG and Tonga; independently verified sampling procedures, sample integrity and sample security; reviewed various company reports as appropriate; and reviewed the proposed exploration budget and program for 2011 to 2012.
1.2 Sources of Information
SRK has derived the technical information that forms the basis of this Report from Nautilus. SRK has supplemented this information where necessary with information from its own extensive regional geological database. However, if discrepancies arise and no alternative comments are provided, the discrepancy is noted and the data and interpretations provided by Nautilus prevail in this report. The exploration history for these tenements has been derived from previous explorers’ reports, as provided by Nautilus. SRK has not conducted its own independent data searches.
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1.3 Site Visits
SRK completed an initial site visit of some of the tenements from 24 February to 9 March 2005, on the geophysical survey vessel MV Genesis. On this visit, exploration targeting, remote-data gathering and sampling methods were reviewed. Paul Hodkiewicz visited Solwara 1 in PNG between 31 January and 4 February 2006 on the DP Hunter, and witnessed Remotely Operated Vehicle (ROV) sampling and core drilling from the surface. Phil Jankowski visited Solwara 2 between 24 July and 30 July 2006 on the research vessel RV Melville, and witnessed ROV grab sampling, bathymetry measurements, Autonomous Underwater Vehicle (AUV) operations, sub-sampling and sample dispatch He also visited the Valu Fa 1 prospect in Tonga on the MV NorSky between 20 September and 3 October 2008, and witnessed ROV traversing, grab sampling, sample retrieval and processing, and geophysical data gathering; He also visited the Solwara 12 prospect in PNG between 25 and 30 January 2011 and witnessed core retrieval, geological logging, sampling and ROV-mounted core drilling on the REM Etive. Bruce Sommerville visited Solwara 1 on the MV Wave Mercury between 15 August 2007 and 16 August 2007 and witnessed core retrieval, geological logging, sampling and ROV-mounted core drilling associated with the metallurgical drilling campaign. SRK has not visited any of the tenements in Fiji, the Solomon Islands, New Zealand or Vanuatu.
1.4 Qualifications of SRK and Authors
SRK is an international mining industry consulting company that has been providing services and high-level technical and financial advice to the mining industry since 1975. SRK has fully staffed independent offices in all major mining centres of the world. This Report was authored by Phil Jankowski MSc MAusIMM (CP), Principal Consultant and a full-time employee of SRK.
Mr Jankowski has 22 years’ experience in open pit and underground mine geology and grade control, exploration and resource development. He has experience in a wide variety of deposit types including Archaean lode-gold deposits, tantalum-tin deposits, base metal, copper, epithermal porphyry Cu-Au, nickel and bauxite. Mr Jankowski is a Member of the AusIMM and is a Chartered Professional Geologist.
1.5 Statement of SRK Independence
Neither SRK nor any of the authors of this Report have any material present or contingent interest in the outcome of this Report, nor do they have any pecuniary or other interest that could be reasonably regarded as being capable of affecting their independence or that of SRK. SRK has no beneficial interest in the outcome of the Report being capable of affecting its independence. SRK’s fee for completing this Report is based on its normal professional daily rates plus reimbursement of incidental expenses. The payment of SRK’s professional fee is not contingent upon the outcome of this Report.
SRK has completed six previous reports on Nautilus’ tenements:
Independent Technical Assessment of Exploration Tenements in the Bismarck Sea and the Solomon Sea, Papua New Guinea (Clark, Hodkiewicz and Williams, 2005). This report covered the PNG tenements that are also reported on in this Report. Independent Technical Assessment of Sea Floor Massive Sulphide Exploration Tenements in Papua New Guinea, Fiji and Tonga (Jankowski and Hodkiewicz, 2006). This report covered the PNG, Fiji and Tonga tenements that are also reported on in this Report.
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Independent Technical Assessment of Sea Floor Massive Sulphide Exploration Tenements in Papua New Guinea, Fiji, Tonga, Solomon Islands and New Zealand (Bucci and Hodkiewicz, 2008). This report covered the PNG, Fiji, Tonga, Solomon Islands and New Zealand tenements that are also reported on in this Report. Independent Technical Assessment of Sea Floor Massive Sulphide Exploration Tenements in Papua New Guinea, Fiji, Tonga, Solomon Islands and New Zealand (Jankowski et al., 2009). This report covered the PNG, Fiji, Tonga, Solomon Islands and New Zealand tenements that are also reported on in this Report. Nautilus Minerals Inc. NI43-101 Technical Report 2009 PNG, Tonga, Fiji, Solomon Islands and New Zealand (Jankowski, 2010). This report covered the PNG, Fiji, Tonga, Solomon Islands and New Zealand tenements that are also reported on in this Report. Nautilus Minerals Inc. NI43-101 Technical Report June 2010 PNG, Offshore Production System Definition and Cost Study (Blackburn et al., 2010).
1.6 Warranties
Nautilus has represented in writing to SRK that full disclosure has been made of all material information and that, to the best of its knowledge and understanding, such information is complete, accurate and true.
1.7 Consents
Phil Jankowski is the Qualified Person for this Report and consents to the filing of this Report with the relevant securities commission, stock exchange and other regulatory authorities as may be determined by Nautilus including general publication in hardcopy and electronic formats to shareholders and to the public.
This consent is provided on the basis that the technical assessments expressed in the Summary and in the individual sections of this Report are considered with, and not independently of, the information set out in the complete Report.
1.8 Units
Distances, lengths, weights and areas are expressed in SI units (otherwise known as metric units). Distances are approximate and if less than 1000m quoted to the nearest 10m. Grades or concentrations are stated in percent (%) or parts per million (ppm) or as appropriate (1% = 10,000 ppm).
Unless otherwise noted, monetary amounts stated as dollars refer to United States Dollars (USD). The national currency of Papua New Guinea is the Kina (PGK). The December 2010 exchange rate was approximately USD0.38 per PGK1. The national currency of Fiji is the Fiji Dollar (FJD). The December 2010 exchange rate was approximately USD0.54 per FJD1. The national currency of Tonga is the Tongan Pa’anga (TOP). The December 2010 exchange rate was approximately USD0.54 per TOP1. The national currency of Solomon Islands is the Solomon Dollar (SBD). The December 2009 exchange rate was approximately USD0.13 per SBD1. The national currency of New Zealand is the New Zealand Dollar (NZD). The December 2010 exchange rate was approximately USD0.77 per NZD1. The national currency of Vanuatu is the Vatu (VUV). The December 2010 exchange rate was approximately USD0.01 per VUV1.
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2. Reliance on Other Experts
The opinions expressed in this Report have been based on the information supplied to SRK by Nautilus. The opinions in this Report are provided in response to a specific request from Nautilus. SRK has exercised all due care in reviewing the supplied information. While SRK has compared key supplied data with expected values, the accuracy of the results and conclusions from the review are entirely reliant on the accuracy and completeness of the supplied data. SRK does not accept responsibility for any errors or omissions in the supplied information.
SRK has relied upon the opinions and work of Ian Lipton of Golder Associates. SRK has relied on Mr Lipton for areas covering the Mineral Resource estimate at Solwara 1 referred to in this report, which are documented in Lipton (2008), a report that has been publicly released by Nautilus. Mr Lipton is the Qualified Person with regards to the Mineral Resources.
Unless otherwise noted, all illustrations in this Report were supplied by Nautilus.
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3. Property Description and Location
A summary of Nautilus’ total tenement position as at 31 December 2010, in the South West Pacific region is presented in Table 3-1.
Table 3-1: Nautilus’ South West Pacific tenements and tenement applications
Total area Granted Area Application area Location Number (km2) Granted (km2) Applications (km2) PNG - Bismarck Sea* 90 113,380 45 48,824 45 64,556 PNG - Woodlark Area 17 20,889 13 14,571 4 6,318 PNG - New Ireland Arc 6 15,345 0 0 6 15,345 Solomon Islands 86 46,696 25 10,580 61 36,116 Tonga 46 210,867 16 78,977 30 131,890 Fiji 17 63,086 0 0 17 63,086 New Zealand 1 52,818 0 0 1 52,818 Vanuatu 55 4,876 19 1685 36 3,191 Total 318 527,957 118 154,637 200 373,320
3.1 Papua New Guinea
3.1.1 Tenement Details
The Papua New Guinea Mining Act 1992 is the principal policy and regulatory document governing the exploration, development, processing and transport of minerals in PNG. It vests ownership of all minerals in or below the surface of land with the State, and governs exploration and mining activities. The Mining Act allows exploration activities and mining of minerals to be undertaken on the seafloor within PNG territorial waters.
As of 31 December 2010, Nautilus’ Bismarck Sea Project Area comprised 45 granted Exploration Licences (EL), 44 Exploration Licence applications, and one Mining Lease application (Table 3-2). The granted ELs cover approximately 48,824km2 and the application areas cover approximately 64,497km2 (Figure 3-1). The Mining Lease application covers an area of just over 59 km2.
The Mining Lease application (MLA) 154 covers the Solwara 1, Solwara 5, Solwara 9a, Solwara 9b and South Su and North Zone mineralisation deposits (Figure 3-3). The Mining Lease application has an area of 59.11 km2 and was registered by the PNG Mineral Resources Authority in September 2008. (Note ML154 subsequently granted in January 2011.)
As of 31 December 2010, Nautilus’ Woodlark Basin Project Area comprised 13 granted Exploration Licences and 4 Exploration Licence applications (Figure 3-2). The granted Woodlark Basin ELs cover approximately 14,571km2 and the EL application areas cover approximately 6,318km2.
As of 31 December 2010, Nautilus’ New Ireland Arc Project Area comprised 6 Exploration Licence applications that cover approximately 15,345km2 (Figure 3-1).
The Environmental Permit required for the development of the Solwara 1 Project was approved on 29 December 2009 by the Department of Environment and Conservation. The permit has a term of 25 years and is renewable.
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Figure 3-1: Nautilus’ tenements and tenement applications in the Bismarck Sea, PNG
Figure 3-2: Nautilus’ tenements and tenement applications in the Woodlark Basin, PNG
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Table 3-2: Nautilus’ PNG tenements and tenement applications
Expenditure Annual Rent Commitment (PGK) (PGK) Area Grant Expiry Application 2 EL/ELA Name (km ) Date Date Fee (PGK) 2011 2012 2011 2012 EL 1196 Solwara 1 & 4 184.14 28/11/1997 27/11/2011 5,000 400,000 400,000 25,380 25,380 Eastern Manus EL 1374 Basin Ext 296.67 10/09/2004 9/09/2012 5,000 350,000 350,000 81,780 81,780 EL 1383 Solwara 2 & 3 637.67 10/06/2005 9/06/2011 5,000 375,000 375,000 87,890 87,890 EL 1386 Willaumez 641.08 14/09/2005 13/09/2011 5,000 375,000 375,000 88,360 88,360 Woodlark Basin EL 1387 East 641.08 14/09/2005 13/09/2011 5,000 375,000 375,000 88,360 88,360 Woodlark Basin EL 1388 West 641.08 14/09/2005 13/09/2011 5,000 375,000 375,000 88,360 88,360 Woodlark Basin EL 1389 Central 641.08 14/09/2005 13/09/2011 5,000 375,000 375,000 88,360 88,360 EL 1422 Garove 1278.75 30/06/2007 29/06/2011 5,000 375,000 375,000 67,500 67,500 EL 1469 Cape Maragu 1016.18 14/07/2008 13/07/2012 5,000 350,000 350,000 53,640 53,640 EL 1470 Dyaul Island 1278.75 30/06/2007 29/06/2011 5,000 375,000 375,000 67,500 67,500 EL 1474 Lassul 337.59 30/06/2007 29/06/2011 5,000 100,000 100,000 17,820 17,820 EL 1475 Kokola 75.02 30/06/2007 29/06/2011 5,000 25,000 25,000 3,960 3,960 EL 1476 Lambu 190.96 30/06/2007 29/06/2011 5,000 65,000 65,000 10,080 10,080 EL 1477 Lamban Bay 1278.75 30/06/2007 29/06/2011 5,000 350,000 350,000 67,500 67,500 EL 1478 Lama 1023 3/08/2007 2/08/2011 5,000 300,000 300,000 54,000 54,000 EL 1479 Vambu 702.46 3/08/2007 2/08/2011 5,000 210,000 210,000 37,080 37,080 EL 1480 Narage 982.08 3/08/2007 2/08/2011 5,000 290,000 290,000 51,840 51,840 EL 1481 Makiri 460.35 3/08/2007 2/08/2011 5,000 135,000 135,000 24,300 24,300 EL 1482 Willaumez Ridge 1 1278.75 11/04/2008 10/04/2012 5,000 375,000 375,000 67,500 67,500 EL 1483 Willaumez Ridge 2 1278.75 11/04/2008 10/04/2012 5,000 375,000 375,000 67,500 67,500 EL 1484 Willaumez Ridge 3 1278.75 11/04/2008 10/04/2012 5,000 375,000 375,000 67,500 67,500 EL 1485 Willaumez Ridge 4 1278.75 11/04/2008 10/04/2012 5,000 375,000 375,000 67,500 67,500 EL 1486 Willaumez Ridge 5 1278.75 30/06/2007 29/06/2011 5,000 375,000 375,000 67,500 67,500 EL 1487 Willaumez Ridge 6 1278.75 7/12/2007 6/12/2011 5,000 375,000 375,000 67,500 67,500 EL 1488 Willaumez Ridge 7 1278.75 30/06/2007 29/06/2011 5,000 375,000 375,000 67,500 67,500 EL 1489 Willaumez Ridge 8 1278.75 7/12/2007 6/12/2011 5,000 375,000 375,000 67,500 67,500 EL 1490 Willaumez Ridge 9 1278.75 11/04/2008 10/04/2012 5,000 375,000 375,000 67,500 67,500 EL 1491 Willaumez Ridge 10 1278.75 7/12/2007 6/12/2011 5,000 375,000 375,000 67,500 67,500 EL 1492 Willaumez Ridge 11 1278.75 7/12/2007 6/12/2011 5,000 375,000 375,000 67,500 67,500 EL 1493 Willaumez Ridge 12 1278.75 7/12/2007 6/12/2011 5,000 375,000 375,000 67,500 67,500 EL 1495 Willaumez Ridge 14 1278.75 7/12/2007 6/12/2011 5,000 375,000 375,000 67,500 67,500 EL 1496 Willaumez Ridge 15 1278.75 7/12/2007 6/12/2011 5,000 375,000 375,000 67,500 67,500 EL 1497 Willaumez Ridge 16 1278.75 30/06/2007 29/06/2011 5,000 375,000 375,000 67,500 67,500 EL 1500 Willaumez Ridge 19 1278.75 11/04/2008 10/04/2012 5,000 375,000 375,000 67,500 67,500 EL 1501 Willaumez Ridge 20 1278.75 11/04/2008 10/04/2012 5,000 375,000 375,000 67,500 67,500 EL 1502 Willaumez Ridge 21 1278.75 11/04/2008 10/04/2012 5,000 375,000 375,000 67,500 67,500 EL 1513 Whirlwind Reef 11 1278.75 7/12/2007 6/12/2011 5,000 375,000 375,000 67,500 67,500 EL 1516 Pocklington 1 1278.75 3/11/2008 2/11/2010 5,000 350,000 350,000 67,500 67,500 EL 1519 Pocklington 4 1278.75 3/11/2008 2/11/2010 5,000 350,000 350,000 67,500 67,500 EL 1526 Woodlark 8 1278.75 3/11/2008 2/11/2010 5,000 350,000 350,000 67,500 67,500 EL 1528 Woodlark 10 1278.75 3/11/2008 2/11/2010 5,000 350,000 350,000 67,500 67,500 EL 1530 Woodlark 12 1278.75 3/11/2008 2/11/2010 5,000 350,000 350,000 67,500 67,500 EL 1531 Woodlark 13 1278.75 3/11/2008 2/11/2010 5,000 350,000 350,000 67,500 67,500 EL 1532 Woodlark 14 1278.75 3/11/2008 2/11/2010 5,000 350,000 350,000 67,500 67,500
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Expenditure Annual Rent Commitment (PGK) (PGK) Area Grant Expiry Application 2 EL/ELA Name (km ) Date Date Fee (PGK) 2011 2012 2011 2012 EL 1539 Woodlark 21 1278.75 3/11/2008 2/11/2010 5,000 350,000 350,000 67,500 67,500 EL 1564 Kerav 1278.75 30/06/2007 29/06/2011 5,000 375,000 375,000 67,500 67,500 EL 1569 Woodlark 23 1138.94 29/05/2008 28/05/2012 5,000 266,800 266,800 60,030 60,030 EL 1571 Dyaul Island West 1278.75 14/07/2008 13/07/2012 5,000 350,000 350,000 67,500 67,500 EL 1573 Blup Blup Island 637.67 29/05/2008 28/05/2012 5,000 149,600 149,600 33,660 33,660 EL 1619 Woodlark 24 1278.75 29/05/2008 28/05/2012 5,000 350,000 350,000 67,500 67,500 EL 1647 West Willaumez 1278.75 3/11/2008 2/11/2010 5,000 350,000 350,000 67,500 67,500 EL 1662 Meit 2557.5 20/10/2009 19/10/2011 5,000 300,000 300,000 67,500 67,500 EL 1690 Garove 2 722.92 17/08/2009 16/08/2011 5,000 170,000 170,000 38,250 38,250 EL 1691 West Bismarck 1 1278.75 17/08/2009 16/08/2011 5,000 300,000 300,000 67,500 67,500 EL 1692 West Bismarck 2 1275.34 17/08/2009 16/08/2011 5,000 300,000 300,000 67,230 67,230 EL 1693 West Bismarck 3 1278.75 17/08/2009 16/08/2011 5,000 300,000 300,000 67,500 67,500 EL 1694 West Bismarck 4 1278.75 17/08/2009 16/08/2011 5,000 300,000 300,000 67,500 67,500 EL 1695 West Bismarck 5 1278.75 17/08/2009 16/08/2011 5,000 300,000 300,000 67,500 67,500 EL 1503 Whirlwind Reef 1 1534.5 Application 5,000 350,000 350,000 40,500 40,500 EL 1504 Whirlwind Reef 2 2557.5 Application 5,000 350,000 350,000 67,500 67,500 EL 1505 Whirlwind Reef 3 2557.5 Application 5,000 350,000 350,000 67,500 67,500 EL 1506 Whirlwind Reef 4 2557.5 Application 5,000 350,000 350,000 67,500 67,500 EL 1507 Whirlwind Reef 5 2557.5 Application 5,000 350,000 350,000 67,500 67,500 EL 1508 Whirlwind Reef 6 2557.5 Application 5,000 350,000 350,000 67,500 67,500 EL 1570 Manam Island 1227.6 Application 5,000 144,000 144,000 32,400 32,400 EL 1572 Woodlark 22 566.06 Application 5,000 66,400 66,400 14,940 14,940 EL 1688 East Manus Basin 1 398.97 Application 5,000 50,000 50,000 10,530 10,530 EL 1689 East Manus Basin 2 136.4 Application 5,000 20,000 20,000 3,600 3,600 EL 1735 Central Bismarck 2 641.08 Application 5,000 76,000 76,000 16,920 16,920 EL 1736 East Manus Basin 5 40.92 Application 5,000 7,500 7,500 1,080 1,080 EL 1737 East Manus Basin 3 6.82 Application 5,000 5,000 5,000 180 180 EL 1738 East Manus Basin 4 10.23 Application 5,000 5,000 5,000 270 270 EL 1739 Lassul 2 341 Application 5,000 40,000 40,000 18,000 18,000 EL 1740 Willaumez Ridge 22 1278.75 Application 5,000 150,000 150,000 33,750 33,750 EL 1741 Lassul 3 900.24 Application 5,000 125,000 125,000 23,760 23,760 EL 1742 Kerav 2 920.7 Application 5,000 110,000 110,000 48,600 48,600 EL 1758 Willaumez 2 637.67 Application 5,000 75,000 75,000 16,830 16,830 EL 1759 Woodlark Central 2 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1760 Woodlark West 2 637.67 Application 5,000 75,000 75,000 16,830 16,830 EL 1769 Woodlark 25 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1829 Garove 3 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1830 Garove 4 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1831 West Bismarck 6 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1832 West Bismarck 7 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1833 West Bismarck 8 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1834 West Bismarck 9 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1835 West Bismarck 10 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1836 Willaumez North 1 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1837 Whirlwind Reef 14 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1838 Willaumez Ridge 23 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1839 Willaumez Ridge 24 1800.48 Application 5,000 215,000 215,000 47,520 47,520 EL 1840 Willaumez Ridge 25 1653.85 Application 5,000 200,000 200,000 43,650 43,650
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Expenditure Annual Rent Commitment (PGK) (PGK) Area Grant Expiry Application 2 EL/ELA Name (km ) Date Date Fee (PGK) 2011 2012 2011 2012 EL 1841 Willaumez Ridge 26 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1842 Willaumez Ridge 27 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1843 Willaumez Ridge 28 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1844 Willaumez Ridge 29 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1845 Willaumez Ridge 30 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1846 Willaumez Ridge 31 596.75 Application 5,000 70,000 70,000 15,750 15,750 EL 1868 Cape Maragu 2 668.36 Application 5,000 80,000 80,000 17,640 17,640 EL 1879 Central Bismarck 3 255.75 Application 5,000 30,000 30,000 6,750 6,750 EL 1905 East Manus Basin 6 88.66 Application 5,000 15,000 15,000 2,340 2,340 EL 1906 East Manus Basin 7 88.66 Application 5,000 15,000 15,000 2,340 2,340 EL 1907 East Manus Basin 8 17.05 Application 5,000 15,000 15,000 450 450 EL 1908 East Manus Basin 9 30.69 Application 5,000 15,000 15,000 810 810 East Manus Basin EL 1909 10 23.87 Application 5,000 15,000 15,000 630 630 East Manus Basin EL 1910 11 47.74 Application 5,000 15,000 15,000 1,260 1,260 EL 1921 Mahur Island 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1922 Boang Island 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1923 Ambitle Island 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1924 Tabar Island 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1925 Nissan Island 2557.5 Application 5,000 300,000 300,000 67,500 67,500 EL 1926 Simberi Island 2557.5 Application 5,000 300,000 300,000 67,500 67,500 ML 154 Solwara 1 59.1147 Application 5,000 0 0 71,000 71,000 Total Granted 63,395 Total Application 70,875
3.1.2 Exploration Licences
An Exploration Licence (EL) is granted for a period of two years and is renewable for a further period of two years, with a 50% reduction in area at the end of the initial period. The base unit of area for a PNG EL is the sub-block (~3.41 km2). The maximum size over which an EL can be granted is 750 sub-blocks; approximately 2,555 km2. If successive reductions reduce an EL to 30 sub-blocks or fewer, no further reductions are required. If successive reductions reduce an EL to between 30 and 75 sub-blocks, the holder may apply to the Mineral Resources Authority (MRA) to waive or vary the requirement to make further reductions. If the MRA is satisfied that special circumstances justify retention of more than 30 sub-blocks, the MRA may waive or vary the requirement to reduce area, but the total area after the waiver or variation shall not exceed 75 sub-blocks. Successful renewal is dependent upon the holder having complied with the provisions of the Papua New Guinea Mining Act 1992. Nautilus has successfully applied to the Director of the Minerals Resources Authority to waive further relinquishments of EL1196, and has applied for another waiver in respect of EL 1476.
Under the Mining Act 1992, an EL grants to the holder the right to exclusive occupancy for exploration purposes over the area identified in the EL. This includes the surface and any ground beneath the surface of the land and any offshore areas identified in the EL, being the seabed underlying the territorial sea from the mean low water spring level of the sea to such depth as required for the exploration or mining of minerals.
An EL permits the holder to extract, remove and dispose of such quantity of rock, earth, soil or minerals as may be permitted by the approved program subject to the requirements that all cores and drilling samples shall be preserved. The EL authorises the holder to do all other things necessary or expedient for the undertaking of exploration and confers to the holder priority over other parties when applying for mining rights.
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3.1.3 Mining Leases
A Mining Lease (ML) is granted for an initial term not exceeding 20 years under the Mining Act 1992. The Minister may, after considering a recommendation from the Mineral Resources Authority Board, extend the term of the ML for a period or periods not exceeding 10 years, as the Minister determines.
Holders of MLs are authorised, in accordance with the Mining Act 1992 and Mining (Safety) Act 1977 and any other conditions attached thereto, to:
enter and occupy the mining lease for the purpose of mining the minerals on that land and carry on such operations and undertake such works as may be necessary or expedient for that purpose construct a treatment plant on that land and treat any mineral derived from mining operations, whether on that land or elsewhere, and construct any other facilities required for treatment including waste dumps and tailings dams take and remove rock, earth, soil and minerals from the land, with or without treatment take and divert water situated on or flowing through such land and use it for any purpose necessary for mining or treatment operations subject to and in accordance with the Water Resources Act 1982 do all other things necessary or expedient for the undertaking of mining or treatment operations on that land. The holder of an ML is entitled to the exclusive occupancy for mining and mining purposes of the land in respect of which the ML was granted; and owns all minerals lawfully mined from that land.
3.1.4 Tenement Survey
Under the Mining Act 1992, an applicant for an ML is to mark out each corner of the land over which the ML is sought by erecting a distinctively coloured post standing at least 1.2m above the surface. In the case of MLA 154, four metal posts with coordinates marking the four corners of the ML were deployed on the seafloor.
Exploration Licences are not required to be surveyed under the Mining Act 1992. The area of an EL comprises blocks and sub-blocks, measuring five minutes of latitude by five minutes of longitude and one minute of longitude by one minute of latitude, respectively. The surface area of a sub-block is variable depending on its latitude. At PNG latitudes a sub-block is generally around 3.41 km2.
3.1.5 State’s Section 17 Right
Under Section 17 of the Mining Act 1992, and the licence conditions, the State reserves the right to elect at any time, prior to the commencement of mining, to make a single purchase up to a 30% equitable interest in any mineral discovery arising from any licence, at a price pro rata to the accumulated exploration expenditure and development expenditure and then to contribute to further exploration and development in relation to the lease on a pro rata basis. As of 31 December 2010, the State of PNG had not exercised its right in respect of any of Nautilus’ tenements
3.1.6 Royalty
The royalty payable to the State of PNG under the Papua New Guinea Mining (Royalties) Act 1992 is 2% of the net smelter return on all minerals produced, and 0.25% for the Mineral Resources Authority
3.1.7 Environmental Deposits
A security deposit of PGK6,000 is lodged upon grant for each Exploration Licence in PNG. When a Mining Lease is granted, a security deposit of PGK48,000 applies.
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3.1.8 Legal requirements
Prior to commencing either onshore construction activities or seafloor mining operations, the Project has to be granted a Mining Lease and an Environmental Permit in accordance with the Mining Act 1992 and the Environment Act 2000, respectively. The application process requires, inter alia, the submission of a Mining Feasibility Plan and approval of an Environmental Permit. The Environmental Permit was approved on 29 December 2009.
Nautilus has in the first instance used local PNG legislation and requirements as reference standards; however where local requirements were inadequate or non-existent, requirements laid down in the Equator Principles and other internationally recognised standards and guidelines were used. Nautilus also took cognisance of international conventions and maritime law requirements.
Figure 3-3: Nautilus’ Mining Lease Application (MLA 154) in the Bismarck Sea, PNG
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3.2 Tonga
3.2.1 Tenement Details
The Royal Proclamation of 1887 declared Tonga's jurisdiction over approximately 394,000 km2 of ocean area, defined as being between latitude 15°S and 23°30’S and longitude 173°W and 177°W. Under current international legal arrangements, Tonga is entitled to a much larger EEZ of approximately 700,000km2, and although Tonga has not formally declared such a zone, most international arrangements to which it is a party function as if it had.
Nautilus has 16 granted Prospecting Licences (PL) (Figure 3-4) within the 1887 Proclamation Area of the Kingdom of Tonga. In addition Nautilus has 30 applications for PLs, which are located both within and outside the 1887 Proclamation Area (Table 3-3).
3.2.2 Rights of a Holder of a PL
Under the Minerals Act 1988, a PL authorises the holder to exclusive occupancy of the area of the PL for the purposes of exploration, provided the prospecting licence is held by either a Tongan citizen or company, or a citizen of a company registered in the British Commonwealth. Nautilus has made its applications through Nautilus Minerals Offshore Limited, a company registered in Vanuatu and 100% owned by Nautilus Minerals Inc. Both Vanuatu and Canada are members of the British Commonwealth.
In addition to the Minerals Act 1988, relevant sections of the Petroleum Mining Act are also used to administer offshore Prospecting Licences.
PLs are issued for a period of two years and can be renewed, provided the holder has complied with its work program as specified under the Minerals Act 1988. The conditions attaching to Nautilus’ granted PLs do not include a requirement to reduce the area upon renewal. Renewal applications were lodged in 2009 and were subsequently renewed for a further period of four years.
The PL grants priority to the holder for the issuance of a Mining Lease, on either expiry of the PL or application for a Mining Lease, subject to meeting the conditions of the PL, and any conditions considered applicable by the Minister of Lands, Survey and Natural Resources.
The Minerals Act 1988 does not specify any annual rental fees for PLs, the only fee being a TOP500 application fee for each PL. Nautilus’ original proposed work program covered all 18 of the original PL applications, with a total two year expenditure commitment of TOP6.2M. The program for 2010 and 2011 covers all 16 granted PLs with proposed expenditure of USD2M in each year.
3.2.3 Royalty
Mining royalties are payable to the Kingdom of Tonga under the Minerals Act 1988 based on the value of production net of all mining, processing, transportation, marketing and related costs. The rates are set at 5% net value for gold, and 1% net value for other minerals.
3.2.4 Environmental Liabilities and Permits
The Tongan tenements are not subject to any environmental liabilities or rehabilitation performance bonds.
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Table 3-3: Nautilus offshore tenements and applications in the Kingdom of Tonga
Expenditure Commitment (TOP) Area Cos Tenement (km2) Granted Expiry (TOP) 2011 2012 East Late No 1 4872 2/11/2007 2/11/2013 500 236,000 236,000 East Late No 2 4854 2/11/2007 2/11/2013 500 236,000 236,000 East Late No 3 4886 Application 500 122,039 122,039 East Late No 4 4879 Application 500 122,039 122,039 East Late No 5 4861 Application 500 122,039 122,390 East Late No 6 4838 Application 500 122,039 122,039 East Late No 7 4811 Application 500 122,039 122,039 East Late No 8 1591 Application 500 122,039 122,039 Late No 1 5016 2/11/2007 2/11/2013 500 236,000 236,000 Late No 2 5016 2/11/2007 2/11/2013 500 236,000 236,000 Late No 3 5016 2/11/2007 2/11/2013 500 236,000 236,000 Late No 4 4827 Application 500 192,000 192,000 Late No 5 4824 Application 500 122,039 122,039 NE Lau No 2 4969 Application 500 122,039 122,039 NEL No 1 4642 Application 500 192,000 192,000 Niuafo ou No 1 5016 2/11/2007 2/11/2013 500 236,000 236,000 Niuafo ou No 2 5016 2/11/2007 2/11/2013 500 236,000 236,000 Niuafo ou No 3 5016 2/11/2007 2/11/2013 500 236,000 236,000 Niuafo ou No 4 4960 2/11/2007 2/11/2013 500 236,000 236,000 Niuafo ou No 5 3932 Application 500 192,000 192,000 Niuafo ou No 6 4951 Application 500 192,000 192,000 Niuafo ou No 7 4966 Application 500 122,039 122,039 Niuafo ou No 8 4903 Application 500 122,039 122,039 NW Lau No 5 4963 Application 500 122,039 122,039 NW Lau No 6 1322 Application 500 130,000 130,000 NW Lau No 7 2639 Application 500 130,000 130,000 NWL1 2962 Application 500 192,000 192,000 NWL2 4945 Application 500 192,000 192,000 NWL3 4288 Application 500 192,000 192,000 NWL4 4962 Application 500 192,000 192,000 SWLau1 4712 Application 500 122,039 122,039 SWLau2 4698 Application 500 122,039 122,039 SWLau3 4684 Application 500 122,039 122,039 SWLau4 4669 Application 500 122,039 122,039 SWLau5 4652 Application 500 122,039 122,039 Valu Fa No 1 5016 2/11/2007 2/11/2013 500 236,000 236,000 Valu Fa No 2 5016 2/11/2007 2/11/2013 500 236,000 236,000 Valu Fa No 3 5016 2/11/2007 2/11/2013 500 236,000 236,000 West Late No 1 4577 2/11/2007 2/11/2013 500 236,000 236,000 West Late No 2 4904 2/11/2007 2/11/2013 500 236,000 236,000 West Late No 3 4881 2/11/2007 2/11/2013 500 236,000 236,000 West Late No 4 4873 Application 500 192,000 192,000 WVFa1 4785 2/11/2007 2/11/2013 500 236,000 236,000 WVFa2 4124 Application 500 192,000 192,000 WVFa3 4782 Application 500 192,000 192,000 WVFa4 4735 Application 500 122,039 122,039 Total Granted 78,977 Total Applications 131,890
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Figure 3-4: Nautilus’ Prospecting Licences in Tonga
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3.3 Fiji
3.3.1 Tenement Details
Nautilus originally applied for 14 Special Prospecting Licences (SPLs) in the North Fiji Basin in the Exclusive Economic Zone of Fiji, but a change in legislation in 2010 necessitated the splitting and/or re-lodgement of all applications. The outcome of this exercise is that Company now has 17 SPL applications (Table 3-4; Figure 3-5). SPLs in Fiji are granted for a period of up to two years and are renewable for periods of two years. There is no automatic requirement for relinquishing ground on renewal, provided that the tenement conditions have been met in full, and annual expenditure commitments have exceeded requirements. Terms and conditions attached to SPLs are determined by the Minister. Tenements do not necessarily have to be surveyed prior to grant, which is dependent upon whether the Minister of Mines is satisfied that there are no land use conflicts.
3.3.2 Rights of a Holder of an SPL
The Continental Shelf Act 1987 and the Fiji Constitution 1997 enables the Mining Act 1978 to control the exploration and exploitation of minerals within Fiji’s Exclusive Economic Zone. Under the Mining Act, an SPL authorises the holder to have exclusive occupancy for exploration purposes of the area identified in the SPL licence, provided that the work is completed under the direction or supervision of the holder of a current Fiji Prospector’s Right. The SPL grants priority to the holder for the issuance of a Mining Lease, subject to submission of a comprehensive Feasibility Study that demonstrates the commercial and technical viability of the project. Submission of a Development Agreement is also required.
Mining Leases can be granted for periods of between 5 and 21 years, and SPLs can be granted for a period of up to two years, at the discretion of the Minister. There is a right to renew for both.
3.3.3 Royalty
The royalty payable to the State under the Fiji Mining Act 1978 comprises a royalty and Export Tax; the combined total of which will not exceed 5% free onboard (FOB) for all minerals other than iron and bauxite, for which the maximum is 3%. Gold and silver have a 3% FOB Export Tax payable on export, but this is included as part of the overall 5% royalty rate.
3.3.4 Environmental Liabilities and Permits
The Fiji tenements are currently in the application stage. No environmental requirements or performance bonds have yet been fixed.
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Table 3-4: Nautilus’ Fiji tenement applications
Expenditure Commitment Annual Rent (FJD) (FJD) Area Grant Application Fee 2 Name (km ) Date (FJD) 2011 2012 2011 2012 Fiji Fracture Zone 1 3307.92 Application 947 100,000 200,000 63,924 63,924 Fiji Fracture Zone 2 1890.24 Application 947 100,000 200,000 36,528 36,528 Fiji Fracture Zone 3 5907 Application 947 100,000 200,000 114,150 114,150 Fiji Fracture Zone 4 5670.72 Application 947 100,000 200,000 109,584 109,584 Fiji Fracture Zone 5 4725.6 Application 947 100,000 200,000 91,320 91,320 Futuna SC 1 2480.94 Application 947 100,000 200,000 47,943 47,943 Hunter Ridge 1 3544.2 Application 947 100,000 200,000 68,490 68,490 North Cikobia SC 4489.32 Application 947 100,000 200,000 86,754 86,754 North Fiji Basin 1 472.56 Application 947 100,000 200,000 9,132 9,132 North Fiji Basin 2 3544.2 Application 947 100,000 200,000 68,490 68,490 North Fiji Basin 3 236.28 Application 947 100,000 200,000 4,566 4,566 North Fiji Basin 4 826.98 Application 947 100,000 200,000 15,981 15,981 Peggy Ridge 1 5907 Application 947 100,000 200,000 114,150 114,150 Peggy Ridge 2 5316.3 Application 947 100,000 200,000 102,735 102,735 Peggy Ridge 3 4725.6 Application 947 100,000 200,000 91,320 91,320 Peggy Ridge 4 4725.6 Application 947 100,000 200,000 91,320 91,320 Peggy Ridge 5 5316.3 Application 947 100,000 200,000 102,735 102,735 Total 63,086
Figure 3-5: Nautilus Special Prospecting Licence Applications in Fiji
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3.4 Solomon Islands
3.4.1 Tenement Details
Nautilus Minerals holds 25 granted Prospecting Licences (PLs) covering an area of 10,580 km2 in the Solomon Islands, to the west and south of the New Georgia group of islands. In addition, 61 PL applications were lodged in the east Solomon Islands in June 2010 (Figure 3-6; Figure 3-7). The total area covered by the applications is 36,116 km2. Tenement details are shown in Table 3-5.
Under the Solomon Islands Mines and Minerals Act 1990 and the Mines and Minerals Regulations 1996, every holder of a PL is required to report on prospecting activities quarterly and annually. A PL is granted for an initial period of three years, however at expiration a PL holder may apply for a renewal of up to half of the initial area of the PL for a further two years. The Minerals Board may authorise renewal over a larger area if, in its opinion such authorisation would be in the national interest.
A Mining Lease is required for production and may be granted for a maximum of 25 years and may be renewed for a further period not exceeding 10 years. Only the holder of a PL who has made a commercial discovery may apply for a Mining Lease over the area covered by their PL and in respect of a mineral allowed to be exploited under the PL. The grant of the mining lease is dependent on the Minister being satisfied that the proposed mining plan ensures the efficient and beneficial use of the mineral resources and adequate protection of the environment. The holder of a mining lease may be required to pay royalties, surface rental and compensation for damage, and a share of production, revenues, profits or equity capital to the Government of Solomon Islands. It may also be required to maintain an office in Solomon Islands with complete technical and financial records.
3.4.2 Environmental Liabilities
The Mines and Minerals Board may require the holder of a prospecting licence to lodge a bond or guarantee with the Director for due performance; and on due performance of obligations under the Mines and Minerals Act the deposit will be refunded.
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Table 3-5: Nautilus’ offshore Prospecting Licenses in the Solomon Islands
Expenditure Annual Rent Commitment (SBD (SBD) Area Grant Application Lease Name (km2) Date Expiry Date Cost (SBD) 2010 2011 2010 2011 PL 01/09 New Georgia 32 590 21/10/2009 20/10/2012 2,250 100,000 200,000 24,800 32,000 PL 02/09 New Georgia 33 590 21/10/2009 20/10/2012 2,250 100,000 200,000 24,800 32,000 PL 03/09 New Georgia 34 590 21/10/2009 20/10/2012 2,250 100,000 200,000 24,800 32,000 PL 04/09 New Georgia 35 590 21/10/2009 20/10/2012 2,250 100,000 200,000 24,800 32,000 PL 05/09 New Georgia 36 590 21/10/2009 20/10/2012 2,250 100,000 200,000 24,800 32,000 PL 06/09 New Georgia 37 590 21/10/2009 20/10/2012 2,250 100,000 200,000 24,800 32,000 PL 07/09 New Georgia 38 590 21/10/2009 20/10/2012 2,250 100,000 200,000 24,800 32,000 PL 08/09 New Georgia 39 590 21/10/2009 20/10/2012 2,250 100,000 200,000 24,800 32,000 PL 09/09 New Georgia 40 590 21/10/2009 20/10/2012 2,250 100,000 200,000 24,800 32,000 PL 10/09 New Georgia 41 590 21/10/2009 20/10/2012 2,250 100,000 200,000 24,800 32,000 PL 11/09 New Georgia 42 590 21/10/2009 20/10/2012 2,250 100,000 200,000 24,800 32,000 PL 23/07 New Georgia 1 296 21/05/2007 20/07/2012 3,000 166,666 166,666 31,340 46,765 PL 24/07 New Georgia 2 296 21/05/2007 20/07/2012 3,000 166,666 166,666 31,340 46,765 PL 26/07 New Georgia 9 296 21/05/2007 20/07/2012 3,000 166,666 166,666 31,340 46,765 PL 27/07 New Georgia 10 296 21/05/2007 20/07/2012 3,000 166,666 166,666 31,340 46,765 PL 28/07 New Georgia 11 296 21/05/2007 20/07/2012 3,000 166,666 166,666 31,340 46,765 PL 34/07 New Georgia 17 296 21/05/2007 20/07/2012 3,000 166,666 166,666 31,340 46,765 PL 35/07 New Georgia 18 296 21/05/2007 20/07/2012 3,000 166,666 166,666 31,340 46,765 PL 37/07 New Georgia 20 295 21/05/2007 20/07/2012 3,000 166,666 166,666 31,250 46,625 PL 39/07 New Georgia 22 295 21/05/2007 20/07/2012 3,000 166,666 166,666 31,250 46,625 PL 40/07 New Georgia 23 254 21/05/2007 20/07/2012 3,000 166,666 166,666 27,560 40,885 PL 43/07 New Georgia 26 296 21/05/2007 20/07/2012 3,000 166,666 166,666 31,340 46,765 PL 44/07 New Georgia 27 296 21/05/2007 20/07/2012 3,000 166,666 166,666 31,340 46,765 PL 55/07 New Georgia 30 286 27/08/2007 26/08/2010 3,000 166,666 166,666 30,440 45,365 PL 56/07 New Georgia 31 296 27/08/2007 26/08/2010 3,000 166,666 166,666 31,340 46,765 PL ES07 East Solomons 7 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES08 East Solomons 8 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES09 East Solomons 9 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES10 East Solomons 10 594 Application 2,250 30,000 200,000 24,960 32,200 PL ES11 East Solomons 11 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES12 East Solomons 12 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES13 East Solomons 13 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES14 East Solomons 14 594 Application 2,250 30,000 200,000 24,960 32,200 PL ES15 East Solomons 15 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES16 East Solomons 16 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES17 East Solomons 17 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES18 East Solomons 18 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES19 East Solomons 19 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES20 East Solomons 20 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES21 East Solomons 21 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES22 East Solomons 22 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES23 East Solomons 23 591 Application 2,250 30,000 200,000 24,840 32,050 PL ES24 East Solomons 24 591 Application 2,250 30,000 200,000 24,840 32,050 PL ES25 East Solomons 25 591 Application 2,250 30,000 200,000 24,840 32,050 PL ES26 East Solomons 26 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES27 East Solomons 27 591 Application 2,250 30,000 200,000 24,840 32,050 PL ES28 East Solomons 28 590 Application 2,250 30,000 200,000 24,800 32,000
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Expenditure Annual Rent Commitment (SBD (SBD) Area Grant Application Lease Name (km2) Date Expiry Date Cost (SBD) 2010 2011 2010 2011 PL ES29 East Solomons 29 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES30 East Solomons 30 590 Application 2,250 30,000 200,000 24,800 32,000 PL ES31 East Solomons 31 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES32 East Solomons 32 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES33 East Solomons 33 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES34 East Solomons 34 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES35 East Solomons 35 590 Application 2,250 30,000 200,000 24,800 32,000 PL ES36 East Solomons 36 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES37 East Solomons 37 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES38 East Solomons 38 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES39 East Solomons 39 598 Application 2,250 30,000 200,000 25,120 32,400 PL ES40 East Solomons 40 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES41 East Solomons 41 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES42 East Solomons 42 589 Application 2,250 30,000 200,000 24,760 31,950 PL ES43 East Solomons 43 591 Application 2,250 30,000 200,000 24,840 32,050 PL ES44 East Solomons 44 578 Application 2,250 30,000 200,000 24,320 31,400 PL ES45 East Solomons 45 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES46 East Solomons 46 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES47 East Solomons 47 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES48 East Solomons 48 588 Application 2,250 30,000 200,000 24,720 31,900 PL ES49 East Solomons 49 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES50 East Solomons 50 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES51 East Solomons 51 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES52 East Solomons 52 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES53 East Solomons 53 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES54 East Solomons 54 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES55 East Solomons 55 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES56 East Solomons 56 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES57 East Solomons 57 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES58 East Solomons 58 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES59 East Solomons 59 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES60 East Solomons 60 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES61 East Solomons 61 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES62 East Solomons 62 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES63 East Solomons 63 591 Application 2,250 30,000 200,000 24,840 32,050 PL ES64 East Solomons 64 592 Application 2,250 30,000 200,000 24,880 32,100 PL ES65 East Solomons 65 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES66 East Solomons 66 593 Application 2,250 30,000 200,000 24,920 32,150 PL ES67 East Solomons 67 593 Application 2,250 30,000 200,000 24,920 32,150 Total Granted 10,580 Total Application 36,116
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Figure 3-6: Location of Nautilus’ tenements in the Solomon Islands
Figure 3-7: Location of Nautilus’ tenements in the east Solomon Islands
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3.5 New Zealand
3.5.1 Tenement Details
Nautilus has applied for a single Prospecting Permit (PP) in the Havre Trough region of New Zealand (Table 3-6; Figure 3-8). In New Zealand, the Crown Minerals Act 1991 provides for three types of permit: Prospecting, Exploration and Mining. Provisions in the Continental Shelf Act 1964 are also used to administer PPs by the New Zealand authorities. Under draft Standard Terms and Conditions prepared by the authorities in 2010 an offshore PP is granted for an initial period of four years under the Continental Shelf Act. A PP allows geological, geochemical, and geophysical surveys; sampling by hand or hand held methods; and serial surveys. An Exploration Permit is initially granted for a period up to five years and is for the purpose of identifying mineral deposits and evaluating the feasibility of mining.
The annual rent on a PP is NZD5.00 per km2. Holders of PPs are required to file annual technical and financial summaries to the Ministry of Economic Development.
Mining requires a Mining Permit, where the nature and extent of a mineral deposit needs to be clearly defined during exploration. A Mining Permit can be granted for a period of up to forty years depending on the size of the resource. It is more common for MPs to be granted for periods of less than twenty years.
3.5.2 Royalty
In New Zealand, a royalty is payable only on all minerals produced from a MP that are sold, disposed of or used in production. For precious metals (gold and silver) an ad valorem royalty (AVR) is based on annual net sales revenues: 1% if the annual net sales revenues are less than NZD1.5M, or 1% if the annual net sales revenues are greater than NZD1.5M. For base metals, royalties are set by the Minister, taking into consideration estimated sales price, the market into which the material is to be supplied, and national and international production and price trends.
3.5.3 Environmental Liabilities and Permits
The New Zealand tenement is currently in the application stage. No environmental requirements or performance bonds have yet been fixed.
Table 3-6: Nautilus’ offshore tenement application in New Zealand
Expenditure Annual Rent Commitment (NZD) (NZD) Application Application Number Area (km2) Granted Lodged Cost (NZD) 2011 2012 2011 2012 PP Havre 39348 Trough 52,818 Application 1,600 500,000 500,000 264,000 264,000 Total Application 52,818
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Figure 3-8: Location of Nautilus’ New Zealand tenement
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3.6 Vanuatu
3.6.1 Tenement Details
Nautilus Minerals holds 19 granted Prospecting Licences (PLs) covering an area of 1,685 km2 in Vanuatu on the eastern side of the main islands. In addition, 36 PL applications have been lodged (Figure 3-9). The total area covered by the PL applications is 3,191 km2. Tenement details are shown in Table 3-7.
Under the Vanuatu Mines and Minerals Act, every holder of a PL is required to report on prospecting activities quarterly. A PL is granted for an initial period of three years, however at expiration a PL holder may apply for a renewal of up to half of the initial area of the PL for a further two years.
A Mining Licence is required for production and may be granted for a maximum of 25 years. It may be renewed for a further period, not exceeding 25 years. Only the holder of a PL who has made a commercial discovery may apply for a Mining Licence over the area covered by their PL, and only in respect of a mineral permitted to be explored for under the PL. The grant of the Mining Licence is dependent on the Minister being satisfied that the proposals of the applicant ensure the most efficient and beneficial and timely use of the mineral resources concerned. The holder of a Mining Licence shall pay royalties in respect of minerals recovered within the mining area.
3.6.2 Rights of a holder of a PL
A prospecting licence gives the holder, subject to the Act and the conditions specified in the licence, the exclusive right to carry out prospecting operations in or in relation to the prospecting area for any mineral to which the licence relates, and to undertake in the prospecting area such works as are necessary for that purpose
3.6.3 Royalties
Subject to the Mines and Minerals Act, the holder of a mining licence must pay a royalty in respect of minerals recovered from the mining area.
The royalty is at the rate fixed in, or calculated in accordance with the provisions of the mining licence concerned, or if no rate is fixed or provision so made in the mining licence concerned; or pursuant to the rate prescribed.
3.6.4 Environmental Liabilities
The Minister may require the arrangements to be made which he deems sufficient to secure the performance of the holder of a Mining Right under the Act.
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Table 3-7: Nautilus’ Offshore tenements in Vanuatu
Expenditure Annual Rent Commitment (NZD) Application Application Number Area (km2) Granted Date Cost (NZD) 2011 2012 2011 2012 PL 1652 Temakons 2 99.33 1/08/2010 31/07/2013 347,400 3,445,050 496,650 496,650 PL 1653 Temakons 3 99.28 1/08/2010 31/07/2013 347,400 3,445,050 496,400 496,400 PL 1654 Temakons 4 50.29 1/08/2010 31/07/2013 347,400 3,445,050 251,450 251,450 PL 1655 Temakons 5 56.58 1/08/2010 31/07/2013 347,400 3,445,050 282,900 282,900 PL 1656 Temakons 6 51.12 1/08/2010 31/07/2013 347,400 3,445,050 255,600 255,600 PL 1657 Temakons 7 53.00 1/08/2010 31/07/2013 347,400 3,445,050 265,000 265,000 PL 1658 Coriolis 1 99.76 1/08/2010 31/07/2013 347,400 3,445,050 498,800 498,800 PL 1659 Coriolis 2 99.76 1/08/2010 31/07/2013 347,400 3,445,050 498,800 498,800 PL 1660 Coriolis 3 99.76 1/08/2010 31/07/2013 347,400 3,445,050 498,800 498,800 PL 1661 Coriolis 4 99.76 1/08/2010 31/07/2013 347,400 3,445,050 498,800 498,800 PL 1662 Coriolis 5 99.76 1/08/2010 31/07/2013 347,400 3,445,050 498,800 498,800 PL 1663 Coriolis 6 99.76 1/08/2010 31/07/2013 347,400 3,445,050 498,800 498,800 PL 1664 Coriolis 7 98.40 1/08/2010 31/07/2013 347,400 3,445,050 492,000 492,000 PL 1665 Coriolis 8 95.00 1/08/2010 31/07/2013 347,400 3,445,050 475,000 475,000 PL 1666 Coriolis 9 96.25 1/08/2010 31/07/2013 347,400 3,445,050 481,250 481,250 PL 1667 Nifonea Ridge 4 98.01 1/08/2010 31/07/2013 347,400 3,445,050 490,050 490,050 PL 1668 Nifonea Ridge 5 98.01 1/08/2010 31/07/2013 347,400 3,445,050 490,050 490,050 PL 1669 Futuna 2 93.10 1/08/2010 31/07/2013 347,400 3,445,050 465,500 465,500 PL 1670 Futuna 3 98.01 1/08/2010 31/07/2013 347,400 3,445,050 490,050 490,050 FUT 1 Futuna 1 83.70 Application 347,400 3,445,050 418,500 418,500 FUT 4 Futuna 4 85.14 Application 347,400 3,445,050 425,700 425,700 FUT 5 Futuna 5 99.36 Application 347,400 3,445,050 496,800 496,800 FUT 6 Futuna 6 97.00 Application 465,000 2,170,000 485,000 485,000 FUT 7 Futuna 7 99.00 Application 465,000 2,170,000 495,000 495,000 FUT 8 Futuna 8 96.00 Application 465,000 2,170,000 480,000 480,000 FUT 9 Futuna 9 96.00 Application 465,000 2,170,000 480,000 480,000 JEAC 1 Jean Charcott 1 99.00 Application 347,400 3,445,050 495,000 495,000 JEAC 2 Jean Charcott 2 99.00 Application 347,000 3,445,050 495,000 495,000 JEAC 3 Jean Charcott 3 100.00 Application 465,000 2,170,000 500,000 500,000 JEAC 4 Jean Charcott 4 100.00 Application 465,000 2,170,000 500,000 500,000 MAD 1 Madwo 1 93.00 Application 465,000 2,170,000 465,000 465,000 MAD 2 Madwo 2 93.00 Application 465,000 2,170,000 465,000 465,000 MAD 3 Madwo 3 99.00 Application 465,000 2,170,000 495,000 495,000 MAD 4 Madwo 4 93.00 Application 465,000 2,170,000 465,000 465,000 NIFR 1 Nifonea Ridge 1 99.00 Application 347,400 3,445,050 495,000 495,000 Nifonea Ridge NIFR 10 10 98.00 Application 465,000 2,170,000 490,000 490,000 NIFR 2 Nifonea Ridge 2 99.00 Application 347,400 3,445,050 495,000 495,000 NIFR 3 Nifonea Ridge 3 99.00 Application 347,400 3,445,050 495,000 495,000 NIFR 6 Nifonea Ridge 6 91.00 Application 465,000 2,170,000 455,000 455,000 NIFR 7 Nifonea Ridge 7 98.00 Application 465,000 2,170,000 490,000 490,000 NIFR 8 Nifonea Ridge 8 91.00 Application 465,000 2,170,000 455,000 455,000 NIFR 9 Nifonea Ridge 9 98.00 Application 465,000 2,170,000 490,000 490,000 OSC1 Oscostar 1 95.90 Application 465,000 3,255,000 479,500 479,500 OSC2 Oscostar 2 95.90 Application 465,000 3,255,000 479,500 479,500 OSC3 Oscostar 3 95.90 Application 465,000 3,255,000 479,500 479,500 OSC4 Oscostar 4 95.90 Application 465,000 3,255,000 479,500 479,500
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Expenditure Annual Rent Commitment (NZD) Application Application Number Area (km2) Granted Date Cost (NZD) 2011 2012 2011 2012 OSC5 Oscostar 5 95.90 Application 465,000 3,255,000 479,500 479,500 OSC6 Oscostar 6 89.50 Application 465,000 3,255,000 447,500 447,500 TEM 1 Temakons 1 55.18 Application 347,400 3,445,050 275,900 275,900 TEM 8 Temakons 8 57.72 Application 347,400 3,445,050 288,600 288,600 TEM 9 Temakons 9 31.00 Application 347,400 3,445,050 155,000 155,000 VOL1 Volsmar 1 78.10 Application 465,000 3,255,000 390,500 390,500 VOL2 Volsmar 2 81.20 Application 465,000 3,255,000 406,000 406,000 VOL3 Volsmar 3 63.20 Application 465,000 3,255,000 316,000 316,000 VOL4 Volsmar 4 50.50 Application 465,000 3,255,000 252,500 252,500 Total Granted 1,685 Total Applications 3,191
Figure 3-9: Location of Nautilus’ tenements in Vanuatu
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3.7 Clarion Clipperton Zone (CCZ)
3.7.1 Tenement Application Details
Nautilus, though its 100% controlled entity Tongan Offshore Mining Ltd (TOML), has been sponsored by the Government of Tonga in its application for approval by the International Seabed Authority (ISA) of a plan of work for polymetallic nodule exploration under the terms of the United Nations Convention on the Law of the Sea 1982 (UNCLOS).
The application areas within the Clarion-Clipperton-Zone (CCZ) are located in the Central Pacific Ocean, between 110 to 160 degrees West Longitude and 5 to 20 degrees North Latitude. The Application Area covers a total combined surface area of 74,713 km2. The Application Area is divided into 6 Regions (Table 3-8), with each region covering a section from ISA Reserved Blocks (Figure 3-10).
Table 3-8: Application Areas and Block Numbers in the CCZ
Application Area Region Reserved Block Area (km2) Area A Block 2 10,281 Area B Block 15 9,966 Area C Block 16 15,763 Area D Block 20 7,002 Area E Block 21 15,881 Area F Block 25 15,820 Total 74,713
Figure 3-10: Location of Tongan Offshore Mining Limited’s Exploration Licence Applications Application Area Regions A, B, C, D, E and F shown in yellow
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3.7.2 International Seabed Authority (ISA)
The International Seabed Authority is an autonomous international organization established under the 1982 United Nations Convention on the Law of the Sea and the 1994 Agreement relating to the Implementation of Part XI of the United Nations Convention on the Law of the Sea. The Authority is the organization through which States Parties to the Convention shall, in accordance with the regime for the seabed and ocean floor and subsoil thereof beyond the limits of national jurisdiction (the Area) established in Part XI and the Agreement, organize and control activities in the Area, particularly with a view to administering the resources of the Area.
The Authority, which has its headquarters in Kingston, Jamaica, came into existence on 16 November 1994, upon the entry into force of the 1982 Convention. The Authority became operational as an autonomous international organization in June 1996. Currently, the Authority has 161 members, although the United States of America has still not formally ratified the treaty, and is the only notable absentee.
3.7.3 United Nations Convention of the Law of the Sea (UNCLOS)
UNCLOS deals with navigational rights, territorial sea limits, economic jurisdiction, legal status of resources on the seabed beyond the limits of national jurisdiction, passage of ships through narrow straits, conservation and management of living marine resources, protection of the marine environment, and marine research.
Part XI of UNCLOS, and its subsequent Implementation Agreement of 1994, deals with mining of minerals from the seafloor outside of nationally regulated areas. The agreements provide a framework for countries and companies (with country sponsorship) to obtain legal title to areas of the seafloor from the International Seabed Authority for the purpose of exploration and eventually exploitation of resources. The agreements also recognize the rights of “Pioneer Investors”, those companies and countries that had invested significantly in deep ocean mining prior to the adoption of UNCLOS and the Implementation Agreement.
3.7.4 Permitting Regime
The Mining Code is not complete to date, although the Authority has issued regulations on Prospecting and Exploration for Polymetallic Nodules (adopted 13th July 2000), and Prospecting and Exploration for Polymetallic Sulphides (adopted 7th May 2010). To date, eight countries or consortiums have been granted exploration licences for polymetallic nodules within the area, through governmental bodies:
Yuzhmorgeologiya (the Russian Federation) Interoceanmetal Joint Organization (consortium comprising Bulgaria, Cuba, Slovakia, Czech Republic, Poland and the Russian Federation) The Government of the Republic of Korea China Ocean Minerals Research and Development Association (COMRA) Deep Ocean Resources Development Company (Japan_ Institut français de rechèrche pour l’exploitation de la mer (France) The Government of India The Federal Institute for Geosciences and Natural Resources (Germany)
Of the eight contractors, seven hold their licences in the Clarion Clipperton Zone, while the government of India holds its licence in the central Indian Ocean.
Licences for prospecting and exploration for nodules are granted for 15 years, and give the licensee exclusive title. Licences initially comprise 150,000km2, although half (based on “value” and area) must be returned to the Authority by year eight, to be administered by the “Enterprise” as part of the “Reserved
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Areas”. The Enterprise is a body within the Authority tasked with holding and managing the landholdings held by the “Pioneer Investors” as well as those areas relinquished by licensees during the term of their initial exploration work. The Enterprise acts as a sort of “land bank” for developing nations to benefit directly from deep ocean mining, whereby developing nations (or their sponsored companies) may apply for ground.
Licences conditions cover such areas as obligations of the sponsoring state, environmental obligations, marine scientific research, fees, and work programs.
On the 10th of April 2008, United Ventures, an affiliate of Nautilus Minerals, and led by former Nautilus CEO David Heydon, made application for two licences for nodules pursuant to Annex III, article 8, of UNCLOS. The two applications were made by Tonga Offshore Mining (sponsored by the Kingdom of Tonga), and Nauru Offshore Resources Inc. (sponsored by the Republic of Nauru). Each application comprised approximately 75,000km2, and covered reserved blocks (i.e. areas “controlled” by the Enterprise) within the Clarion-Clipperton Zone of the Central Pacific. The applications were first heard by the ISA Legal and Technical Commission (LTC) in mid-2008, although the LTC was unable to reach a decision on the applications at that time. Consideration of the applications was deferred in 2009, at the request of the Nauru government, for a ruling on the rights and obligations of sponsoring states under UNCLOS to be handed down by the International Tribunal on Law of the Sea. The Tribunals decision is due in early February 2011.
In December 2010, Nautilus Minerals, United Nickel (formerly United Ventures), and associates of David Heydon, entered into a deed of termination, whereby Nautilus Minerals obtained 100% ownership of Tongan Offshore Mining Limited, and its nodule application, and the Heydon associates obtained 100% of Nauru Offshore Resources Inc. The two licences applications remain valid, but now Nautilus controls one licence 100%.
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4. Accessibility, Climate, Local Resources, Infrastructure, Physiography and Environment
4.1 Papua New Guinea
4.1.1 Location
The Solwara 1 deposit is situated in the Bismarck Sea within the New Ireland Province of PNG, at Latitude 3.789° S Longitude 152.094° E, about 50 km north of Rabaul township in the East New Britain Province and about 40 km west of Namatanai in New Ireland Province. The site is approximately 30 km from the nearest coast. The proposed mining project is of relatively small scale and there is no need for large-scale site preparation or construction of complex facilities, and no direct landowner issues. The area proposed for mining is approximately 0.112 km2 and the footprint at the sea surface is limited to the presence of a production support vessel and attendant support vessels.
Solwara 1 would be the first attempt in the world to mine an SMS deposit commercially. The mining area includes small areas of active mineralised chimney habitats with associated hydrothermal vent fauna colonies. Understanding the impacts of mining on these biological communities is a fundamental environmental issue for the Project.
4.1.2 Physiography
The Solwara 1 deposit is a mound on a small ridge on the NW flank of the North Su volcanic centre at depths of 1500 mBSL to 1700 mBSL. The top of the deposit is characterised by the presence of sulphide-rich chimneys which can reach up to 15 m in height. Some of the chimneys are still active and are venting hydrothermal fluids, but for the most part the chimney fields are inactive. A thin veneer of unconsolidated sediments up to several m thick covers much of the mound.
The water depth increases beyond Solwara 1 to the north and west to around 2000 mBSL. Within the wider Bismarck Sea, there are a number of seafloor mounds rising up to 500 m above the surrounding seafloor. The mounds are volcanic centres that are believed to be intermittently active, as indicated by thermal plumes and fresh volcanic rocks. The hydrothermal field containing Solwara 1 extends SE across the North Su and South Su seafloor volcanic centres. The summits of North Su and South Su are 1150 mBSL and 1320 mBSL respectively.
4.1.3 Climate
The climate of the Bismarck Sea and surrounds is tropical, with mean maxima ranging from 31°C to 33 °C and mean minima about 23°C (Figure 4-1). There are two distinct monsoonal regimes, the NW Monsoon, which persists typically from about November to April and the SE Monsoon, which persists typically from about May to October. Rainfall is distributed throughout the year, but is heavier during the NW Monsoon. The project area is within 5° of the equator and is not affected by tropical cyclones.
Seawater temperatures for the Solwara 1 site remain warm throughout the year, with mean monthly sea surface temperatures ranging from a maximum of 30.1 °C (in November) to a minimum of 28.9 °C (in August). Throughout the year, mean near-seabed water temperatures remain virtually constant at ~3 °C.
4.1.4 Wind
The conditions at the Solwara 1 site are generally benign with occasional strong to gale force winds from the W-NW (during the summer NW Monsoon) and from S-SE (during the winter SE Monsoon). Higher maximum winds occur during the summer NW Monsoon, with 10 minute mean speeds ranging from about 18.2 to 20.3 m/s, while higher mean wind speeds occur during the winter SE Monsoon, with 10 minute mean speeds ranging from about 6.8 to 7.4 m/s.
Ten minute mean wind speeds are typically the lightest in and around the transition months (April to May and October to December) between the two monsoons, with mean speeds ranging from only about 4.7 to 5.6 m/s.
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Reports of gale force winds (>17.5 m/s) over the Bismarck Sea are rare (<1% chance of occurrence). Most gale reports are due to very localised conditions, such as convective squalls or a big surge in the NW Monsoon due to a distant tropical cyclone.
Due to its close proximity to the equator and the considerable protection of the surrounding islands, tropical cyclones have historically not occurred within the Bismarck Sea.
Figure 4-1: Average climate conditions for Rabaul, 1974-1994.
4.1.5 Waves, tides and currents
The Solwara 1 location is situated in the Bismarck Sea, about 50 km north of Rabaul township, East New Britain Province and about 40 km west of Namatanai, New Ireland Province., The site is well protected (with significantly limited fetches) to the arrival of significant seastates from especially the north through east through south to southwest directions. Fetches at Solwara 1 are only significant (i.e. ~700 to 1000 km) to the west (WSW – WNW). As a result, the wave height at the Solwara 1 location will be mostly locally generated wind waves (seas with Tp < 7 sec) roughly following the directions of the NW and SE Monsoons (i.e. from the W in summer and from the SE – SSE in winter), with only fairly minor contributions of swell waves (with Tp > 7 sec and up to 19.5 sec).
At Solwara 1, the strongest winds (> 14.5 m/s) are from the W – WNW during the NW Monsoon months of February to April and are from the ESE – SSE during the SE Monsoon months of June to September. However, the largest waves (> 3.0 m) affecting Solwara 1 location are only from the W – WNW directions (where sufficient fetch exists) during the summer NW Monsoon months of December to April. During the SE Monsoon months of June to September, the largest waves are typically only just greater than 2.0 m (due to limited fetch) and are from the SE – SSE directions.
The Solwara 1 site experiences a maximum spring tide range of around 0.8 m. The tides of the area are predominantly diurnal, with typically one high and one low each day. A summary of annual wave exceedence data against significant seastate is presented in Table 5 1.
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Table 4-1: Annual wave exceedence data against significant seastate
% Exceedence Significant Seastate - Hsig (m) > 1% 2.69 > 5% 1.72 > 10% 1.33 > 30% 0.80
The ambient total steady currents for the Solwara 1 site are dominated by the reversing monsoonal drift and wind-driven currents for the mixed layer (up to ~150 m) of the water column. The combined effect of the diurnal tides and drift currents dominate the majority of the water column from about 200 m depth to about 1300 m depth. The lower ~200 m of the water column (down to 1500 m depth) is more strongly tidally dominated.
4.1.6 Volcanism
The Solwara 1 deposit lies on the NW flank of the active North Su submarine volcano. Rabaul is situated adjacent to two active volcanoes, Tavurvur and Vulcan, that form part of a group of volcanoes that lie within a caldera complex. These two volcanoes have erupted in the recent past, both in 1937 leading to loss of 507 lives and in 1994 where 80% of Rabaul’s dwellings were destroyed by ash accumulation; large loss of life was avoided due to local warning systems.
Vulcan is currently largely dormant, while Tavurvur has intermittent emissions of volcanic ash (of decreasing frequency). The Rabaul Observatory is manned to monitor trends in volcanic activity in the region.
4.1.7 Tectonics and seismicity
PNG straddles several major tectonic plate boundaries and is part of the Pacific ‘Ring of Fire’. Modelling indicates that the India–Australia and Pacific plates are moving towards each other at a rate between 3 and 10 cm/yr. The movement of the plates has resulted in significant faulting and seismic activity, creating the potential for both shallow and large-magnitude earthquakes on land and under the sea. The PNG earthquake loadings code indicates that the Solwara 1 deposit is located within Zone 2 (where Zone 1 is most unstable) and the Port of Rabaul component of the Project is located within Zone 1. The Global Seismic Hazard Assessment Program has assessed the Rabaul area as having a peak ground acceleration range of 4.0 g to 4.8 g (a very high hazard) for a return period of 475 years.
4.1.8 Environment Act 2000
The Environment Act 2000 defines the activities which require an Environmental Impact Assessment (“EIA”) process prior to the approval of an Environmental Permit. It sets out three levels of activities, ranging from Level 1 to Level 3 activities, where Level 3 activities are defined as those that may result in serious environmental harm. It also sets out the EIA process to be followed, which commences with the registration with the Department of Environment and Conservation (“DEC”) of the intent to carry out preparatory work for an activity. After review DEC serves a notice, for Level 3 activities, to undertake an EIA process. The first step in this process is to prepare and submit an Environmental Inception Report (“EIR”) under Section 52 of the Environment Act 2000. Once the EIR is approved the proponent commences with the preparation of an Environmental Impact Statement (“EIS”). Once submitted, the EIS is assessed by DEC and other parties and if approval is recommended the DEC grants approval in principle, after which an Environmental Permit may be issued. Under Section 66 of the Environment Act 2000 a condition of the permit may be the preparation and carrying out of an Environmental Management Plan (“EMP”), based on the findings and mitigation measures contained in the EIS.
4.1.9 Key environmental regulations
Environment (Council’s Procedures) Regulation 2002
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Environment (Prescribed Activities) Regulation 2002 Environment (Water Quality Criteria) Regulation 2002 Environment (Fees and Charges) Regulation 2002
4.1.10 Other relevant legislation
The Fauna (Protection and Control Amendment) Act 1974 The International Trade (Fauna and Flora) Act 1979 Dumping of Wastes at Sea Act 1979 Prevention of Pollution at Sea Act 1979
4.1.11 International standards and conventions
International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto (“MARPOL”) United Nations Convention on the Law of the Sea (“UNCLOS”) (1994) Convention for the Protection of the Natural Resources and Environment of the South Pacific Region (“SPREP”) (1990) Kyoto Protocol to United Nations Framework Convention on Climate Change (1997) International Finance Corporation (“IFC”) Performance Standards IFC General EHS Guidelines World Health Organisation (“WHO”) Standards Montreal Protocol on Ozone Depleting Substances Convention on Biological Diversity (1993)
4.1.12 Nautilus mandated requirements
Nautilus Environmental Policy Nautilus Solwara 1 Project Statement of Requirements
4.1.13 Default or voluntary codes and guidelines
Australian and New Zealand Guidelines for Fresh and Marine Water Quality Guidelines Australian National Environment Protection (Ambient Air Quality) Measures Equator Principles established by the World Bank. Lihir Gold Mine DEC standards Lihir PNG Standards (reported in Lihir Responsible Environmental Management Fact Sheet 4) PNG Code of Conduct for Mining International Marine Minerals Society Code for Environmental Management of Marine Mining InterRidge Code of Conduct
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4.1.14 Environmental Impact Assessment
4.1.14.1 Environmental Inception Report
On 5 October 2006, Nautilus submitted a ‘Notification of Preparatory Work’ to the DEC under the provisions of the Environment Act 2000 for the first phase of the Project. The activity was deemed to be a Level 3 activity and on 17 October 2006 DEC issued a ‘Notice to Undertake Environmental Impact Assessment’ to Nautilus to prepare and submit an EIR. The objectives of the EIR were to:
Identify the potential environmental and social issues of developing the Project. Describe the scope of the EIS to address these issues. Initiate the formal process of stakeholder consultation. Enable DEC to review the proposed EIS scope and redress any shortcomings.
Nautilus submitted the EIR for the offshore component of the Project on 1 February 2007. DEC approved the EIR on 28 May 2007.
4.1.14.2 Environmental Impact Statement
The Solwara 1 Project is a ‘Level 3’ activity under the Environment Act 2000, (section 53) which requires that an Environmental Impact Statement (EIS) be submitted to the Department of Environment and Conservation (DEC). Nautilus appointed Coffey Natural Systems (Australia) (“Coffey”) (now Coffey Environments) the lead consultant for the EIA / EIS process.
In contrast to a typical land-based project, there are no direct landowner impacts, and the primary focus is on scientific issues. Its environmental footprint is mainly that of a single mining ship (with attendant support vessels) and precision mining machinery operating on an area proposed for mining of approximately 11.2Ha. One of the key environmental issues is the need to understand the biology of hydrothermal vent communities and the surrounding seafloor, and the potential impacts of mining on them.
It is proposed to discharge the water from dewatering close to its point of origin at depths between 25 to 50 m above the seafloor, and not at shallow or mid-water depths; this avoids any exposure or impacts on surface ecosystems. The processes of mining and dewatering will therefore not affect the pelagic tuna, tuna fisheries or near-shore coral reefs.
Potential impacts to surface pelagic animals are only from the presence of the surface vessels and their normal operations, including lighting, underwater noise and routine discharges (in compliance with relevant maritime acts and regulations). These impacts are similar to shipping generally and to the exploration surveys already completed.
In an effort to enhance scientific knowledge while meeting the needs of the EIA process, Nautilus engaged international scientific experts to design and conduct the following environmental studies for the Project:
Macrofauna of hard seafloor areas (College of William and Mary, Duke University) Macrofauna and meiofauna of sediments (Scripps Institution of Oceanography) Abyssal meiofauna (Dr John Moverley and Coffey Natural Systems). Sediment geology (University of Toronto) Sediment geochemistry – elutriate and toxicity testing (CSIRO and Charles Darwin University) Biomass, biodiversity and bioaccumulation (Hydrobiology) Water quality (CSIRO and Coffey Natural Systems) Natural hazards (Rabaul Volcano Observatory) Oceanography (Coffey Natural Systems)
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Underwater acoustic modelling (Curtin University of Technology) Discharged water and sediment dispersion modelling (Asia-Pacific Applied Science Associates)
In addition, Nautilus provided oceanographic and deep sea sampling platforms (ROVs) to conduct this work.
The main objectives of the EIS were to understand the existing environment, potential impacts due to mining and how to mitigate significant impacts. The EIS discusses the issues and impacts associated with the Project in a range of spatial contexts such as the mining areas at Solwara, barge corridor and crew transfer routes and the project facilities to be used during operations at the Port of Rabaul.
Key sections of the EIS include:
Executive summary and overview of proposal; Purpose of the development; Viability of the project; Overview of the policy, legal and administrative framework; Stakeholder consultation; Description of the proposed development activity; Development timetable; Physical, biological and social characteristics of the receiving environment; Socioeconomic Environment; Potential impacts of the project and mitigation and management measures; Accidental events and natural hazards; Waste minimisation, cleaner production and energy balance; Environmental management, monitoring and reporting; Other statutory decisions
4.1.14.3 EIS Approval Status
In August 2009, the Department of Environment and Conservation granted an ‘Approval in Principle’ for the Solwara 1 Environmental Impact Statement. The Approval in Principal was signed by the Minister of the Environment, and signalled the completion of internal and independent external reviews of the EIS by the DEC. The Solwara 1 Project Environmental Permit was granted on 29 December 2009 for a term of 25 years, expiring in 2035. The next steps for Nautilus are to prepare the draft project Environmental Management Plan (EMP) for submission and approval by the DEC three months prior to project commissioning.
4.1.14.4 Stakeholder consultation
Unlike other mining projects in Papua New Guinea, there are no directly affected communities or landowners. The initial investigation of the social environment revealed that no customary land ownership exists at any of the proposed project locations.
Due to its offshore location, under PNG law the Solwara 1 deposit is owned by the State of PNG; the proposed facilities at the Port of Rabaul occupy alienated land and is a pre-existing industrial facility
Nevertheless, social awareness and general acceptance of the Project is important for its successful operation. To this end Nautilus currently maintains regular contact with stakeholders and government
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Nautilus also conducts a public consultation process, which involved extensive interactions with stakeholder groups. Consultation with communities in New Ireland, East New Britain Provinces and other provinces, NGOs and the international scientific community has included formal meetings, presentations and workshops. Mining Warden’s Hearings were carried out for a total of nine provinces and there has been ongoing regular consultation with PNG government departments. Key issues raised during the stakeholder consultation process, which were addressed in the EIS, included:
Concerns regarding the possibility of Project activities setting off a natural disaster, such as a volcanic eruption, tsunami, etc. Concern regarding impacts to the biological life, in particular to surface pelagic fish, turtles, whales, sharks and reefs. Impacts to local fishing and ‘shark calling’. Concern that the benefits would not reach the people or provincial governments directly impacted by the project. Fewer jobs for PNG nationals due to the project operations being carried out remotely. Local nationals won’t be involved due to the need for international expertise, particularly at start- up. Government capacity to regulate the Project.
Local communities expressed most concern about the environmental impacts to surface organisms, in particular, pelagic fish such as tuna, whales, sharks, turtles and dolphins. In response, Nautilus engineered out impacts to surface waters from the discharge of mining waters, and designing a fully enclosed ore delivery system (a riser pipe). The only impact to surface waters will be the presence of the Production Support Vessel (PSV), supporting vessels and the riser pipe. In addition, Nautilus conducted education campaigns for communities, various levels of government departments and regulators. Nautilus used a number of media including radio, posters, brochures, newspaper articles, face-to-face meetings and workshops in both Tok Pisin and English (the official languages of PNG). Nautilus conducted 10 community awareness campaigns in 2009 (Figure 5.2).
Figure 4-2: Areas visited as part of stakeholder consultation program.
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4.1.15 Specialist studies conducted
Nautilus gave independent experts the opportunity to participate throughout the EIA process. Nautilus held a workshop in March 2007 in Port Moresby to enable the early identification of the perceived impacts from a broad spectrum of bodies and interested parties. These included local and international Non-Government Organisations (“NGO”), local and international scientists, environmentalists, anthropologists, oceanographers, as well as DEC and Department of Mines.
The specialist studies conducted by consultants, research bodies and universities during the EIS phase to determine or predict the potential impacts through observation and/or modelling focussed not only on the biological communities and potential endemism of the hydrothermal vent species, but also included physical, chemical and other biological baseline studies. Specific specialist studies included:
Benthic habitat assessment to characterise the seafloor areas adjacent to venting sites. Bioaccumulation to determine the potential for contaminants to accumulate via the food chain. Bioluminescence to predict the effect of mining activities on deep-sea species of fish. Existing resource utilisation to describe the nature of offshore commercial and subsistence fisheries, assess the potential impact on these fisheries and develop procedures to communicate with fishing vessels during construction and operation. Hazard and risk assessment to identify and characterise potential hazards and risks associated with construction and operation of the project, estimate the likelihood of the project activities setting off a hazard event, inform project design and operating procedures so that significant risks are reduced to be as low as is reasonably possible. Hydrodynamic modelling to determine the composition of the water to be discharged during the dewatering process, model the dispersion of discharged water at different depths, determine the most appropriate depth of discharge, determine the contours of concentrations of contaminants and mixing zone boundaries, assess compliance with ambient water quality standards. Hydrodynamic modelling of the seafloor to determine the potential generation and extent of the formation of plumes caused by the seafloor mining equipment, model plume dispersion at the seafloor Macrofauna survey of active and inactive sites to determine species present at Solwara 1 and the taxonomic and genetic similarities with species, determination of species present at a reference site Meteorology to gather all available meteorological and oceanographic data on the Bismarck Sea, use collected data and researched data to model currents within the Bismarck Sea. Noise, light and vibrations to determine the underwater noise and likely attenuation characteristics of the project vessels and mining equipment, assess the distances from source for noise to attenuate to threshold levels, manage potential interactions with cetaceans, describe likely fish attracting and other physical aspects of the presence of the vessel on surface and near surface swimming animals. • Oceanography to obtain 12 months of full water column current profiles at Solwara 1, use collected data and researched data to model currents within the Bismarck Sea. Sedimentation rates to determine the rate of sediment/particulate matter deposition over Solwara 1 and the reference site (South Su). •Sediment geochemistry to determine baseline sediment geochemistry and composition surrounding Solwara 1 and the control site. Visual observation logging to record biological, geological, and water observations of the deep seafloor at Solwara 1 and the reference site. Waste management to develop a waste minimisation and management plan for the project. Water quality to determine the baseline water quality at and above Solwara 1 and South Su.
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4.1.16 Potential impacts
Marine life varies with the depth of water. At the Solwara 1 site the ocean may be divided into three broad zones:
The ‘Surface Mixed Layer’ which is the upper water column between ~0 – 200 mBSL and contains mostly pelagic fish species including tuna, squid and sharks. Other animals known to exist in the area include dolphins, turtles and migrating whales. The ‘Mesopelagic Zone’ which is the mid water column between ~200 – 1000 mBSL and where amongst others squid and occasional short visits by, for example, tuna in search of prey and migrating whales may occur. The ‘Bathypelagic Zone’ which is the bottom water column, deeper than ~1000 mBSL where animals typical of active hydrothermal vent sites, such as gastropods, shrimp, crabs, barnacles, occur. Away from venting, animals present include bamboo coral, stalked barnacles, hydroids and others. Other animals observed include octopus, swimming sea cucumbers, Chimera, deep sea fish species.
Although the impacts to the seafloor, its hydrothermal chimneys and associated vent fauna have been identified as the main defining environmental issue for this Project there may be impacts throughout all three zones. The process of impact assessment was approached through internal risk assessment of issues at each step of the process. The results of this provided the initial assessment of potential hazards, impacts, mitigation strategies and severity of residual effects. This was further developed at a workshop held in San Diego, USA in April 2008, where input was provided by an international team of scientists on appropriate mitigation measures aimed at protecting biodiversity of the Solwara 1 site. Several aspects may give rise to specific environmental impacts. These include:
Water use and discharge Water quality Noise and vibrations on the seafloor and at the surface; Sedimentation and dewatering Acid mine drainage Emissions to air.
4.1.16.1 Water use and discharge
Potable water on the production support vessel(“PSV”) will be obtained using two 35 kL/day reverse osmosis desalination plants resulting in brine production of up to 82 kL/day. This brine will be discharged to the sea. The brine salinity will typically be double the salinity of the sea water, but is not expected to have any material impact. However pre-treatment requirements for the desalination plants such as chlorination, bromination, dechlorination, coagulation and filtration may lead to waste streams that may require treatment prior to discharge. A further waste stream associated with desalination through reverse osmosis include filter backwash water with elevated salinity and retained solids.
4.1.16.2 Water quality
Impacts on water quality may occur due to accidental hydraulic fluid leaks, fuel spills during transfers at the site of the PSV, ore spills during transfer to barges and bulk ore carriers and in extreme cases due to accidental collisions resulting in loss of vessels. Unexpected equipment malfunctions could result in the loss of material in the Riser and Lifting System (“RALS”). The maximum amount of mined ore in the riser pipe at any one time is approximately 11 m3, which could be lost to the seafloor. Any of these occurrences could cause localised impact to water quality near the seafloor or in surface waters, along with associated smothering of animals on the seafloor.
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4.1.16.3 Noise
Transmission of noise from operating machinery through the water is an important consideration due to the presence of marine turtles and whales, both of which are protected by international conventions. It was identified that the most likely source of noise which may cause disturbance is from the vessel power generation, dynamic positioning system (“DPS”) thrusters or Seafloor Production Tool (“SPT”). Modelling indicated that noise levels will drop rapidly within the first 2 km, and more slowly thereafter. These sounds may be audible (e.g., to whales) at up to 600 km but at long ranges, the sounds will not be greatly above that of background ocean noise depending on sea surface conditions.
The maximum distances for specific received level thresholds being exceeded show that it would not be until an animal approached closer than 1.1 km from the source that the levels would be greater than 140 dB. Harmful effect to whales is unlikely as literature suggests behavioural avoidance at levels generally between 130 to 140 dB. Masking of marine animal calls may occur if the mining vessel noise interrupts or prevents the listener from detecting the communicative signal. The operational noise associated with DPS of the mining vessel is continuous over a wide frequency bandwidth. Animals may suffer signal-masking effects at similar ranges up to approximately 15 km.
4.1.16.4 Sedimentation and dewatering
Prior to mining pre-stripping of unconsolidated surface sediment will be required. It is anticipated that approximately 130,000 t of unconsolidated sediment and 115,000 t of competent waste rock will be moved within the mining zones. The unconsolidated sediment will be disposed of, and competent waste material side cast, at a number of locations adjacent to the mining area. While suspended sediment plumes may be created, no significant geochemical changes are expected to occur as the unconsolidated sediment and competent waste material will remain near the seafloor and not be exposed to any increases in temperature or oxidation. Where practicable, relocation of low-grade material is to be conducted in such a way so as to minimise sediment re-suspension and plume generation. As such the intention is to discharge such material horizontally along the seafloor rather than into the water column to minimise plume formation and enhance the rate at which material settles to the seafloor.
The waste water plumes from dewatering will be discharged such that it will not have an unacceptable impact in the water column shallower than 1300 mBSL. Discharge plumes of the slurry waste water is therefore not expected to impact fish and other animals in the mid (~200 to 1000 mBSL) and upper (0 to 200 mBSL) water column. It is intended to keep exposure time to cold and un-oxygenated seawater recovered from the seafloor to surface to a minimum so as to not lead to an unacceptable change in oxygen or temperature levels when pumped back to the seafloor. Discharges from dewatering are not expected to have any adverse toxicity effects to seafloor ecosystems and will have negligible overall effects.
4.1.16.5 Acid mine drainage
Onshore storage and handling at the Port of Rabaul of produced ore will be designed to minimise acid generation and deal with acid rock drainage. Where such generation and drainage cannot be eliminated, then a drains treatment facility will be added to prevent any acidic water draining into the ocean.
4.1.16.6 Emissions to air
Air emissions will consist of combustion emissions from the vessel DPS thrusters, vessel power supply and the mining, transfer and processing power supply. Air emissions of most concern are carbon dioxide, carbon monoxide, nitrous oxides and sulphur dioxide.. It is expected that there will be no dust emissions from processing or transport activities due to the moisture content of the processed ore. Emissions to air from this Project should not have a direct impact on marine life.
4.1.17 Impact mitigation
Nautilus proposes the following management and mitigation measures to minimise adverse environmental and socioeconomic impacts identified:
The application of sound engineering design, deployment and operational practices for the SPT so as to minimise disturbance to the seafloor and the suspension of sediments.
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The adoption of a dewatering management strategy that will involve discharge at depths from which the material originated, thereby avoiding impacts to the water column. The retention of an unmined area at South Su and temporary reserve areas in Solwara 1 to aid in the recolonisation of the mined areas and conservation of biodiversity. Relocation of animals to already disturbed areas is to be considered as is placement of artificial substrates to enhance recolonisation. The adoption of lighting and noise strategies that will address surface and subsea operational and safety requirements and minimise the potential for the attraction of, and interaction with, marine animals. The adoption of a waste management strategy that will address the management of sewage, chemical and hazardous materials to minimise the potential for contamination of the water column. The adoption of appropriate water management strategies at the Port of Rabaul that will involve the containment and, possibly, treatment of surface runoff to ANZECC/ARMCANZ (2000) standards to avoid any impacts of acid drainage prior to any discharge to the shallow Simpson Harbour waters. Where practicable, the application of policies for the employment and training of the workforce that will maximise benefits to the local communities and minimise adverse social effects. The development of emergency response plans to mitigate the effects of natural disasters and unplanned events
4.1.18 Environmental management system
Nautilus states that it intends to manage the Project under the governance of an environmental management system (“EMS”) which is to be developed in accordance with the international EMS standard, ISO 14001:2004 as adapted for use in Australia and New Zealand as AS/NZS ISO 14001:2004. This standard will provide Nautilus with the elements to implement, achieve, review and maintain the Company’s environment policy.
Details of the Project’s proposed environmental monitoring program, including descriptions of the components to be monitored, frequency of monitoring and purpose, will be included in the detailed EMP’s which are still to be submitted to the PNG regulatory authorities and will take into account any relevant conditions of approval set in the Environmental Permit.
The Project will provide the PNG regulatory authorities with compliance reports as stipulated in environment, water abstraction and waste discharge permits. Regulatory authority and internal assessments of EMP implementation will occur, with the schedule for such assessments and reporting to be determined in consultation with DEC.
Much of the proposed monitoring of the deep seafloor is anticipated to extend into more general scientific research, for which Nautilus will encourage publication through the normal scientific peer review process.
Incidents that occur as a result of an emergency, accident or malfunction or that cause or threaten serious adverse environmental impacts or are likely to adversely impinge on relations with local communities will be immediately reported to Project senior management in addition to the relevant PNG regulatory authorities.
4.1.19 Waste management
The aim of waste management is to employ practices which avoid waste in the first instance, progressively moving through less preferable alternatives. If waste generation cannot be avoided the measures of most relevance to the Project are likely to be a combination of recycling, treatment and disposal. Management of solid, liquid and hazardous waste are the key issues of concern.
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4.1.19.1 Non hazardous waste
General waste includes items such as timber, packaging, spent batteries, paint containers, aluminium cans, cable, cardboard and paper, plastic, printer cartridges and steel. The majority of waste is expected to be office waste and food waste. Office waste will be separated for recycling. Waste on the PSV will be disposed of in accordance with International Maritime Organisation (“IMO”) requirements and may include incineration. Not everything can be incinerated and items such as scrap steel, glass and batteries will be segregated for recycling or other waste disposal options.
4.1.19.2 Hazardous waste
Hazardous waste includes waste oil, contaminated oil, hazardous chemical containers, medical waste and sharps. Small volumes are expected to be generated for all except waste oil.
There are three main liquid hazardous wastes likely to be generated on the PSV namely oily water, sewage and brine from the desalination plant. Nautilus states that the surface discharge of all wastewater from the support vessel will comply with international maritime standards such as MARPOL 73/78 Convention and the Protection of the Sea, the Australian Prevention of Pollution from Ships Act 1983 as well as with additional standards required by the PNG government.
4.1.20 Socioeconomic environment
Consideration of social and economic impacts is an integral part of the assessment of the Solwara 1 Project under the Environment Act 2000, which requires that the likely social impacts of the proposed activity be set out in the EIS. The EIS addresses background requirements such as demographics, existing infrastructure, public health, social services availability and present economic status of the Project area. However as the Solwara 1 mining area is located offshore (where the workforce will also be accommodated) and owing to the fact that the onshore Project components will utilise an existing commercial facility the actual social impact assessment was confined to areas where:
Employees will be recruited. Contractors and suppliers are located. Benefit streams, e.g., royalties and taxes, will be distributed. Offshore activities will take place, e.g. where fishing and marine traffic occur.
The main local areas are Kavieng and Rabaul. Kavieng, which is both a trading and tourist destination, is the capital of the New Ireland Province and is the largest town on the island. Rabaul is a township in East New Britain Province, which used to be the provincial capital until it was destroyed by the falling ash from a volcanic eruption in 1994. However, Rabaul remains a tourist destination popular for diving and snorkelling. The PNG Millennium Development Goals ranks these two provinces performance against the PNG average and shows that, in general these two provinces well above the national average.
There are no subsistence fisheries at Solwara 1 but some interaction between ore transport and support vessel activities to and from Solwara 1 and subsistence fisheries may occur closer to shore. Traditional activities, such as shark calling, were found to be important. Nautilus are confident that the project activities will not impact shark calling, a traditional activity practised in New Ireland Province, as cargo ships and other vessels already sail on the Bismarck Sea.
Marine traffic in the Bismarck Sea includes national and local cargo and passenger traffic. Generally, routes are poorly defined and companies operate largely without charts or navigational aids. There are some smaller local transportation boats that move between New Ireland and East New Britain.
As the setting of the onshore components of the Project are on already developed and alienated land, an archaeological and cultural heritage survey was not conducted.
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4.1.21 Conclusions
Nautilus notes that seafloor mining offers advantages over typical land-based mining from health, safety, environmental and social points of view. Nautilus states the benefits of seafloor mining include:
Limited social disturbance as seafloor mining does not require the social dislocation common to land-based operations with the resulting impact on culture or disturbance of traditional lands. Little mining infrastructure as SMS deposits are located on the seafloor, mining production will be limited to a floating ship and a concentrator located close to shore. There will be no intensive land use requiring post-production restoration. Minimal overburden or stripping as the ore generally occurs directly on the seafloor and will not require large pre-strips or overburden removal. Minimal mining waste as only high-grade ore will be mined, resulting in a small ore footprint, with no requirement for waste rock dumps. Worker safety as the operation is remote, not requiring operators to be exposed to typically dangerous mining environments.
SRK notes the following in terms of this review:
Nautilus and its subsidiaries have adopted best practice for the development of the environmental component of the project as evidenced by going beyond PNG requirements and incorporating environmental standards and guidelines from a cross-section of countries and organisations. •The environmental consultants, notably Coffey and the specialist sub-consultants have produced a comprehensive EIS based on a comprehensive EIA process. The EIS has been approved ‘in principle’ by the PNG regulatory authorities. Nautilus must now compile and submit an EMP based on the EIS and Environmental Permit requirements for approval. SRK expects the EMP which is still to be finalised and approved by the regulatory authorities to be of the same high standard as the current EIS documentation. Consultation with PNG regulatory authorities, local communities, NGO’s and international experts has been comprehensive, inclusive and is of an ongoing nature. Nautilus accepts that there adverse environmental impacts associated with this Project, but has committed to minimise these impacts and manage the residual impacts in a responsible manner. Adverse social impacts are likely to be minimal.
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4.2 Tonga
4.2.1 Accessibility
The Kingdom of Tonga is an island nation in the South Pacific lying between 15°S and 23°30’S. There are 169 islands in three groups, of which 39 are inhabited; the total land surface area is 747km2. The 2006 census population of Tonga was 101,991, of whom 70% live on the main island of Tongatapu, about 15,500 on the Vava'u group of islands and 7,500 on the Ha'apai group.
The only deepwater port in Tonga is located in the capital, Nuku’alofa (population approximately 40,000). It is served by scheduled cargo ships sailing to and from New Zealand, Fiji and Samoa. Tonga’s international airport (Fua’amotu International Airport, IATA code TBU) is located 24 kilometres by road from Nuku’alofa at Latitude 21°14’S Longitude 175°08’W. The main runway is 2,691m by 45m and is asphalt sealed, capable of handling aircraft as large as a Boeing 767. There are regular commercial flights from Sydney, Australia; Auckland, New Zealand; Nadi and Suva, Fiji; and Apia, Samoa. The airport also serves as the hub for internal flights to Ha’apai (HPA), ‘Eua (EUA) and Vava’u (VAV).
Nautilus’ tenements are located in the open ocean to the west of the three island groups. The sea floor of prospective parts of the Tonga tenements comprises volcanic rift and ridges, at depths between 1,770 to 2,100 mBSL. These tenements do not include any habitable land or coastal waters; there is no requirement to negotiate access rights with local landowners.
4.2.2 Climate
Tonga has a subtropical climate, with a wet season from November to April and a dry season from May to October. In general, the climate becomes warmer and wetter moving from the south to the north of the archipelago. Average temperatures and rainfall are presented for southern Tonga (Nuku’alofa) in Figure 4-3 and for northern Tonga (Niuafo’ou) in Figure 4-4. Temperature variability is moderate, with a maximum recorded temperature for the nation of 35.0°C and a minimum recorded temperature of 8.7°C. Average relative humidity is around 75%. The predominant wind is the southeast trade wind, which is generally light to moderate year-round, averaging 12-15 knots. Tropical cyclones, which may bring heavy rainfall and destructive winds, occur between November and April, usually one or two per year; although in the 2002- 2003 seasons, there were five that affected at least part of Tonga. There is a 10% chance that any part of the country or its territorial water will be affected by an intensity 4 cyclone (winds in excess of 210 km/h) or higher every ten years
The Tonga region is seismically highly active; there is a 20% chance that any part may be affected by a Modified Mercalli Intensity VIII earthquake (destructive) every 50 years.
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35 350
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Figure 4-3: Average climate conditions for Nuku’alofa (southern Tonga), 1971-2000.
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Figure 4-4: Average climate conditions for Niuafo’ou (northern Tonga), 1971-2000.
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4.3 Fiji
4.3.1 Accessibility and Infrastructure
Fiji is an island nation in the South Pacific lying between 9°S and 25°S, with a population of 850,000 (estimated), comprising 322 islands of which 106 are inhabited. The total land surface is 18,274km2; the two largest islands of Viti Levu (10,388 km2) and Vanua Levu (5,587 km2) also account for most of the population. The capital, Suva (1996 census population 167,975) is in the southeast part of Viti Levu. The nation’s main international airport (IATA: NAN), situated at Nadi (1996 census population 30,791) in the west of Viti Levu, can handle aircraft up to Boeing 747, and is served by scheduled commercial flights to destinations in the South Pacific, Australasia, North America and Asia. There are port, logistics and services available in Suva, which is served by regular shipping to Australasia, Asia, North America and the South Pacific; port facilities are also available at Lautoka on the west coast of Viti Levu.
4.3.2 Climate
The climate in Fiji is tropical with a distinct wet season (November to April) and a dry season. Local rainfall is highly variable on the larger islands of Fiji due to topography, but much more evenly distributed on low-lying islands and in ocean areas. The predominant winds year-round are trade winds from the east to south-east; in general light or moderate. Fiji is affected by tropical cyclones, mostly confined to the period November to April, with greatest frequency around January and February. On average, some ten to twelve cyclones per decade affect some part of Fiji, with two or three causing severe damage. The climatic averages for Nadi are presented in Figure 4-5.
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Figure 4-5: Average climate conditions for Nadi, 1974-1994.
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4.4 Solomon Islands
4.4.1 Accessibility and Infrastructure
The Solomon Islands is a nation in the South Pacific, east of Papua New Guinea, consisting of six major islands, about thirty smaller ones and hundreds of minor islets stretching over a distance of approximately 1,500 km. Collectively, the islands cover a land mass of 27,540 km2, the six largest representing about 75% of this area. The total population is 506,967 (2008), of which about 250,000 live on the two most populous islands, Guadalcanal and Malaita. The capital and largest population centre is Honiara (pop 54,600, 2003 estimate), located on the island of Guadalcanal. Honiara is served by scheduled shipping services, and hosts the Solomon Islands’ international airport (IATA: HIR). This has a main runway of 2,200 m by 45 m and is asphalt sealed. There are regular commercial flights from Brisbane, Australia; Port Moresby, PNG; and Nadi and Suva, Fiji. The airport also serves as the hub for internal flights to numerous destinations within the Solomon Islands.
4.4.2 Climate
The Solomon Islands have a humid tropical climate, with very little climatic variation throughout the year. Temperature, humidity and air pressure normally follow a regular diurnal cycle. Rainfall is abundant, with a wetter period from November to April. Thunderstorms are common throughout the year, but are more abundant during the wetter period. Light to moderate east to southeast trade winds are usual from May to October, with lighter west to northwest winds from about November to April; although this latter period is also the season when cyclones may occur; the Solomon Islands are usually affected by one or two per year. These may bring heavy rain and destructive winds, and would disrupt Nautilus’ activities. The Solomon Islands are also highly active seismically. The climatic averages for Auki in the northern Solomon Islands are presented in Figure 4-6.
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Figure 4-6: Average climate conditions for Auki, 1962-2000.
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4.5 New Zealand
4.5.1 Accessibility and Infrastructure
New Zealand is a country in the south-western Pacific Ocean comprising two large islands (the North Island and the South Island) and numerous smaller islands, most notably Stewart Island and the Chatham Islands. The North and South Islands are separated by the Cook Strait, which is 20 km wide at its narrowest point; the total land area, 268,680 km2. New Zealand is notable for its geographic isolation, being separated from Australia to the northwest by the Tasman Sea, approximately 2,000 km across. Its closest neighbours to the north are New Caledonia, Fiji and Tonga.
New Zealand has a modern developed economy with an estimated Gross Domestic Product of USD119 billion (as of 2008). Logistically the country has international airports with scheduled commercial flights to many other countries.
4.5.2 Climate
The climate throughout the country is mild and temperate, mainly maritime, with temperatures rarely falling below 0°C or rising above 30°C in populated areas. Conditions vary sharply across regions from extremely wet on the West Coast of the South Island to semi-arid in the Mackenzie Basin of inland Canterbury and subtropical in Northland. Of the main cities, Christchurch is the driest, receiving only some 640 mm of rain per year. Auckland, the wettest, receives almost twice that amount. Climatic averages for Tauranga in the north of the North Island are presented in Figure 4-7.
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Figure 4-7: Average climate conditions for Tauranga (northern NZ), 1971-2000.
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4.6 Vanuatu
4.6.1 5.6.1 Accessibility and Infrastructure
Vanuatu is an island nation located in the South Pacific Ocean. The archipelago, which is of volcanic origin, is some 1,750 kilometres east of northern Australia, consisting of approximately 82 relatively small, geologically newer islands of volcanic origin (65 of them inhabited), with about 1,300 km north to south distance between the outermost islands. Collectively, the islands cover an area of 12,274 km2.
The total population is 221,506 (1999), and is predominantly rural, although Port Vila and Luganville have populations in the tens of thousands. The capital and largest population centre is Port Vila (population 29,356, 1999), located on the island of Efate. Port Vila is served by scheduled shipping services, and has Vanuatu’s international airport (IATA: VLI). This has a main runway of 2,600 m and is asphalt sealed. There are regular commercial flights from Brisbane, Melbourne and Sydney, Australia; Noumea, New Caledonia; Auckland, New Zealand; Nadi, Fiji; and Honiara, Solomon Islands. The airport also serves as the hub for internal flights in Vanuatu.
4.6.2 Climate
Vanuatu has a sub-tropical climate with approximately nine months of warm to hot rainy weather and the possibility of cyclones and three to four months of cooler drier weather characterized by winds from the southeast. Cool between April and September, the days become hotter and more humid starting in October. The daily temperature ranges from 20°C to 32°C. Southeasterly trade winds occur from May to October. Vanuatu has a long rainy session, with significant rainfall usually occurring almost every month. The wettest and hottest months are December through April, which also constitute the cyclone season; Vanuatu is usually affected by two or three per year. These may bring heavy rain and destructive winds, and would disrupt Nautilus’ activities. The Climatic averages for Port Vila are presented in Figure 4-8.
Vanuatu is also highly active seismically.
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Figure 4-8: Average climate conditions for Port Vila, Vanuatu
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4.7 Clarion Clipperton Zone (CCZ)
4.7.1 Accessibility and Infrastructure
Access to the Clarion Clipperton Zone (“CCZ”) is essentially only achieved by ocean going vessels. There is no infrastructure in the region of the CCZ. The nearest land is Mexico, some 2,00km to the east, and Hawaii some 3,000 to 4,000km to the northwest.
4.7.2 Climate
Climate in the region of the CCZ is largely warm equatorial, moving northwards into lower temperate zones. Being in the middle of the Pacific Ocean, and thousands of kilometres from land, there is limited climatic data available.
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5. History
5.1 Papua New Guinea
The first discovery of submarine hydrothermal sulphides and black smokers in Papua New Guinea was at what was to become the Solwara 2 project, when in 1985 the US research vessel RV Moana Wave photographed sea floor sulphides there. Since then, occurrences of submarine sulphides in the Bismarck Sea, where some of Nautilus’ PNG tenements are located, have been studied by research groups from many countries, including France, Germany, Canada, USA, Japan, Korea, UK and Australia (Table 5-1).
As a result of detailed geological, geophysical and geochemical surveys by these research groups, extensive hydrothermal fields and SMS mineralisation have been identified. Results of these studies are documented in several reports that are listed in the reference section of this report. A brief and general summary of the research history of the property is provided here, mainly from Adamson (2003).
Research cruises have supplied detailed bathymetry of the Solwara 1, 2, 3 and 4 areas, and these have also been observed during manned submersible dives and numerous deep-tow video traverses. Dredging traverses were extensively employed during the various “PACMANUS” and “Binatang” research cruises, and it is estimated that, since 1991, Australia’s Commonwealth Scientific and Industrial Research Organisation (“CSIRO”) has acquired several tonnes of sulphide samples from the Solwara 4 and Solwara 1 hydrothermal fields. Basic descriptions of dredge contents are recorded in the various cruise reports, which were compiled on board, prior to chemical analyses. Submersible and deep-tow video observations supplemented by the dredge reports have enabled researchers to compile and publish basic geological reconnaissance reports and maps of several of the hydrothermal fields.
Analytical data were generally reported several years after the research cruises. The largest research database is contained in Yeats, Parr and Binns (1998), which presents data from about 100 of the almost 500 samples collected between 1991 and 1997 at the Solwara 4 and Solwara 1 hydrothermal fields.
Detailed logs, core photos and some descriptive data are reported from Leg 193 of the Ocean Drilling Program, which was completed in December 2000 (ODP 193, 2000). A series of partially cored holes was drilled to investigate geological and geophysical conditions to depths of up to 370m below the seafloor in three of the active Solwara 4 fields.
During the German/UK Research Cruise “Condrill” (SO166) in late 2002, an initial phase of drilling to 5m depth into the surface of the Solwara 4 hydrothermal fields was conducted using the drilling services of the British Geological Survey. Of the ten holes drilled, three recovered massive chalcopyrite mineralisation, and six recovered sphalerite-rich chimney material (Petersen et al., 2003).
Dredge samples were recovered during several research cruises (e.g. Yeats, Parr and Binns, 1998; Binns, Parr and Waters, 1999), and include grades of approximately 8% Cu, 18% Zn, 200ppm Ag and 11ppm Au, based on analyses of 17 samples. Note that these grades are from scientific reports and may be based on sulphide samples that were specifically selected for detailed analysis and scientific research on the formation and genesis of sea-floor massive sulphide systems. Therefore, the grades only reflect the average of the samples selected and may not reflect the average value of the SMS deposit.
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Table 5-1: Summary of selected research cruises in and around Nautilus tenements
Research Cruises Ship/Cruise Dates Area CSIRO-led Cruises PACLARK I RV Franklin April 1986 Western Woodlark Sea PACLARK II RV Franklin: FR01/88 January 1988 Western Woodlark Sea and Goodenough Bay PACLARK III HMAS Cook February 1988 Western Woodlark Sea PACLARK IV/SUPACLARK RV Akademik Mstislav Keldysh: Leg 1 April 1990 Western Woodlark Sea PACMANUS/PACLARK V RV Franklin: FR08/91 Sep-Oct 1991 Eastern Bismarck Sea PACMANUS II RV Franklin: FR05/93 June 1993 Eastern Bismarck Sea PACMANUS III RV Franklin: FR10/96 Nov-Dec 1996 Eastern Bismarck Sea PACMANUS IV RV Franklin: FR09/97 Oct-Nov 1997 Eastern Bismarck Sea BINATANG RV Franklin: FR03/00 Apr -May 2000 Eastern Bismarck Sea SHAARC RV Franklin: FR04/00 May 2000 Tabar-Lihir-Tangi-Feni Chain ODP Leg 193 JOIDES Resolution Nov 2000 – Jan 2001 Eastern Bismarck Sea BISMARCK-SOLAVENTS 2002 RV Franklin: FR02/2002 March 2002 Western Bismarck Sea BISMARCK-SOLAVENTS 2002 RV Franklin: FR03/2002 Mar-Apr 2002 Bougainville-Solomons Southern Bismarck Arc RV Southern Surveyor Jul-Aug 2007 West & south Bismarck Sea Cruises with CSIRO participation Edison '94 RV Sonne: SO 94 Mar-Apr 1994 Lihir-Feni Chain and Eastern Manus Basin ManusFlux Yokosuka/Shinkai 6500: Y95-07 Oct-Nov 1995 Eastern Bismarck Sea (Solwara 4) BioAccess 98 Natsushima/Shinkai 2000: NT98-13 Oct-Dec 1998 Eastern Bismarck Sea (Solwara 4) KODOS '99 RV Onnuri May 1999 Eastern Bismarck Sea Dae Yang 2002 Leg 1 RV Onnuri Aug-Sep 2002 Lihir Island and Eastern/Western Bismarck Sea Other cruises Moana Wave (USA) RV Moana Wave: MW8517-18 1985-86 Bismarck Sea, Woodlark Sea and Islands OLGA I (German) RV Sonne: SO 63 Jul-Sep 1989 Eastern Bismarck Sea OLGA II (German) RV Sonne: SO 68 Apr-Jun 1990 Eastern Bismarck Sea 21st Cruise RV Akademik Mstislav Keldysh: Leg 3 May-Jun 1990 Eastern Bismarck Sea Aquarius Hakuho-Maru: KH90-33 Leg 2 Nov-Dec 1990 Eastern Bismarck Sea MMAJ for SOPAC RV Hakurei-Maru No 2 Aug-Oct 1992 Central Bismarck Sea BioAccess 96 Natsushima/Shinkai 2000: NT96-14/15 Oct-Dec 1996 Eastern Bismarck Sea (Solwara 4) ODP Leg 180 JOIDES Resolution Jun-Aug 1998 Western Woodlark Sea Edison II RV Sonne: SO 133 Jul 1998 Lihir-Feni Chain Manaute RV L'Atalante/Nautile Mar-Apr 2000 Central and Eastern Bismarck Sea Condrill RV Sonne: SO 166 Sep-Oct 2002 Solwara 4 and Conical Seamount Bismarck Sea Survey 2005 RV Onnuri Sep-Oct 2005 Central Bismarck Sea WHOI RV Melville Jul – Aug 2006 Manus Basin Jamstec Yokosuka/Shinkai 6500 Sep 2006 Manus Basin Woodlark Basin RV Sonne: SO 203 Oct-Dec 2009 Solomon Sea
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5.2 Fiji
The North Fiji Basin has been the subject of a number of scientific research cruises over the past 20 years (Table 5-3), although no mineral exploration activity has been carried out to date. These cruises have broadly defined the geology and mineralisation of an active spreading centre, and the active and fossil hydrothermal systems have been investigated by ROV dives, dredging and limited drilling. Analyses of sulphide samples has not been systematic, with many researchers not assaying for gold, and much of the focus in the later cruises shifting towards biological rather than mineral sampling.
The 2001 Triple Junction cruise undertaken by Japanese researchers drilled 22 shallow holes in the vicinity of the SO99 field using the BMS (Boring Machine System) rig built by Williamson and Associates of Seattle, Washington, USA. Eight of the holes intersected massive sulphides, with thicknesses up to 7m reported.
Table 5-2: Summary of selected research cruises to the North Fiji Basin
Research Cruises Ship Dates SEAPSO III Avant Cruise RV Jean Charcot 1985 STARMER Kaiyo 88 RV Kaiyo Nov-Dec 1987 STARMER I RV Nadir /Nautile June 1989 STARMER Kaiyo 89 RV Kaiyo 1989 NEW STARMER NOFI 94 RV L’Atalante Sep1994 STARMER Yokosuka Jan-Feb 1990 STARMER Yokosuka with Shinkai Aug-Sep 1991 NEW STARMER RV L’Atalante Sep 1994 Hyfiflux SO 99 RV Sonne Jan 1995 Hyfiflux II SO 134 RV Sonne Aug 1998 SOPAC-Japan Project Yokosuka 1999 TRIPLE JUNCTION Yokosuka with BMS rig 2001 Ridge 2000 Expedition 4 of 5 RV Melville May-June 2005 North of Hunter Ridge 03-2009 RV Southern Surveyor July 2009
5.3 Tonga
There have been a number of marine science research cruises in the Lau Basin over the past 20 years (Table 5-3). The research cruises have broadly defined the geology and mineralisation of the spreading ridges identified to date within the Lau Basin. Investigations of spreading rates, structural geology, biology and geochemistry, have been supported by numerous sampling runs using both dredging, ROVs and submersibles. The majority of this work has focused on the Eastern Lau Spreading Centre (ELSC), a 400km long segment of active spreading and hydrothermal activity that includes the Valu Fa Ridge.
Since late 2003, the Ridge 2000 Program (funded by the US National Science Foundation) has conducted five cruises to the Lau Basin. These cruises brought together multidisciplinary teams of research scientists to study various aspects of the Lau Basin such as the geology, structure, geophysics, geochemistry, fluid genesis, and biology. The Ridge 2000 Program has made major contributions to the understanding of this complex plate tectonic junction.
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Table 5-3: Summary of selected marine science research cruises to the Lau Basin
Research Cruises Ship/Cruise Dates SO 35 Leg 2 RV Sonne Dec 1984 – Jan 1985 SO 48 RV Sonne Feb-Apr 1987 Nautilau RV Le Nadir/Nautile Apr-May 1989 SO 67 RV Sonne Mar-Apr 1990 21st Cruise, leg 2 RV Akademik Mstislav Keldysh, MIR submersible Mar-Jun 1990 SOPAC/MMAJ Leg 1 Hakurei Maru No. 2 July- Aug 1995 MW9603 RV Moana Wave Feb-Mar1996 Lauhavre 97 (New STARMER Program) RV Yokosuka Jan-Feb 1997 SO 167 RV Sonne Oct-Nov 2002 TELVE (SSO2/2003) RV Southern Surveyor Mar-Apr 2003 Ridge 2000 expedition 1 of 5 (KM0410) RV Kilo Moana Apr-May 2004 Ridge 2000 expedition 2 of 5 (KM0417) RV Kilo Moana Sept-Oct 2004 NoToVe (SS11/2004) RV Southern Surveyor Oct-Nov 2004 YK04-09 Leg 1 RV Yokosuka/Shinkai 6500 Sep-Oct 2004 YK04-09 Leg 2 RV Yokosuka/Shinkai 6500 Oct-Nov 2004 KORDI RV Onnuri Dec 2004 -Jan 2005 Ridge 2000 expedition 3 of 5 (TUIM05MV) RV Melville Apr-May 2005 Ridge 2000 expedition 4 of 5 (TUIM06MV) RV Melville May-June 2005 Ridge 2000 expedition 5 of 5 (TUIM07MV) RV Melville June 2005 MGLN07MV RV Melville Sept-Oct 2006 MANGO SO 192 Leg 2 RV Sonne Apr-May 2007 KM0804 RV Kilo Moana Apr-May 2008 SS07/2008 RV Southern Surveyor May-Jun 2008 NE Lau Basin RV Thomas G. Thompson Nov 2008 NE Lau Basin RV Thomas G. Thompson Apr 2009
5.4 Solomon Islands
Since 1960, over 70 cruises were carried out by various Marine Scientific Researchers (MSRs) in the EEZ of Solomon Islands. Six of the known areas of hydrothermal venting and plumes occur outside Nautilus Minerals’ tenement areas. However, one significant plume found in the licence area (SHAARC cruise) is a positive indicator for hydrothermal activity, and demonstrates the prospectivity of the Nautilus tenements.
5.5 New Zealand
In 1999 the New Zealand American Plume Mapping Expedition (NZAPLUME) surveyed 13 volcanoes in the southern 260 km of the Kermadec Arc for their hydrothermal plumes with seven of them discharging vent fluids into the surrounding ocean. Three of those seven volcanoes have had mineralisation recovered from them during dredging and submersible operations: Brothers, Rumble II and Clark.
5.6 Vanuatu
There have been a number of marine science research cruises in Vanuatu over the past 40 years (Table 5-4). Early research cruises, including an Ocean Drilling Program (ODP leg 134) mainly investigated the
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Hydrothermal indicators of interest include recovery of hydrothermal precipitates, visual observation of vent related biological communities and possible chimneys, as well as hydrothermal plume indicators from hydrocasting and water sampling.
Table 5-4: Summary of selected marine science research cruises to Vanuatu
Cruise Name Vessel name Dates Monster Cruise Mahi 2-70 RV Mahi 22 Apr 1970 to 20 Jun 1970 DME06 RV Dmitry Mendeleev 18 Jun 1971 to 13 Oct 1971 KK71-04-26-05 RV Kana Keoki 4 Oct 1971 to 2 Nov 1971 GEORSTOM II RV Coriolis 20 Aug 1974 to 18 Sep 1974 EVA 77/4 RV Coriolis 5 Aug 1977 to 5 Sep 1977 EVA 77/5 RV Le Noroit 10 Sep 1977 to 14 Oct 1977 VA80-1 RV Vauban 25 Jul 1980 to 26 Aug 1980 VA80-2 RV Machias 22 Nov 1980 to 1 Dec 1980 VA80-3 RV Machias 4 Dec 1980 to 21 Dec 1980 EVA 81/8 RV Coriolis 13 Oct 1981 to 31 Oct 1981 EVA 81/9 RV Coriolis 1 Nov 1981 to 12 Nov 1981 EVA 82/10 (GEOVAN II) RV Coriolis 10 Oct 1982 to 4 Nov 1982 EVA 82/11 RV Coriolis 10 Nov 1982 to 4 Dec 1982 CH100L09 RV Chain 4 Aug 1971 to 26 Aug 1971 L6-82-SP / SOPAC 1 RV Samuel Peter Lee 27 Apr 1982 to 16 May 1982 L5-84-SP / SOPAC 2 RV Samuel Peter Lee 4 May 1984 to 5 Jun 1984 SEAPSO Leg 1 RV Jean Charcot 14 Oct 1985 to 6 Nov 1985 SEAPSO Leg 2 RV Jean Charcot 9 Nov 1985 to 29 Nov 1985 EVA 86/13 RV Coriolis 21 Aug 1986 to 25 Sep 1986 MULTIPSO RV Jean Charcot 12 Apr 1987 to 29 Apr 1987 EVA 87/14 RV Coriolis 3 Aug 1987 to 4 Sep 1987 Kaiyo 87/1, STARMER RV Kaiyo 28 Nov 1987 to 14 Dec 1987 SUBPSO RV Nadir 27 Feb 1989 to 13 Mar 1989 SOPAC GLORIA HMAS Cook Aug-89 ODP Leg 134 RV Joides Resolution 16 Oct 1990 to 16 Dec 1990 SOPAC Maps Leg 1 RV L'Atlante 17 July 1993 to 15 Aug 1993 JAPAN/SOPAC Deep Sea Mineral Resources Program Phase I RV Hakurei Maru No 2 22 Aug 1994 to 25 Oct 1994 CALVA RV L'Atlante 12 Jul 1996 to 17 Jul 1996 DGWR Boat 29 May 1999 to 8 June 1999 ALAUFI transit RV L'Atlante 29 Feb 2000 to 17 Mar 2000 VAVE FR08/2001 RV Franklin 5 Sep 2001 to 25 Sep 2001 TERRALIS RV Alis 10 Dec 2003 to 20 Dec 2003 High Resolution Bathymetric Survey of Efate RV Turagalevu 2 Aug 2003 to 27 Aug 2003 CoTroVE SS06/2004 RV Southern Surveyor 2 Jun 2004 to 27 Jun 2004
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5.7 Clarion Clipperton Zone (CCZ)
Since 1868, when polymetallic nodules were first discovered, scientific expeditions have demonstrated that they have a widespread occurrence in the world’s oceans. Relatively dense zones are found in the north central Pacific Ocean, the Peru Basin in the southeast Pacific, and the centre of the north Indian Ocean. The highest nodule abundance and metal contents are found in the Clarion Clipperton Zone (“CCZ”)of the eastern equatorial Pacific, between Hawaii and Central America.
From the 1960’s onwards, interest in the potential exploitation of nodules included the United States led International Decade of Ocean Exploration (IDOE) from 1972 to 1982. During this period some 30-40 US, 26 German, and 42 French cruises as well as Soviet and Japanese programs were completed. Seven mining consortia were formed at various times. This activity culminated in the trial mining or bulk sampling of nodules by two of these consortia in the mid to late 1970’s. One consortium, led by the Canadian mining company INCO, collected polymetallic nodules from the abyssal plains of the CCZ, at a depth of approximately 5,500 mBSL (Figure 5-1). Nickel (the primary target at the time) as well as copper and cobalt were extracted from the recovered nodules using both pyrometallurgical and hydrometallurgical methods.
Activities were stopped due to a combination of low metal prices, critical gaps in technology, and the lack of a secure mining tenure system.
Figure 5-1: Trial mining of nodules by the INCO consortium
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6. Geological Setting
6.1 Bismarck Sea
The Manus Basin in the Bismarck Sea is an active back-arc basin bounded to the south by the active subduction zone of New Britain Trench and to the north by the inactive subduction zone of the Manus Trench, formed at the convergence zone between the Australian Plate to the south and the Pacific Plate to the north (Figure 6-1). The Basin’s major geological features include: 1) the rapidly opening (~10cm/yr) Manus Spreading Centre, which hosts the Solwara 2, 3, 10, 14, 15 and 16 prospects; 2) the Willaumez Spreading Centre, which includes the Willaumez Project, comprising Solwara 11, 17 and 18; and 3) the rifted volcanic zone of the Eastern Manus Basin, which is bounded by two major W to NW transform faults (the Djaul and Weitin Faults), and characterised by basaltic to dacitic volcanism. The Eastern Manus Volcanic Zone is in the Eastern Manus Basin, and hosts the Solwara 1, 4, 5, 6, 7, 8, 9, 12 and 13 prospects (Figure 6-2).
A series of prominent submarine volcanic edifices have been formed on the sea floor, extending in an “en echelon” configuration across the trend of the rift basin (Binns and Scott, 1993). These edifices are the sites of active hydrothermal venting and associated deposition of seafloor massive sulphide (SMS) deposits, such as those found at both Solwara 4 and Solwara 1. Nautilus has identified eighteen separate SMS Projects in the Manus Basin (Figure 6-3) and one barite-rich system (Solwara 19) that collectively comprise the Solwara Project.
Figure 6-1: Major geological features and hydrothermal fields in eastern PNG
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Figure 6-2: Tectonic features summary in Central and Eastern Manus Basin
Figure 6-3: Location of SMS occurrences Solwara 1 to 19. Note that Solwara 17 and 19 are barite-rich sulphate systems.
6.1.1 Solwara 1
The hydrothermal field of the Solwara 1 Project was first discovered by the CSIRO during the 1996 “PACMANUS III” cruise on the RV Franklin in the far eastern sector of the Eastern Manus Basin. The detection of an intense particulate plume during the “PACMANUS II” cruise in 1993 led the researchers to the NNW-trending volcanic edifice (the Pual Ridge) that hosts Solwara 1, which is located on a deep (approximately 1,700m BSL) platform of pelagic sediments. The Pual Ridge is 5 km long and is mainly basalt, with two major andesite-dacite domes (North Su and South Su). Solwara 1 is to the NNW of North Su, and lies at the intersection of an adjacent, NE-trending extensional rift structure (Bugave Ridge), which
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx │56 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report March 2011 contains largely basaltic lavas (Figure 6-4). Dacites and andesites at North Su and South Su are extensively brecciated and altered, and carry widespread disseminations and stockworks of pyrite and other sulphides, as well as localised sulphide chimneys, mounds and sulphide breccias. Solwara 1 has exposures of both andesite and dacite lavas, and includes several large fields of chalcopyrite-rich massive sulphide chimneys and mounds. Sulphide chimney heights generally range from approximately 2m to 10m, with the tallest chimney approximately 18m. The chimney fields are draped with finely laminated to coarsely-banded sulphidic sediments. The summits of North Su and South Su are 1,150 and 1,320m BSL, respectively. The Solwara 1 field occurs at approximately 1500m BSL.
The Solwara 1 Project was the target for exploration works by Placer Dome Inc. and continues to be evaluated by Nautilus. ROV dive videos and bathymetry show that sulphide mounds and chimney fields are generally surrounded by flatter areas, containing mound and chimney debris, sulphide crusts, algal mats, and unconsolidated sediments (Figure 6-5). Unconsolidated sediments consist of variably sulphidic mud and clay, as well as volcanic ash from recent terrestrial and/or nearby submarine eruptions. Approximately 500 chimneys and chimney clusters have been observed during previous ROV dives.
Figure 6-4: Schematic geology and locations of Solwara 1 and 4 with EL boundaries. adapted from Binns (2004).
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Figure 6-5: Oblique view of the Solwara 1 area seabed showing Electromagnetic (EM) conductive areas in red The conductive zones correspond with areas of strong sulphide mineralisation
6.1.2 Solwara 2 and 3 (EL 1383)
The Solwara 2 and 3 prospects include a group of several known SMS occurrences on the Manus Spreading Centre (Figure 6-3):
Vienna Woods Solwara 2a and 2b (formerly known as Tufar 2) Solwara 3a and 3b (formerly known as Tufar 3)
The Manus Spreading Centre covers a basaltic to andesitic back-arc spreading zone, and is one of the first discoveries of modern massive sulphide chimneys in a back arc basin setting. German researchers on the cruises OLGA I (SO63, 1989) and OLGA II (SO68, 1990) aboard the RV Sonne used a TV-guided grab sampler and accurate navigation with sea floor beacons to conduct an extensive survey of this area in order to locate extensive SMS fields. Four major fields were surveyed, and other sites of venting were noted without locations being given. All four venting sites lie on the central spreading ridge or valley. The largest is Solwara 2 proper (centred on 3°9.86'S, 150°16.78E), which was originally reported as having a strike length of 1,000 m. Tufar 2 is nearby but smaller with a reported strike length of 500 m. Tufar 3 to the northeast was described as being larger, but mostly containing Fe-Mn oxides, rather than sulphides (which in other areas has indicated an extinct field) with ‘weathered’ thin Mn oxide coatings. The researchers also reported indications from water sampling of hydrothermal activity and plumes at many places along the ridge but these were not followed up. At Vienna Woods, some chimneys are described as very high, up to 20 m high and 15 m across as individuals, with smaller chimneys surrounding them to distances of approximately 10-30 m. Reported results of geochemical analyses of 25 samples from Vienna Woods and Tufar 2, average 29.7% Zn, 2.18% Cu, 15.2% Fe (Tufar 1990, Tufar and Jullman 1991, Tufar 1992). Note that these average grades are from scientific reports and may be based on sulphide samples that were specifically selected for detailed analysis and scientific research on the formation and genesis of sea-floor massive sulphide systems. Therefore, the average grades stated only reflect the average of the samples selected and may not reflect the average value of the SMS deposit, although comparisons with samples acquired by Placer Dome Inc. and Nautilus in 2005 and 2006 have shown that the scientific research sampling returns grades broadly similar to those intended for mineral exploration. Gold assays were not averaged but are reported to range from 1.3 g/t to 52.5 g/t Au (Tufar 1990, Tufar and Jullman 1991, Tufar 1992).
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6.1.3 Solwara 4
The Solwara 4 prospect is a group of six known SMS occurrences:
Solwara 4a (formerly known as Rogers Ruins) Solwara 4b (formerly known as Roman Ruins) Solwara 4c (formerly known as Satanic Mills) Solwara 4d (formerly known as Snowcap) Solwara 4e (formerly known as Fenway) Solwara 4f (formerly known as Tsukushi)
All of these occurrences (except Solwara 4e) were discovered in 1991 during the “PACMANUS I” marine science research cruise, a collaboration between CSIRO and the University of Toronto (Scott and Binns 1995). The active hydrothermal vents and associated sulphide mounds occur over an area of approximately 10km2 (Figure 6-6). Solwara 4e was discovered during the Magellan 06 cruise in 2006.
The first interpretations based on video camera surveys were successfully confirmed via dredging, which produced sulphide material. During subsequent research campaigns (1993, 1996 and 1997) four individual hydrothermal fields (Solwara 4a, 4b, 4c and 4d) were identified along the crest of Pual Ridge (Figure 6-7), a volcanic ridge that formed from fissure eruptions of mostly andesite, dacite and rhyodacite lava eruptions along a NE-trending extensional fault at the centre of the East Manus Basin.
Pual Ridge is a narrow steep-sided volcanic edifice that is approximately 15 km long and rises to 1,655 m BSL from the surrounding basalt-basaltic andesite sea floor at ~ 2,200m BSL. Four high temperature (up to 276°C) black-grey smoker chimney fields (Solwara 4a, 4b, 4c and 4f) (Figure 6-7) occur at fracture zones in relatively unaltered dacite lavas. Chimneys formed from venting hydrothermal fluids, and are composed dominantly of chalcopyrite and sphalerite, with barite and minor bornite. Solwara 4d shows extensive diffuse venting of low temperature fluids (up to 6°C) through extensively altered dacite-rhyodacite with disseminated pyrite and native sulphur at a small eruptive centre.
Figure 6-6: Schematic Solwara 4 sea floor topography, geology and major prospects
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mu d Rhyodacite Andesite dome
Debris slope Andesite Dac ite
Felsic dome Andesite B Dac ite dome
Felsic Andesite C Cone
Figure 6-7: Schematic geology of the Solwara 4 with locations of hydrothermal fields
6.1.3.1 Solwara 4a
The most northerly site of the Solwara 4 prospects, Solwara 4a, is located at about 1,730 to 1,800m BSL, on a very steep northwest slope of Pual Ridge with an area of approximately 100 m by 80 m (Figure 6-8). This hydrothermal vent field consists of numerous large (< 20 m) inactive sulphide chimneys, with a few chimneys that are actively venting hydrothermal fluid. The process of SMS mound formation is well advanced here with chimney debris located among erect chimneys in addition to proximal developments of low mounds of Fe-Mn and manganiferous oxides.
6.1.3.2 Solwara 4b
The Solwara 4b field is a relatively level site that occurs on the crest of Pual Ridge at depths of 1,690 to 1,710 m BSL (Figure 6-8). As with Solwara 4a, Solwara 4b consists of numerous sulphide chimneys that stand as high as 20 m in an area of 250 m by 150 m. Many chimneys are broken and some show later re- growth. Chimneys collected from Solwara 4b are composed predominantly of chalcopyrite and sphalerite, with subsidiary pyrite, bornite, tennantite, galena, and dufréynosite (Scott and Binns, 1995; Parr et al., 1996). Barite is the principal gangue, but anhydrite substitutes in some samples. A scientific research drilling program was conducted at Solwara 4b in 2000.
6.1.3.3 Solwara 4c
The Solwara 4c chimney field is located on the upper southeast slopes of the Pual Ridge, approximately 500 m south of Solwara 4b (Figure 6-7). It is in an area of scattered chimneys approximately 150 m across that slopes south-eastward from 1,700 to 1,720 m BSL. Chimney structures are actively venting, resulting in a sulphide mound approximately 50 m in diameter with a halo of Fe-Mn oxide crusts. East of this field are north-south oriented fissures in dacite, encrusted with fauna, which are emitting clear fluid and are interpreted as juvenile low temperature vents. Chimneys collected from Solwara 4d are composed predominantly of chalcopyrite and sphalerite, with subsidiary pyrite, bornite, tennantite, galena, and dufréynosite (Scott and Binns, 1995; Parr et al., 1996). Barite is the principal gangue with anhydrite in some samples.
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6.1.3.4 Solwara 4d
Solwara 4d is approximately 150 m by 200 m, at depths of 1,654 to 1,670 mBSL, bounded to the east by a NNE-striking fault scarp 60 to 80 m high. Unlike the other fields, it is venting low-temperature fluid (approximately 6°C). Outcrops of altered dacite-rhyodacite lava and hyaloclastite predominate, locally covered with patches of both sandy sediment and metalliferous hemipelagic ooze only millimetres thick. Typical alteration assemblages at Solwara 4c are dominated by cristobalite, with lesser natroalunite, diaspore, and illite-montmorillonite with traces of pyrite, marcasite, chalcopyrite, enargite, and native sulphur.
Figure 6-8: Plan of Solwara 4a (Rogers Ruins) and Solwara 4b (Roman Ruins)
Figure 6-9: Solwara 4b Section showing general geology and drill holes. From Adamson (2003).
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6.1.3.5 Solwara 4e
Solwara 4e (1,680–1,686m BSL) at the far south-eastern end of Solwara 4 was discovered during the Magellan 2006 cruise aboard the RV Melville, operated by Woods Hole Oceanographic Institute (WHOI). The system is a two-tiered mound 40 m in diameter, with a large black smoker chimney complex. The entire mound is composed of chimney debris, massive anhydrite-sulphide rock and anhydrite sand. Diffuse venting of clear to gray to black smoker fluids takes place in numerous locations along the base and up the slope.
6.1.3.6 Solwara 4f
Solwara 4f (1,680–1,686m BSL) lies at the south-western end of Solwara 4 and contains numerous actively venting chimneys as high as 30 m. When first observed in 1993, and again in 1995, no chimneys were recorded. However, chimneys were discovered in 1996, and more large chimneys were present in 1998. Solwara 4f may in fact be a very young and developing SMS deposit.
6.1.4 Solwara 5
Solwara 5 is 2.5km NW of Solwara (White et al., 2008). Numerous outcrops of felsic to intermediate-mafic volcanic rocks were identified in the area surrounding Solwara 5. The chimney area itself is approximately 250 m by 170 m. The chimney field is inactive and contains sparse small chimneys with significant sediment draped over them, obscuring the underlying geology. Only around 5 to 10% of the seafloor is outcropping chimneys, with most of the chimneys upstanding and only a few metres high.
6.1.5 Solwara 6
Solwara 6 is approximately 1.3km to the SE of Solwara 4b and was identified by the discovery of a hot water venting site. The field consists of standing and collapsed chimneys which appear to lie within a small bathymetry plateau or terrace (White et al., 2008). The field is inactive, covering an area of approximately 50 m by 50 m, with the standing chimneys formed in clusters and individual chimneys up to several metres in height. The standing chimneys are surrounded by piles of collapsed chimney debris, and the chimney field is sediment covered.
6.1.6 Solwara 7
Solwara 7 is located approximately 200 m to the northeast of Solwara 4a, on the NW flank of the Pual Ridge, and 440 m to the northwest of Solwara 4b. The area is a highly active hydrothermal field with a strike length of 200 m and 20 to 25 m wide. The seafloor surrounding Solwara 7 is composed of the typical glassy volcanics of the Pual Ridge, which are largely felsic in composition. The area is characterised by a large variety of chimney styles, ranging from narrow, tall and fragile black smokers up to 18 m high, to collapsed and broken tree-trunk like formations, to classic bee-hive chimneys, to white anhydrite chimneys (White et al., 2008). The chimneys occur in clusters of dozens, and are surrounded by large mounds of collapsed chimney rubble forming piles at least two or three metres high in some places. A separate small pod of active chimneys named “Solwara 7 Extension” was also discovered approximately 220 m to the northwest of Solwara 7. This small chimney cluster is only about 10 m by 10 m in size, but appears to be on the same structure that controls Solwara 7.
6.1.7 Solwara 8
Located approximately 750 m to the WSW of Solwara 6, Solwara 8 consists of both active and inactive chimneys, immediately adjacent to Solwara 4e and 4c. The local basement geology is predominantly glassy volcanics (interpreted to be felsic), with extensive sediment cover in places. Around several of the vent areas there are piles of chimney rubble. Collectively, these three sites (Solwara 8, Solwara 4e, 4c) comprise a discontinuous SSE to NNW trending chimney field of chimneys with an approximate strike distance of 580 m trending, with a width varying from 50 to 150 m (White et al., 2008). 2008 ROV mapping suggests Solwara 8 and Solwara 4 are probably part of the same hydrothermal system.
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6.1.8 Solwara 9
Solwara 9 comprises two separate areas, Solwara 9a and Solwara 9b, both located within 1.5 km of Solwara 1. They are approximately 220 m and 180 m long respectively, with a width averaging 40 m. They lie approximately 1,680 mBSL on the south-west flank the North Su knoll. The chimney outcrops are surrounded by unconsolidated sediment and volcanic outcrops.
6.1.9 Solwara 10
Solwara 10 is located in EL1383 on the Manus Spreading Centre, about 24km southwest of Solwara 2. The SMS system is approximately 680 m along strike, with width varying from 30 to 270 m averaging around 110 m. It lies on the seafloor approximately 2,240m BSL on the south flank of a small volcanic knoll. The SMS outcrop is surrounded by unconsolidated sediment and volcanic outcrops.
6.1.10 Solwara 11a to 11i
The Solwara 11 area lies in the western parts of the Bismarck Sea, to the south of Manus Island. The area is prospective for SMS deposits due to its combination of felsic volcanic activity, hydrothermal plume activity and known SMS occurrences. Solwara 11 lies along an under-explored structural extensional zone (the Willaumez Spreading Centre Extension Zone), interpreted to be a similar geological feature to the Manus Spreading Centre. It was first examined by the Metal Mining Agency of Japan (MMAJ) in 1992 with RV Hakurei Maru No 2, including a detailed multibeam map published in their atlas for the South Pacific Applied Geoscience Commission (SOPAC). MMAJ used a systematic gridding of sediment samples to look for metal enrichments. They located several inactive sites of ferruginous oxide deposit, (possible “weathered” sulphides) (Japan International Cooperation Agency 2000).
The French “MANAUTE” cruise in 2000 (aboard the RV L’Atalante) used a manganese detector on the manned submersible Nautile to record anomalies indicative of local hydrothermal activity. Ferruginous and Mn-Si oxides, barite, and “sulphides” (limited details given) were dredged from three underwater volcanoes (Auzende et al., 2000).
In 2008 Teck, working under their earn-in option, discovered the Solwara 11 deposit on EL 1647. Solwara 11 comprises at least four sulphide-rich chimney fields (Solwara 11a, e, f, i) with associated iron-manganese oxide and silica-iron zones (Solwara 11b, c, d, g, h) covering an area of approximately 2.8 km by 2 km. Sulphide outcrops up to 10 m high were mapped by ROV; chimney fields are largely inactive except one where hot water was observed.
Solwara 11i was discovered in late 2009 and is located approximately 310 m to the SW of Solwara 11a (White et al., 2010) .This prospect is approximately 160 m by 90 m and consists of remnant chimney clusters both standing (up to 18 m tall) and collapsed. Three ROV traverses demonstrated that Solwara 11a and 11i are not joined.
6.1.11 Solwara 12
Solwara 12 occurs near the apex of a rise over 120 m high, located on the southeastern edge of the DESMOS Caldera at around 1850 mBSL to 1900 mBSL water depth (White et al., 2010). The rise extends significantly beyond the observed sulphide chimney outcrops along two sediment covered ridges: one trending north; and the other trending west. The chimney field is around 200 m across with abundant sediment cover between chimneys, the extent of mineralisation beneath the sediment is unknown. The Solwara 12 outcropping chimneys are large (up to 15 m high).
6.1.12 Solwara 13
Solwara 13 occurs at the southwest end of the Yuam Ridge, in the eastern Manus Basin at around 2000 mBSL (White et al., 2010) . The chimney field is approximately 200 m by 150 m, comprising mainly inactive chimneys up to 20 m high; two areas of active venting were observed near the centre of the field. Large clusters of well cemented chimneys were observed in the central part of the field. The outer part of the chimney field is dominated by smaller, poorly indurated Fe-Mn oxide chimneys. The chimney field is
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6.1.13 Solwara 14
Solwara 14 lies approximately 1.8 km south of Solwara 10, in the Manus Spreading Centre at around 2240 mBSL (White et al., 2010). The system comprises two sub-parallel NE trending lenses of strong sulphide development.
Solwara 14a is a linear zone of inactive chimney clusters approximately 150 m by up to 20 m wide. The chimneys are up to 14 m high. Some minor development of chimney mound was observed. Solwara 14b is slightly smaller and less continuous than Solwara 14a, and has active black smoker chimneys.
6.1.14 Solwara 15
Solwara 15 occurs on the Manus Spreading Centre, to the SW of Solwara 14 at around 2215 m water depth (White et al., 2010). The system comprises a cluster of small, generally NE trending/elongated chimney occurrences scattered along about 1km of the main spreading ridge axis. Solwara 15a comprises one small area of chimneys on NE trend (~60 m long and 10 m wide). Two of the clusters are actively venting black smoke with abundant biology. Another area around 80 m long was mapped further east of this (Solwara 15b). Billowing black smokers occur in this area with abundant life. The chimneys are built on volcanic pillows and lobes close to fault scarps. No samples were collected from Solwara 15.
6.1.15 Solwara 16
Solwara 16 occurs in the southern part of the Manus Spreading Centre.approximately 20km SSW of Solwara 10 in the SW portion of the Manus Spreading Centre, at around 2160 m water depth (White et al., 2010). The system comprises several small sulphide zones less than 50 m each in strike length (Figure 22), over a 400 m long NE striking zone. When combined, the total strike length of the sulphide systems exceeds 100 m. Regionally, algal mats and hydrothermal indicators were observed in conjunction with the sulphides over a strike length approximately 4 km. A lack of sediment cover and proximity to the spreading axis suggest the system is relatively young.. Six sulphide chimney samples were taken from Solwara 16.
6.1.16 Solwara 17
The Solwara 17 system is located approximately 60 km NE of Solwara 11 (White et al., 2010), along a transform zone that links the two main spreading centres in the Willaumez area . The system is a 120 m by 75 m zone of outcropping chimneys, extensive algal mats and hydrothermal oxide coatings in relatively shallow waters (around 530 mBSL). The chimneys are quartz-rich or sulphate-rich hydrothermal precipitates; only minor sulphides were observed in hand specimen; hot water venting was observed in places.
The target was selected for investigation based on previously published reports from a French-Japanese cruise noting the presence of possible sphalerite in dredge samples. An additional, smaller, shallower (~390 mBSL), active, chimney site was discovered approximately 1.1 km to the south west of Solwara 17.
6.1.17 Solwara 18
Solwara 18 is located within the Willuamez Spreading Centre Extended, approximately 10 km NNE of Solwara 11, at around 1310 m water depth (White et al., 2010). This system comprises east-west elongated small inactive chimney clusters scattered over 80 m of strike length, hosted within a wider zone of hydrothermal indicators. The chimneys appear to be growing directly on volcanic pillows, and are only around 1 m height on average. The substrate is pillow basalt with no sediment cover.
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6.1.18 Solwara 19
Solwara 19 occurs at around 1,030 mBSL approximately 150km WSW of Solwara 10. The system comprises a northerly trending zone of barite chimneys, outcropping for approximately 110m along strike, situated on a mound ESE of a large caldera system (White et al., 2010).
6.2 Woodlark Basin
The three main Woodlark Basin tenements follow the axis of the Woodlark Spreading Centre in the Woodlark Basin and cover an area of 633km2 (EL1387), 633km2 (EL1388), and 633km2 (EL1389). These three tenements underwent a further 50% relinquishment in 2009. Prospective areas relinquished as a result of compulsory 50% relinquishment were re-applied for, after the moratorium on applying for relinquished areas had ended. A series of other tenements held by Nautilus surround these tenements, and cover the adjacent parts of the Spreading Centre.
The Woodlark Spreading Centre (Figure 6-10) is an active spreading centre southeast of mainland PNG, where the continental crust of PNG has been rifting rapidly (~25 mm/yr) along an east-west axis for at least 6 million years (Martinez et al., 2001).
Previous marine science research cruises discovered active hydrothermal venting at the Franklin Seamount, a 250 m high basalt-basaltic andesite volcano (crest at 2,138 m BSL) lying at the western propagating end of the Woodlark Spreading Centre, with a breached collapse crater (~300 to 400 m across) at its summit (Binns et al., 1993). Two sites on the seamount were investigated: Beaujolais, which consists of extensive deposits of Fe-Mn-Si oxide with some active venting of a clear, low-temperature fluid; Chablis is a group of barite- silica chimneys with disseminated sulphides on the crater floor. Six grab samples from Chablis, acquired by manned submersible dives, contained anomalous gold assays of 21.0, 21.1, 8.1, 11.0, 13.7, and 3.8 ppm Au (Binns et al., 1993). Zn, Cu and Pb were present only at trace levels. The chimneys’ mineralogy consisted of fine grained barite aggregates, botryoidal silica, pyrite, sphalerite, galena, chalcopyrite and cerussite.
Note that the assay grades reported are from a scientific report and may be based on samples that were specifically selected for detailed analysis and scientific research on the formation and genesis of sea-floor massive sulphide systems. Therefore, the grades stated only reflect the grades of the samples selected and may not reflect the average value of any SMS deposit. No SMS deposits were discovered, however Binns et al. (1993) postulated that they may be present in the subsurface of the volcano.
The Woodlark Basin tenements are prospective for SMS deposits due to the combination of active spreading, active hydrothermal activity and known base-precious metal mineralisation.
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Figure 6-10: Bathymetry of the Woodlark Basin, showing the location of the active spreading centre. Figure from Taylor et al., (1999)
6.3 North Fiji Basin
This description of the North Fiji Basin (NFB) is compiled from Halbach et al. (1999) and Danyushevsky et al. (2006). The North Fiji Basin is a back-arc basin that began opening ~12 Ma. The triangular shape of the basin reflects southward propagation of the spreading centre since ~5 Ma. During this time (5-3 Ma), a short-lived intra-oceanic arc, the Hunter Ridge, formed along the southeast margin of the NFB. This arc magmatism occurred in response to a short period of NNW-directed subduction of the South Fiji basin crust under the NFB. The southern tip of the North Fiji Basin is a volcanically active submarine triple junction between the back-arc basin spreading centre, Vanuatu Trench and Hunter Fracture zone.
The spreading centre is moderately fast-spreading, with a spreading rate of about 6cm/yr. In Nautilus’ main tenement area in the western part of the basin, intense tectonism and recent hydrothermal activity have been observed. The sea floor topography is a 2 km wide axial valley, ranging from 1,980m BSL in the north deepening to 2,200m BSL in the south. It is bordered by two volcanic ridges about 100 m higher than the adjacent sea floor. SMS systems have been found within this axial valley.
6.4 Lau Basin
The Lau Basin (Figure 6-11) is an active back-arc basin bounded to the east by the Tonga Ridge, and to the west by the Lau Ridge. The Basin has a triangular shape, formed by differential spreading rates on the Eastern Lau Spreading Centre, ranging from 39 mm/yr in the south to more than of 97 mm/yr in the north. The basin is over 1,500km from south to north, and contains ridges and spreading centres that are prospective for SMS systems.
The oceanic crust is thinner in the north, where spreading is fastest (around 5.5 km thick) and thickest in the south (more than 9 km thick). The volcanic rocks also show variation along the length of the spreading ridge, with mainly basalt in the north, and mainly dacites and andesites in the south.
The main spreading ridges have been mapped by numerous marine science research cruises, and are known to host a number of active and waning hydrothermal vent sites and SMS systems. A seismic line completed along the length of the spreading centre in 2003 showed the presence of a magma chamber at depth in the southern portion of the main spreading ridge.
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Figure 6-11: Tectonic setting of the Lau Basin.
6.4.1 Tahi Moana 1 (CELSC Plume 12)
Tahi Moana 1 is located in a graben with steeply dipping axial faults and terraces, coincident with a large plume anomaly (CELSC Plume 12) found by previous marine scientific research cruises. The terraces are generally composed of pillow volcanics, with volcanic talus at the bottom of the rift. The seafloor adjacent to the rift is mostly covered by sediment. Anomalous biomarkers and bacterial mats are common throughout the target area and visibility.
There are three main chimney fields: Tahi Moana 1a, 1b and 1c. Tahi Moana 1a is a largely inactive chimney field about 480 by 90 m located at the intersection of the rift and major cross structures and the axial rift, on a plateau or terrace between two large axial faults. Massive chimneys and sulphide mound development were observed with one chimney measuring 30 m high. Some active chimneys were observed. The chimneys are usually covered with a white bacterial mat. Minor volcanics were observed within the chimney field.
Tahi Moana 1b is about 1km north of Tahi Moana 1a on a terrace on the western side of the graben in a similar setting to Tahi Moana 1a. It measures about 130 by 100 m. Tahi Moana 1c is about 200 m to the
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There are another five small chimney occurrences in the target area, all along the same structure as the three main fields. The eastern side of the graben is much steeper than the western side with smaller terraces being smaller, and is probably too steep for chimney development.
6.4.2 Tahi Moana 2 (NVFR 3 Plume Target)
Tahi Moana 2a is an inactive chimney field approximately 200 m long and up to 100 m wide; in places the chimneys are densely concentrated and show some mound development. The maximum chimney height is 13 m but generally the chimneys range from 3m to 5m tall. The chimneys are strongly degraded with a firm outside crust and soft, friable inside. Numerous attempts to sample the chimneys failed. Extending to the west of the chimney field (and probably connected to the field) is a north-west trending structure 100 m long and at least 10 m wide filled with wall to wall chimneys with a distinctive flower structure.
The northern section of the original target area consists of two parallel north-east trending ridges. The eastern ridge is covered by thick sediment (volcaniclastic?) and has generally poor outcrop with the exception of ridge parallel fault lines. The western ridge consists of fresh volcanic with little or no sediment cover. The volcanics appear to have flowed down both sides of the ridge forming long lava tubes and lobate flows. In places the ridge crest consists of sheet flows. The thick sediments on the eastern ridge generally have a scalloped appearance. Between the ridge crests the volcanics are generally auto breccias with minor lobate and sheet flows.
Further areas of chimneys were discovered in the south of this target area close to the marked location of site NVFR Site 3. Three areas were delimited and named NVFR Site 3a, 3b and 3c.
Approximately 200 m north of Tahi Moana 2a is Tahi Moana 2b; the two areas are separated by a younger lava-flow unit indicating very recent eruptive activity. The Tahi Moana 2b area is approximately 370 by 90 m in size with rare active (black smoke) chimneys and common degraded chimneys. Chimneys are generally less than 1 m tall with rare taller spires to 10 m. The chimneys occur between unsedimented lobate and autoclastic volcanic flows to their west and mainly sediment-covered flows to the east.
6.4.3 Tahi Moana 3 (Misiteli #2/VFR Plume 042)
Tahi Moana 3a is a small occurrence of highly altered volcanics (soft, Fe-oxide) with numerous small (<1 m) inactive chimney-like structures associated with a major structure.
Very soft chimney structures were found with Fe-oxide chimlets (small chimneys < 1 m) on the edges of the field. The area was named. Parts of the field do not have any out cropping volcanic rocks between the chimneys with the seabed made up of talus material from the chimneys and mat covered sediments. Active venting was noted in the area.
6.4.4 Tahi Moana 4 (Telve Plume Target)
Tahi Moana 4 is an occurrence of single chimneys and clusters up to 3 m high with associated diffuse clear- water venting in an area of approximately 120 by 40 m. The chimneys are anhydrite rich and poorly cemented, making sampling difficult. The chimneys have wide bases with numerous flanges and appear to grow from relatively unaltered volcanics.. Outcrop around the chimney field is 40-50% volcanics flows and volcanic talus masked by sediment. There is evidence of volcanics overlying sediments and debris flows overlying volcanics indicating recent volcanic and tectonic activity.
6.4.5 Tahi Moana 5 (Misiteli Plume Target Area)
Multiple small chimney fields related to ridge-parallel structure shave been named Tahi Moana 5a through to Tahi Moana 5g.
Extensive yellow and grey mats with associated diffuse venting occur in the north-western part of the area. The underlying volcanics (generally talus) are altered over extensive areas and throughout thick vertical sequences as observed on steep slopes. Extensive chimney development exists, with columns up to 15m
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A further chimney field was located 120 m southeast (Tahi Moana 5e); here the chimneys are up to 15m high, many with white mushroom shaped tops showing diffuse venting. Numerous small (<1 m) chimney like structures made of iron oxides grow from areas of venting in volcanic outcrop; these structures are extremely soft and collapse on sampling. An extensive area of altered volcanics surrounds the chimney fields. The volcanics (generally talus) are altered to iron oxide and clay and have extensive yellow staining between the clasts.
At Tahi Moana 5f and Tahi Moana 5g, chimneys are mainly made up of active, between 5 and 15 m high, mostly active and hosted fauna including mussels and squat lobsters. The presence of yellow and black mat/precipitates was also noted, containing iron oxide mounds and small chimlets on a substrate of altered volcanic.
6.4.6 Tahi Moana 6 (Si’i Si’i Plume Target)
Tahi Moana 6 is an occurrence of three chimney clusters over an area of 175 by up to 75 m. The chimneys are up to 6 m high, have a mushroom shape and are covered with a white bacterial mat. Active chimneys (grey smoke) were noted along with numerous passive vent sites of shimmering water. Distinctive, possibly sulphide, mounds of 5 to 10 m diameter with white anhydrite veining occur. Tahi Moana 6 occurs on a ridge of brecciated flows and volcanic talus with minor areas of sediment cover
6.4.7 White Church
White Church was initially discovered by a marine science research cruise. Minor small inactive chimneys were discovered where the system was expected. An area containing chimneys approximately 470 m by 80 m was discovered, although significant areas of volcanic outcrop are contained within this. Chimneys are inactive, weathered and of variable size. Some mound development was observed, which suggests sub- seafloor mineralisation.
The surrounding rocks are dominantly volcanic breccia (flow breccia and some talus) with minor pillow basalt.
6.4.8 NVFR Site 2
NVFR Site 2a consists of inactive chimneys located on three ROV traverses in a zone approximately 220 m by less than 25m wide. NVFR Site 2b is a small site with two chimneys, one very soft and the other inactive and degraded. Areas about 1m in diameter of clear water venting surrounded by snails and mats were found adjacent to the chimneys.
6.4.9 NVFR Site 3
NVFR Site 3a covers approximately 430 by 140 m but has some significant areas of volcanic outcrop between chimney clusters. The central area of the chimney field consisted of large flanged chimneys with rare towers. The flanges seem to be growing together, in some cases resulting in a sulphide floor. The central chimneys are generally less than 5m high. Chimneys in the southern part of the field are active grey smokers and had abundant bio-markers: these chimneys were generally much higher than the central chimney area, had less flanges, and more biota. Chimneys ranged up to 13 m in height.
NVFR Site 3b covers approximately 150 by 100 m and is located at the base of a ridge-parallel fault on the eastern margin of the area. The field included active clear water vents and extensive bio-markers. Chimney clusters are up to 5m high with a volcanic substrate.
NVFR Site 3c covers approximately 70 by 50 m. Clusters of inactive chimneys occur with rare bio-markers. The chimneys are surrounded by pillow lava units with some mound development. The chimneys occur in a rift, bounded on both sides by steep slopes.
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6.4.10 Mariner (Mariner/FVR Plume 12-2)
At the Mariner site, numerous tall (10-15m high) chimneys occur both singly and in clusters with wide bases and occasional white/yellow matting on the tops. On sampling, many of these structures were found to be extremely soft and disintegrated to a yellow powder; these are probably Fe-Mn oxide accumulations. Hydrothermal activity includes clear water venting, white smokers and black smokers. Many of the active chimneys have a white or yellow mat on the top. The chimneys appear to be barite and anhydrite rather than massive sulphide.
6.4.11 Hine Hina 1
Hine Hina 1a consists of inactive chimneys up to to 3 m tall adjacent to a steep cliff with some smaller chimneys noted on sediment covered slopes in the area. An area of diffuse water venting also occurs with associated iron-manganese-oxide precipitates and possible flange growths.
Hine Hina 1b is an area of bulbous inactive chimneys in an area of sediment draped volcanic flows. An irregular ridge of 100 m length by just 1 m wide of slightly domal shaped features with irregular cracks and fissures with protruding growth structures also occurs in this area. In most cases the growth structures are less than 50cm high and formed of soft, black manganiferous material.
6.4.12 Tui Malila 1
Tui Malila 1a consists of numerous clusters of active chimneys up to 13m high on a volcanic substrate. Large areas of clear water venting without chimney development, but with vent bio-markers were also noted. The area of chimneys and venting covers approximately 225 by 80 m.
Tui Malila 1b is 170 m to the north of Tui Malial 1a and consists of chimneys over area of 140 by 90 m named. No venting was directly observed but turbidity is relatively high in this area. Chimneys were up to 10 m tall.
6.4.13 Maka
The Maka system is located at approximately 1660 mBSL and on the crest of the NELSC . Sulphide outcrops up to 4 m high protruding from the base of predominantly pillow basalts over an area of approximately 130 m by 100 m.
6.4.14 Tunu-Sosisi
The Tunu-Sosisi system comprises three subsystems (Tunu, Sosisi 1 and Sosisi 2) at approximately 1635 mBSL. The three subsystems are 150 m by 100 m, 150 m by 60 m and 105 m by 70 m respectively. The system lies along a roughly linear zone over a 1.7 km length on a major structural zone cross cutting the southern rim of the North East Lau Caldera. All three subsystems have sulphide outcrops protruding from a soft sedimentary base.
6.4.15 Pia
The Pia SMS system is located at approximately 1470 mBSL close to a major structural zone that cross-cuts the northern rim of the North East Lau Caldera. The system is 200 m by 80 m. All sulphide outcrops protrude from a soft sedimentary base.
6.4.16 Niua
The Niua SMS system comprises two subsystems that lie approximately 1300 m apart within individual crater like depressions in a rifted part of the old Tongan arc. The first system, Niua-2 is at of 900 mBSL with a strike length of approximately 230 m and width of 170 m. The second system, Niua-3 is at 1180 mBSL with a strike length of approximately 270 m and width of 250 m.
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6.4.17 Tahi Moana 7 (North East Lau 5 Target)
Tahi Moana 7 lies on the North East Lau Spreading Centre. Previous research cruises detected water column anomalies suggesting strong hydrothermal source on the axis of the ridge. High resolution bathymetry and seven new CTD tow-lines were completed by Nautilus, which identified a water column anomaly with strong nephelometer and Eh response. A total of 47 water samples were taken within the NEL5 area with most around the Tahi Moana 7 site.
One camera tow was conducted over Tahi Moana 7 which delineated a several hundred metre extent of chimney field. Also viewed were biota, alteration indicators and pillow basalts. A dredge of the seafloor recovered basalts and massive sulphides.
6.4.18 FRSC02 (North East Lau 11 Target)
The NEL11 target occurs in the Central Fonualei Rift system. This area was chosen as it covers an area where sulphide samples were recovered during a KORDI survey. Geological features include prominent cross structures, broad ridges and a graben basin feature which are potentially sites for SMS systems.
Three water column anomalies (Fonualei Central 1 and 2, Fonualei South Central) were detected along the main ridge axis of the rift zone. One of the centrally located turbidity and Eh anomalies lies within 2 km of the FRSC02 site from which KORDI reported to have dredged sulphides. A total of 65 water samples were collected during the multiple tows. One camera tow operation was conducted in the Central Fonualei. It was planned to capture the FRSC02 site and the main plume anomaly detected on the current cruise. This camera tow failed to gain any footage due to a technical failure, but fortuitously recovered one piece of massive sulphide, probably knocked off a sulphide chimney in the area.
Two dredge operations were conducted over the Fonualei Central area. No sulphides were recovered. Relatively fresh volcanics were recovered in both locations. More work is required at this site to define the area of sulphide chimneys.
6.5 Solomon Islands
The structural-tectonic setting within the tenement area has potential for polymetallic SMS mineralisation. The area includes a series of submerged structural ridges and fault zones adjacent to active spreading centres, which occur to the west of an active subducting slab and trench. Hot magmas below the active spreading centres are interpreted to induce hydrothermal activity in the overlying volcanics and adjacent structures. Hydrothermal activity and sulphide chimneys have been noted at one seamount site (Kana Keoki), which lies immediately west of the subduction zone, on an adjacent competitor tenement.
The structural-tectonic setting within the Woodlark Sea license area appears to have the potential for the formation of polymetallic SMS mineralisation. The area includes a series of submerged structural ridges and fault zones adjacent to active spreading centres, which occur to the west of an active subducting slab and trench. Hot magmas below the active spreading centres are interpreted to induce hydrothermal activity in the overlying volcanics and adjacent structures. The Eastern Solomons terrane includes an active arc and back arc system on a large bend in the plate boundary that is likely to contain slab tears. Recent studies also confirmed the presence of fertile volcanic rocks.
6.6 New Zealand
New Zealand is situated astride a convergent plate boundary that extends offshore from the North Island towards Tonga and into the southern part of Samoa. A prominent feature on this plate boundary is the Kermadec Arc, which hosts numerous volcanic complexes and seamounts, occurring both on the arc and in a zone immediately west of it (de Ronde, 2006). The Arc marks the boundary between the westward subducting Pacific Plate. Active volcanoes occur within a 40 km wide, NNE-trending zone that extends for ~2,500km.
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The Havre Trough region lies to the west of the Kermadec Arc and is interpreted as a back-arc rift system. Nautilus’ New Zealand tenement lies within the Harve Trough area (Figure 6-12.
Flanking the Havre Trough, the remnant Colville Ridge to the west (~5Ma) and the active (≤0.5Ma) Kermadec Arc to the east, form a series of longitudinally semi-continuous ridges. Studies of hydrothermal plumes along the southern part of the Kermadec Arc during the 1999 New Zealand American Plume Mapping Expeditions (NZAPLUME) showed that 7 of the 13 volcanoes surveyed were discharging metal-rich fluids into the surrounding ocean. Similarly, later studies verified both the frequency and heterogeneous nature of venting further north along the Kermadec Arc (de Ronde, 2006).
6.7 Vanuatu
Vanuatu forms part of the New Hebrides Island Arc. This is the currently active island arc forming at the western boundary of the North Fiji Basin where the Australian Plate is being subducted beneath the Pacific Plate at the New Hebrides Trench (Figure 6-13). The Coriolis Troughs are a series of very young back arc basins forming behind the active arc, south of 17°S. The centre of this subduction zone, between 13.5°S and 17°S is affected by the subduction of the D’Entrecasteaux Ridge, and forms a back arc thrust belt, which is a compressional terrain, rather than extensional, and the hydrothermal prospectivity here is lower. North of 13.5°S, the Jean Charcot Troughs are also thought to be back arc basins. Hydrothermal indicators have been located throughout the Coriolis Troughs, at several arc volcanoes, and in the Jean Charcot Troughs.
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Figure 6-12: Tectonic setting of the Tonga-Kermadec Arc The Australian and Pacific plates occur W and E of the Tonga-Kermadec Trench, respectively (de Ronde, 2006).
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Figure 6-13: Geological setting of Vanuatu
6.8 Clarion Clipperton Zone
The seafloor in the Clarion Clipperton Zone is between 4,000 mBSL and 5,000 mBSL; it characterised by NW-SE to NNW-SSE trending elongated horsts and grabens, largely of Oligocene to Miocene age. They are overlain by a variable-thickness drape of largely Miocene to Holocene aged sediment of varying composition. The sediments are predominately carbonate mud in the south, and siliceous clays in the north. This pattern largely reflects the current location of the Carbonate Compensation Depth (CCD).
The position of the CCD has not remained constant over time. The seafloor has migrated relative to the equator, and the balance between tectonic displacement, biological activity, and clastic sedimentation has been dynamic over geological time. As a result, three dimensionally and temporally the sedimentary pattern is locally quite complex with interfingering layers in both north-south and east-west orientations. The pattern
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Major east-northeast structures (the Clarion and Clipperton Fracture Zones) dissect the northern and southern margins of the CCZ. Both fracture zones have been volcanically active in the past, and are a likely source for some the of the nodule metal, along with the relatively much more active East Pacific Rise to the east of the nodule area.
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7. Deposit Types
7.1 SMS Discovery and Global Distribution
More than 300 sites of hydrothermal activity and seafloor massive sulphide mineralisation are known (Hannington et al. 2005) (Figure 7-1), of which about 100 have high-temperature venting or polymetallic sulphide deposits. The existence of more can be inferred on the basis of hydrothermal plume studies (Baker et al., 2003). These hydrothermal sites have been discovered principally by cooperative research and government institutions conducting basic research on Earth processes. Deposits of metalliferous mud and sulphides are formed at, or adjacent to, the vent site when the rising hot hydrothermal fluids mix with the cold ambient seawater on the sea floor.
Figure 7-1: Known hydrothermal systems and polymetallic massive sulphides deposits
The Atlantis II Deep deposit is located in the Red Sea and is the largest known sea floor sulphide deposit. During the 1970s the Sudanese and Saudi Arabian governments contracted the German company Preussag to bulk sample and review the economics of mining the Atlantis II Deep deposit (Guney et al., 1984). Although there were some higher grade parts of the deposit, the overall grades of 0.45% Cu, 2.07% Zn, 39 g/t Ag and 0.5 g/t Au were considered to be uneconomic.
The first active ‘black smoker’ chimneys (and associated SMS deposits) were discovered in 1977 around the Galápagos Islands by the National Oceanic and Atmospheric Administration. They were observed using the submersible Alvin. Subsequently, numerous marine scientific research projects have discovered SMS systems throughout the oceans of the world. This period of rapid discovery was followed by exploration in western Pacific back-arc basins. One of the first discoveries of modern massive sulphide chimneys was in the Manus Basin back-arc in PNG (Both et al., 1986). Although not unlike their mid-ocean equivalents, subsequent research on back-arc SMS systems has shown them to be higher grade (Herzig, 1995). By drawing an analogy with ancient felsic-hosted VHMS deposits, further expeditions discovered SMS deposits in volcanically active back-arc rifts (Halbach et al., 1989; Binns and Scott, 1993) and within the calderas of submarine arc volcanoes (Iizasa et al., 1999; de Ronde et al., 2001). The 1991 discovery of actively forming massive sulphide chimneys with high base- and precious metal contents in felsic volcanics at Pual Ridge
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(Solwara 4) demonstrated the potential of PNG to host high grade SMS deposits (Binns and Scott, 1993; Binns et al., 1995). In 1997, the PNG Government granted Nautilus the first two exploration licences for SMS deposits, covering the Solwara 1, 2, 3 and 4 areas.
Only about 13 of the known 82,000km of prospective sea floor environments worldwide have been carefully surveyed, with another ~6% in less detail (Baker et al., 2003). To date, academic research efforts have only focussed on the active hydrothermal fields and little is known about extinct or mature fields. The older fields are the priority target for Nautilus’ exploration programmes as these areas contain deposits that are mature, and therefore more likely to be of a sufficient size for exploitation. The extinct fields are also less likely to support colonies of hydrothermal-specific marine life. There are likely to be many more extinct fields deposited over time (~100,000 years) on the sea floor than currently active fields, which are the main focus of researchers.
7.2 Characteristics of Terrestrial VHMS Deposits
Volcanic-hosted massive sulphide (VHMS) deposits form a major part of the world’s reserves of copper, lead and zinc, as well as being producers of gold and silver. Over 800 terrestrial (land based) VHMS deposits have already been identified around the world (Franklin et al., 2005). These deposits occur in rocks that range in age from the Archaean through to the Cainozoic, with notable examples being the deposits of the Iberian Pyrite Belt, Kidd Creek and the Noranda Camp in Canada and Kuroko in Japan. VHMS are commonly found in clusters, consisting of dozens of individual deposits, around 1 to 10Mt within a larger mining camp. A selection of VHMS deposits is tabulated in Table 7-1; a comparison of the Solwara 1 resource to some other VHMS deposits is shown in Figure 7-2.
Large et al. (2005) listed the features common to VHMS deposits:
They are hosted in volcanic or volcano-sedimentary successions originally deposited under water. They are the same age as the host succession. The host rocks vary from coherent to clastic volcanic or sedimentary facies and range in composition from basalt through andesite and dacite to rhyolite. Most deposits are hosted in thin volcaniclastic units (less than 100 m thick) between major volcanic formations. The economic parts of the deposits typically comprise >80% sulphide minerals by volume, principally pyrite, sphalerite, chalcopyrite and galena. Massive sulphide lenses are commonly aligned parallel to volcanic strata. Stringer (or stockwork) sulphide zones commonly underlie the massive sulphides and may contain economic Cu grades. Metal contents and metal ratios vary considerably. Deposits may be Cu-rich, Au-rich, Cu Zn rich or polymetallic (Cu-Zn-Pb-Ag-Au) types. Ore metals within sulphide deposits are typically vertically zoned, from Cu at the stratigraphic base to Zn, Pb, Ag, Au and Ba towards the top. However, there are many exceptions to this zonation pattern.
The widely accepted genetic model for VHMS deposits is that they are formed at or just below the seafloor, in volcanically-active extensional settings, where convected seawater is drawn into the seafloor down extensional faults. Vent fluids are heated (>200°C) by underlying magmas, and leach metals from the underlying volcanic rock; this metal-rich fluid may also mix with magmatic fluids sourced from sub-volcanic intrusions. The reduced hydrothermal fluid is then driven upwards towards the seafloor via fault pathways, and expelled at or immediately below the seafloor surface. When in contact with cold seawater, the hydrothermal fluid cools rapidly and precipitate sulphides, sulphates and Fe-oxide minerals. Long lived precipitation eventually builds up a mound of metal-rich sulphide on or immediately beneath the seafloor.
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Within a mining camp, VHMS deposits tend to be spatially clustered with multiple deposits, commonly forming at a single stratigraphic level. Deposits are localised at the prospect scale by the distribution of synvolcanic extension faults. These extension faults are active during the formation of the deposits and create the permeability required to allow transport of the upward-migrating metal-laden fluids to reach either the sea floor or the immediate sub-sea floor porous environments.
Table 7-1: Average grade and tonnage data* for selected VHMS groups.
Number Average Grade and Tonnage Dominant Area of Cu Zn Pb Ag Au metals Mt deposits (%) (%) (%) (ppm) (ppm) Abitibi Belt, Canada Cu-Zn 52 1.47 3.43 0.07 3.19 0.8 9.2 Norwegian Cu-Zn 38 1.41 1.53 0.05 3.5 Caledonides Bathurst, N.B., Canada Zn-Pb-Cu 29 0.56 5.43 2.17 62.0 0.50 8.7 Green Tuff Belt, Japan Zn-Pb-Cu 25 1.63 3.86 0.92 95.1 0.90 5.8 Iberian Pyrite belt Cu-Zn 85 0.80 2.00 0.70 26.0 0.50 20.8 Australian Palaeozoic Cu-Zn 24 1.13 4.10 1.62 42.95 1.78 10.7 Modified after Lydon (1993) and Large (1992). *This information does not relate to mineralisation on the properties that are the subject of this technical report.
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Solwara 1
Solwara 1
Figure 7-2: Comparison of Solwara 1 resource to Canadian VHMS deposits. From Galley et al. (2008)
7.3 Formation and Morphology of SMS Deposits
SMS deposits can be subdivided into three end member deposit styles, based on morphology (Large, 1992):
1. lens and blanket deposits have a low aspect ratio with a dominant zinc-rich massive sulphide lens and subordinate stringer zone, 2. mound deposits have a high aspect ratio, narrow and elongate massive sulphide with a well developed stringer zone, and 3. pipe and stringer deposits have cross-cutting massive sulphide pyrite-chalcopyrite pipe or stringer zones with little or no stratiform Zn rich sulphide lenses.
SMS deposits are commonly formed on the sea floor near plate margins in either:
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divergent plate margins such as mid-ocean ridge spreading centres or spreading back arc basins; convergent plate margins such as island arcs or continental margins; or intra-plate oceanic islands
SMS deposits are formed in geological settings where extensional fault systems facilitate the deep circulation of sea water in convection cells, formed by heat flow from submarine volcanic activity. Active sulphide deposition on the ocean floor (Figure 7-3) is confined to sites where hot (>200°C) rising hydrothermal vent fluids mix with cool (2°C) ambient ocean water. Through the accumulated precipitation of the sulphides at the vent site, chimney-like structures form. These chimneys consist of anhydrite and polymetallic sulphides. The combined processes of: 1) episodic flux of the hydrothermal vent fluid; 2) sea floor oxidation; and 3) seismic events contribute to the collapse of the old chimney structures and the initiation of new chimney structures. This cyclical process results in the formation of a sulphide mound on the sea floor. As the size of the mound increases, through prolonged hydrothermal activity, the mound permeability decreases to a point where precipitation, replacement and remobilisation of sulphides inside the mound can occur resulting in a concentration of minerals.
The obvious similarities (tectonic setting, mineralogy, metal zonation and alteration zonation) between SMS deposits and mound style VHMS deposits have led the research community to conclude the systems are analogous. To date research programs have mostly identified SMS deposits that appear to be analogues with the mound style of VHMS deposit, as these are forming on the sea floor surface and are readily detectable by bathymetry, camera tows, dredge sampling or ROV mapping and sampling. Any SMS analogues of the other two styles of VHMS deposits (pipe and stringer deposits and lens and blanket deposits) would be forming beneath the sea floor, and require geophysical, geochemical and drilling techniques to detect them rather than by direct seafloor observations.
VHMS deposits on land commonly form in clusters. This is likely to be similar for SMS deposits; however, many small (<0.5Mt) SMS deposits could be mined by moving floating infrastructure, whereas on land VHMS deposits of this size may individually be too small to justify development.
Figure 7-3: Schematics of development of modern mound-chimney SMS deposit
7.4 Polymetallic Nodule Deposits
7.4.1 Discovery and Global Distribution
Submarine ferromanganese concretions were first discovered in the Kara Sea off Siberia in 1868 (Earney, 1990). In the course of its round‐the‐world expedition from 1873 to 1876, HMS Challenger collected many
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Polymetallic nodules are found on the seabed in many areas, and have been comparatively well studied because of their potential economic importance (Mero, 1965). The Clarion-Clipperton Fracture Zone (CCZ) has been the focus of much international attention for many years (Mero, 1965; McKelvey et al., 1979; Bernhard and Blissenbach, 1988). Nodules of economic interest have been found in three areas: the north central Pacific Ocean, the Peru Basin in the southeast Pacific, and the centre of the north Indian Ocean. The most promising of these deposits in terms of nodule abundance and metal concentration occur in the Clipperton Fracture Zone of the eastern equatorial Pacific between Hawaii and Central America.
7.4.2 Formation and Morphology of Polymetallic Nodule Deposits
Nodules lie on the seabed sediment, often partly or completely buried (Figure 7-5). They vary greatly in abundance, in some cases touching one another and covering more than 70% of the sea floor. They can occur at any depth, but the highest concentrations have been found on abyssal plains between 4,000 and 6,000 mBSL.
Nodule growth is one of the slowest of all geological phenomena, at rates of 1‐10 mm per million years. Several processes are involved in the formation of nodules, including the precipitation of metals from seawater, the remobilization of manganese in the water column, the derivation of metals from hot springs associated with volcanic activity, the decomposition of basaltic debris by seawater and the precipitation of metal hydroxides through the activity of microorganisms. Several of these processes may operate concurrently or they may follow one another during the formation of a nodule (Figure 7-4; Figure 7-6).
Polymetallic nodules are classified into three types, according to their morphology, size and texture;
1. S‐type (Smooth type), 2. R‐type (Rough type) and 3. S‐R‐type (Smooth‐Rough mixed type).
The chemical composition of nodules varies according to manganese mineralogy. Those of greatest economic interest contain manganese (27-30 %), nickel (1.25-1.5 %), copper (1-1.4 %) and cobalt (0.2-0.25 %). Other constituents include iron (6 %), silicon (5%) and aluminium (3%), with lesser amounts of calcium, sodium, magnesium, potassium, titanium and barium, along with hydrogen and oxygen.
Figure 7-4: Formation model for CCZ polymetallic nodules (from ISA Technical Study No. 6)
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Figure 7-5: Nodule pavement at depth within the CCZ.
Figure 7-6: Polymetallic nodule growth process.
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8. Mineralisation
Significant SMS mineralisation has been identified at 16 prospect areas within the Nautilus tenements: including the Solwara 1 to 14, Solwara 16 and Solwara 18 prospects (Table 8-1). Samples from Solwara 17 and 19 were weakly anomalous in base metals and sulphate-rich. No samples from Solwara 15 were recovered and therefore sulphides have not yet been confirmed there.
This section includes results from previous studies and investigations, along with descriptions of mineralised zones, surrounding rock types and geological controls.
Table 8-1: Average compositions of grab subsamples from the Solwara Project
Prospect Cu % Zn% Au g/t Ag g/t Samples Exploration Stage Solwara 1 11.0 6.6 18.2 215 148 chimney samples Resource evaluation Solwara 2 1.1 23.8 10.6 340 68 chimney samples Target testing Solwara 3 0.5 11.0 30.6 3375 2 chimney samples Target testing Solwara 4 12.3 19.5 14.1 232 43 chimney samples Prospect delineation Solwara 5 5.5 7.7 13.9 263 13 chimney samples Prospect delineation Solwara 6 11.7 18.4 16.1 203 7 chimney samples Target testing Solwara 7 3.7 15.6 10.9 261 11 chimney samples Target testing Solwara 8 5.6 31.4 15.6 305 13 chimney samples Prospect delineation Solwara 9 6.3 10.6 19.9 296 17 chimney samples Target testing Solwara 10 7.1 14.1 2.3 152 13 chimney samples Prospect delineation Solwara 11 1.5 15.1 1.3 198 21 chimney samples Target testing Solwara 12 7 22.6 13.7 425 10 chimney samples Target testing Solwara 13 9.1 30.7 4.7 546 7 chimney samples Target testing Solwara 14 1.3 19.2 3.3 97 14 chimney samples Target testing Solwara 16 2.1 18.6 2.8 105 6 chimney samples Target testing Solwara 17 0.0 0.1 0.0 181 3 chimney samples Target testing Solwara 18 0.3 19.6 0.2 110 2 chimney samples Target testing Solwara 19 0.0 0.1 0.6 4 2 chimney samples Target testing Note that some of these grades are from unverified third-party scientific reports and may be based on samples that were specifically selected for detailed analysis and scientific research. Therefore, the grades stated only reflect the grades of the samples selected and may not reflect the average grade of underlying mineralisation.
8.1 Solwara 1
The Solwara 1 deposit is a tabular flat lying zone of massive (>50%) to semi-massive (20-50%) sulphide mineralisation, lying on a on a volcanic ridge which rises 150 to 200 m above the surrounding seafloor (Figure 8-1). The slopes of the ridge are steep, up to 30 degrees). There are some flatter areas near the crests of the ridges where much of the deposit is located. The volcanic ridge is dominated by andesite to dacite rocks.
Part of the Solwara 1 Project was surveyed by CSIRO on three marine science research cruises: PACMANUS III, PACMANUS IV and Binatang 2000. Each research cruise included deep-tow video traverses, dredge traverses and limited grab sampling. These cruises identified the hydrothermal venting at the North Su and South Su prospects and the chimney fields at Solwara 1, initially called Suzette. Nautilus’ interpretations of recently acquired side-scan sonar data, provided by Placer Dome, defined the extent of the Solwara 1 SMS deposit.
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The main area of the Solwara 1 deposit contains numerous hydrothermal vent structures (“chimneys”). Nautilus has sampled 148 of these chimneys (Table 8-1).The chimneys are formed dominantly of sulphide and lesser sulphate minerals including chalcopyrite, sphalerite, pyrite, barite and anhydrite.
The South Su field is approximately 2.5 km to the south of Solwara 1, and contains copper and gold-rich chimneys standing on an exhalative mound comprising massive pyrite-sphalerite-barite and sulphidic muds. The exhalative sea floor deposits are underlain by altered dacite consisting of high-sulphidation silica-pyrite- native sulphur-alunite alteration accompanied by disseminated and stockwork sulphide mineralisation. The stockwork appears to be exposed on southerly flanks of the dome where samples of altered brecciated dacite and brecciated silica-sulphide assemblages with up to 2.6% Cu and 0.8ppm Au, have been recovered by dredging (Binns et al., 1997). Note that these grades are from a scientific Report and may be based on samples that were specifically selected for detailed analysis and scientific research on the formation and genesis of sea-floor massive sulphide systems. Therefore, the grades stated only reflect the grades of the samples selected and may not reflect the average value of the SMS deposit. Additionally, only the emergent black smoker chimneys were sampled; the grades of these are likely to be different from the underlying SMS mound deposit.
The North Su field is approximately 1.5 km to the south of Solwara 1, and is dominated by steep topography and appears to consist of jagged and sheet-like volcanic outcrops and hydrothermal exhalative mounds, crusts and volcaniclastic dominated zones. Previous deep-tow video surveys were relatively unsuccessful due to large amounts of suspended particulate matter possibly emitted from active hydrothermal vents. Dredged samples from the NW strike extents of North Su consist of dacite which is altered and is host to veined and disseminated pyrite (Binns, 2004).
The sub-surface geological sequence at Solwara 1 (Figure 8-2) has been determined by shallow diamond drilling. Mineralisation is believed to be associated with structures that have formed “feeder-zones” through the host volcanic package of high hydrothermal flux. Hydrothermal fluids have reacted with the volcanic rocks in and adjacent to these zones in a series of processes that have led to the formation of massive sulphides by replacement and vein/breccia infill. Three domains in the mineralisation system, (excluding the chimneys found at surface), have been defined:
Cemented sediment: a distinctive layer of pale to dark grey, fine to medium grained volcaniclastic sands from 0 up to 5.4m thick, averaging 0.5m thick. The sediments have been flooded by hydrothermal fluids that have precipitated a cement of opaline silica, sulphide and sulphate minerals. Rare fragments of sulphide-rich chimneys are entrained within this domain. Locally this unit is well mineralised containing significant chalcopyrite and sphalerite.. Massive and semi-massive sulphide: this is the main mineralised domain, varying in thickness from 0 to at least 18 m (many holes terminated in massive sulphides), The zone consists mainly of pyrite and chalcopyrite with anhydrite or barite gangue; chalcopyrite commonly dominates closer to the surface, but in some drill holes it tends to diminish with depth where pyrite dominates. Pyrite is also seen to be the dominant sulphide on the south eastern side of the deposit. Anhydrite and barite occur in variable amounts throughout the sulphides or in veins and breccia matrix, particularly towards the base of the zone. Locally, the main sulphide zone can include patches of clay-rich altered volcanic material, and generally it grades into this material at depth. Altered volcanic rocks: the footwall to the mineralisation consists of altered volcanic rocks in which most of the primary minerals have been altered to clays or replaced (or veined) with anhydrite and disseminated pyrite. Short-wave infrared (SWIR) mineral analyser studies of alteration minerals in the footwall domain indicate zonation of alteration minerals, with smectites and opal dominant on the periphery of the system, and illite forming the dominant alteration mineral in the centre of the system. Rare pyrophyllite and kandite/dickite have been identified in some drill holes. These rocks are commonly weak and core recovery is generally low in this zone.
The results of drilling of the deposit in 2007 were used to estimate a resource for the deposit (see Section 16).
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Figure 8-1: Distribution of resource drilling at Solwara Source: Lipton (2008)
Figure 8-2: Schematic cross-section through the Solwara Deposit Source: Lipton (2008)
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8.2 Solwara 2 and 3
Solwara 2 is located on the Manus Spreading Centre. It comprises two chimney areas, Solwara 2a and 2b. Many of the chimneys in the Solwara 2a area are growing out of a volcanic substrate with little mound development.
In 1990, the OLGA-II cruise on the RV Sonne discovered two Zn-rich chimney clusters at Solwara 2 and one chimney area at Solwara 3. Using data from the OLGA-II cruise, a Russian team on the RV Akademik Mstislav Keldysh carried out one dive at Solwara 2 and one dive at Solwara 3, confirming the presence of several chimney clusters and collecting samples at 16 sites in the two areas. In 1995, French-Japanese teams carried out five dives by the Shinkai-6500 in the Solwara 2 area, reporting chimneys scattered through an area of 400 m diameter with vent temperatures of up to 300°C. In 2006, the Magellan 2006 cruise of the RV Melville acquired detailed bathymetry, temperature and Eh data using the AUV ABE at the Solwara 2 and 3 sites and at an intermediate site named the Bronze Age Fort. The ROV Jason carried out seven dives in these areas.
Assays returned from chimney samples at the Solwara 2 and 3 sites are tabulated in Table 8-1. Note that some of these grades are from unverified third-party scientific reports and may be based on samples that were specifically selected for detailed analysis and scientific research on the formation and genesis of sea- floor massive sulphide systems. Therefore, the grades stated only reflect the grades of the samples selected and may not reflect the average grade of underlying mineralisation.
8.3 Solwara 4
In 2000 the Solwara 4 SMS systems on the Pual Ridge were extensively sampled by dredging and research drilling. The target of the drilling program was to collect geological and geophysical information on the alteration and extents of mineralisation beneath the hydrothermal vent locations. The drilling program (Leg 193 of the Ocean Drilling Program (“ODP”)) was conducted from the marine research vessel RV JOIDES Resolution (Table 6 1). It is important to note that, due to academic considerations, the drilling program was not engineered or designed to recover representative samples of sulphide mineralisation within 30 m of the seafloor, and the core recovery was inconsistent throughout the drill holes. Despite the lack of consistent core recovery, evidence of altered volcanics and stockwork mineralisation was discovered to extend down to 370m below the seafloor. A cross-section through the Solwara 4 prospect is shown in Figure 8-3.
Further drilling was undertaken in 2002. This research drill program (“Condrill”, SO-166) on the RV Sonne consisted of ten holes drilled to 5m. These drill holes were designed to target the near-seafloor extents of the SMS mineralisation within two of the Solwara 4 hydrothermal fields. Three drill holes intersected massive chalcopyrite mineralisation and six returned samples of sphalerite-bearing debris (chimney fragments) confirming the existence of the sulphide mound below the hydrothermal vents or chimneys.
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Solwara 4d Solwara 4c Solwara 4a
Figure 8-3: Schematic SW-NE cross section along the crest of Pual Ridge Solwara 4
8.3.1 Solwara 4a
Dredging of black smoker chimneys at the Solwara 4a returned samples with high percentages of polymetallic sulphides. The average grades of eight chimney analyses were 7.3% Cu, 17.9% Zn, 250 g/t Ag, 11.3 g/t Au (Yeats et al., 1998). These average grades are from a scientific Report and may be based on specifically selected sulphide samples; however the comparison of the results of the scientific sampling at Solwara 1 and Solwara 2 and the grab sampling suggests that these grade tenors are likely to be associated with significant SMS mineralisation.
8.3.2 Solwara 4b
This chimney field had two drill holes completed in 2000 as part of the ODP Leg 193 program. In the first hole, ODP 1189, sample was not returned until 31 m depth, and the remaining 210 m of the drill hole intersected altered dacite breccias and sulphide-silica-anhydrite stockwork mineralisation. The second hole, ODP 1189A, was drilled further away from the known extent of the mound and was not core sampled until 30 m depth. No significant massive sulphide mineralisation was intersected in this hole.
Dredging returned mineralised samples of sulphidic chimney (average of nine samples: 9.0% Cu, 18.8% Zn, 170g/t Ag, 12.3g/t Au; Yeats, Parr and Binns, 1998). Note that these average grades are from a scientific Report and may be based on sulphide samples that were specifically selected for detailed analysis and scientific research on the formation and genesis of sea-floor massive sulphide systems. Therefore, the average grades stated only reflect the average of the samples selected and may not reflect the average value of the SMS deposit.
A drilling program conducted as part of the 2002 “Condrill” (SO-166) marine science research cruise on the RV Sonne consisted of ten holes drilled to 5 m, which were designed to target the near-seafloor extents of the SMS mineralisation within two of the Solwara 4 hydrothermal fields. Three drill holes intersected massive chalcopyrite mineralisation and six returned samples of sphalerite-bearing debris (chimney fragments) confirming the existence of the sulphide mound below the hydrothermal vents or chimneys. Assays of quarter core sections of core from all drill holes indicate high base and precious metal contents averaging 10.8g/t Au, 166g/t Ag, 18.2.% Zn, 4.1% Cu (S Petersen, pers comm).
These average grades are from a scientific Report and may be based on specifically selected sulphide samples; however the comparison of the results of the scientific sampling at Solwara 1 and Solwara 2 and the grab sampling suggest that these grade tenors are likely to be associated with significant SMS mineralisation.
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8.3.3 Solwara 4c
Dredge sampling of Solwara 4c indicated significant polymetallic sulphide mineralisation with average grades from 48 samples of 13% Cu, 20.8% Zn, 164 g/t Ag and 14.4 g/t Au (Binns, 2004). A large grab sample of a black smoker chimney was recovered by dredging in 2004. A slab was cut from across the long axis of the chimney fragment, and 85 small core samples taken (Figure 8-4; Figure 8-5) (Petersen, 2004). The average grades of these 85 samples are presented in Table 8-2.
Note that these average grades are from a scientific report and may be based on sulphide samples that were specifically selected for detailed analysis and scientific research on the formation and genesis of sea-floor massive sulphide systems. Therefore, the average grades stated only reflect the average of the samples selected and may not reflect the average value of the SMS deposit.
Table 8-2: Average results of 85 samples from Solwara 4c sulphide material
Au Ag Zn Cu Pb (ppm) (ppm) (%) (%) (%) 13.86 272.28 22.13 8.79 1.06
Figure 8-4: Schematic map of Condrill core hole locations at Solwara 4b (formerly Roman Ruins).
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Figure 8-5: Massive sulphide black smoker chimney Solwara 4c.
Figure 8-6: Slice through chimney in Figure 8-5 with sample core holes
8.3.4 Solwara 4d
The Solwara 4d chimney field consists of two multi-spired complexes with patchy hydrothermal venting about half way up these 6-7 m tall structures. Smaller solitary spires in the area are all inactive. Some chimneys grow out of fissures in hard rock basement. Overall, venting activity is minor (Tivey et al., 2006).
Three grab samples were recovered from Solwara 4d during the RV Melville cruise in 2006. Average assay grades returned from those samples were 17.1 % Cu, 29.6 % Zn, 34.5 ppm Au, and 390.7 ppm Ag. Note that these average grades are from a scientific report and may be based on sulphide samples that were specifically selected for detailed analysis and scientific research on the formation and genesis of sea-floor
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8.3.5 Solwara 4e
The core of the Solwara 4e site is a 40 m diameter two-tiered mound, with a large black smoker chimney complex forming the upper tier. The entire mound is composed of chimney debris, massive anhydrite- sulphide rock and anhydrite sand. Diffuse venting of clear to gray to black smoker fluids takes place in numerous locations along the base and up the slope of the Solwara 4e mound. The area around the Solwara 4e mound also features hydrothermal activity in the form of extensive fields of diffuse venting, densely populated by crabs and mussel beds, as well as smaller chimney complexes, active and inactive, up the south and southeast facing slopes that bound the Solwara 4e site to the north. The southern slopes of Solwara 4e are covered with talus, mostly massive sulphide (Tivey et al.,2006).
Sixteen grab samples were recovered from Solwara 4e during the RV Melville cruise in 2006. Average assay grades returned from those samples were 9.6 % Cu, 12.6 % Zn, 8.9 ppm Au, and 158.6 ppm Ag. Note that these average grades are from a scientific report and may be based on sulphide samples that were specifically selected for detailed analysis and scientific research on the formation and genesis of sea-floor massive sulphide systems. Therefore, the average grades stated only reflect the average of the samples selected and may not reflect the average value of the SMS deposit.
8.3.6 Solwara 4f
The Solwara 4f chimney field is mostly inactive. It extends about 40 m E-W and comprises numerous structures that are simple, tall pillars with white conical tips. Minor diffuse fluids seep up through oxide stained cracks in the volcanic basement on which the chimneys stand. The sediment cover is generally light (Tivey et al., 2006).
One grab sample was recovered from Solwara 4f during the RV Melville cruise in 2006. The sample returned assay grades of 0.8 % Cu, 62.2 % Zn, 68.5 ppm Au, and 262.0 ppm Ag. Note that these grades are from a scientific report and may be based on a sulphide sample that was specifically selected for detailed analysis and scientific research on the formation and genesis of sea-floor massive sulphide systems. Therefore, the value stated may not reflect the average value of the SMS deposit.
8.4 Solwara 5
Sampling across the Solwara 5 chimney field identified numerous chimneys with high grades of precious and base metals (Table 8-1). The chimneys commonly display a strong weathering rind up to several centimetres thick, and these rinds have much lower base metal concentrations. Chimneys are on average around 0.5 to 1 m high, which are significantly smaller than at Solwara 1. Most of the chimneys are Zn-rich, containing dull grey sphalerite, with a few of the chimneys sampled in the centre of the field, returning very high Cu. In total, 13 samples were taken (White et al., 2008)
8.5 Solwara 6
Sampling across the Solwara 6 chimney field identified numerous samples with high percentages of Cu, Zn and Au. The standing chimneys are thick in diameter (10’s of cm), several metres in height, have a weathered appearance, and are surrounded by similarly sized collapsed chimneys which form considerable rubble piles. A total of nine samples were taken from the Solwara 6 site, and assays reveal either zinc rich or copper rich samples (White et al., 2008).
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8.6 Solwara 7
Solwara 7 is a very active chimney field with a huge variety of different chimney styles, ranging from tall and fragile black smokers to thick tree-trunk like formations. The chimneys occur in clusters of dozens of chimneys which are surrounded by large mounds of collapsed chimney rubble forming mounds several metres high in some places. Eleven samples were taken from the Solwara 7 site and high Au, Cu and Zn grades are reported, although Pb grades are generally lower (White et al., 2008).
8.7 Solwara 8
A total of thirty one samples were taken across the Solwara 8 chimney field, and assay results indicate that Solwara 8 has predominantly zinc-rich chimneys, although Au and Cu grades are also high in particular locations. In some of more heavily sedimented regions around the site, there were small mounds of what appeared to be old oxidized chimneys. However, these could not be sampled due to their friable nature (White et al., 2008).
8.8 Solwara 9
Solwara 9 is on the south-west flank the North Su knoll at approximately 1,680mBSL (Sant et al., 2009). It comprises two zones, Solwara 9a and Solwara 9b approximately 220 m and 180 m long respectively with a width averaging 40 m. Solwara 9a consists of chimneys up to 17 m in height, some with minor black smoking vents; Solwara 9b consists of chimneys up to 10 m tall with rare grey-to-clear venting water. Seventeen chimney samples were collected by Nautilus and returned high precious and base metal grades (Table 8-1). The area surrounding the chimneys contained both sediment cover and blocky volcanic outcrop.
8.9 Solwara 10
Solwara 10 is located on the Manus Spreading Centre about 24 km SW of Solwara 2, at a depth of 2,240mBSL (Sant et al., 2009). It is situated on the flank of a knoll of volcanic with some lobate flows and zones of unconsolidated sedimentary cover. The deposit is approximately 680 m long and averages 110 m wide, and consists of chimneys up to 12 m tall with sulphide mound development of several metres thickness. No active venting has been observed. . Thirteen chimney samples were collected by Nautilus and returned high base metal and elevated precious metal grades (Table 8-1).
8.10 Solwara 11
Solwara 11 consists of 9 separate pods of chimney clusters over an area of approximately 2.8 km x 2 km. Several of the pods comprise metal bearing chimney clusters including sulphide outcrops up to 10 m high protruding from a base of predominantly pillow basalts. These chimneys are generally Zn rich and there is no sulphide mound development. The chimney fields are largely inactive, although some minor hydrothermal venting has been observed. Two of the smaller pods lie on a separate structure over 1km to the west and contain iron-manganese oxides (Puzic, 2008, White et al., 2010).
8.11 Solwara 12
A total of 10 samples were collected from Solwara 12, across the mapped chimney field. The results highlight very high Zn-Cu-Au-Ag-Pb assays. Three of the samples in the middle section of the system are high in Cu and show abundant chalcopyrite-bornite mineralisation. Zn-rich chimneys surround the copper-
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx │91 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report March 2011 rich chimneys, and are comprised mainly of sphalerite mineralisation. Some of the Zn-rich chimneys are also rich in Pb. Both the Cu- and Zn-rich chimneys are highly anomalous in Ag and Au.
8.12 Solwara 13
Seven sulphide chimney samples were taken from Solwara 13. The results highlight very high Zn-Cu-Au-Ag- Pb assays. Three of the samples in the middle section of the system are high in Cu and show abundant chalcopyrite-bornite mineralisation. Zn-rich chimneys also occur in this filed, and are comprised mainly of sphalerite mineralisation. Some of the Zn-rich chimneys are also rich in Pb. Both the Cu- and Zn-rich chimneys are highly anomalous in Ag and Au (White et al., 2010).
8.13 Solwara 14
Fourteen sulphide chimney samples were taken from Solwara 14a and 14b. The Cu and Zn rich chimney samples observed contain sphalerite- and chalcopyrite-rich sulphide mineralisation (White et al., 2010).
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Figure 8-7: Examples of chimney fields sampled at Solwara sites 5 through 8 A & B. Solwara 5 C & D. Solwara 6 E & F. Solwara 7 G & H. Solwara 8
8.14 Solwara 15
No samples were collected from Solwara 15 due to operational problems, and its small size not justifying a return to this site at a later date. The chimneys at Solwara 15 appear to be sulphide rich of similar appearance to Solwara 14 (White et al., 2010).
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8.15 Solwara 16
Six sulphide chimney samples were taken from Solwara 16. Mineralogical observations show them to consist of a matrix of sphalerite (40%) and pyrite (20%) euhedral crystals. Chalcopyrite (1-15%) occurs as either thin bands within sphalerite-pyrite zonations or as rims within minor, thin conduits and vughs. Sulphates were only observed in one sample as infill within minor vughs. Assay results for the six sulphide samples indicate high Zn and Cu. The samples also have anomalous precious metal grades (White et al., 2010).
8.16 Solwara 17
Solwara 17 comprises a zone of oxidized outcropping sulphides, extensive algal mats and hydrothermal oxide coatings. The samples from Solwara 17 returned very low grades for all metals of interest except for Ag (White et al., 2010).
Mineralogical observations highlighted three chimney samples collected from the system are grouped into quartz rich (x1) and sulphate-rich (x2) hydrothermal precipitates. The quartz-rich material consists of very fine saccharoidal, intergrown, quartz crystals. The material is stained with Fe oxides except in a few ‘fresh areas’. In some of the fresh areas fine sulphide growths within the quartz can be seen, probably pyrite (<1% abundance). The sulphate rich material is stained with both iron and manganese oxide coatings. Fresh material generally consists of a pale cream coloured mineral likely barite and/or anhydrite. Pyrite (4-30% abundance) is present as either aggregated masses in once cavities or as thin bands (1-2 mm). All the chimney samples collected from this system contained at least some pyrite but no copper, zinc or lead sulphides were observed.
8.17 Solwara 18
Solwara 18 comprises a zone outcropping sulphide-rich chimneys. Metal grades from the two samples collected at Solwara 18 are anomalous in Zn and Ag (White et al., 2010). Mineralogical observations from these samples indicate the chimneys are sphalerite rich with Fe-Mn oxide crusts and porous internal mineral zonation. Pyrite-silica banding is observed at the outer edges of the chimneys while silica banding is observed within the chimney centres. Major modal percentages include sphalerite (15-30%) and pyrite (15%). No chalcopyrite was visible in either of the samples.
8.18 Solwara 19
Solwara 19 comprises a small cluster (30 m by 50m) of sulphate rich chimneys. Samples show massive sulphate with minor Fe-Mn oxide coatings. Two chimney samples were assayed and both samples returned very low base metal grades, apart from one sample with 1.2 g/t Au (White et al., 2010).
8.19 North Fiji Basin
Three areas of hydrothermal venting and/or black smoker chimneys have been identified: SO99 (comprising the Corner Mound and Yogi Mound prospects), Père Lachaise and White Lady (comprising the White Lady and Mussel Hill prospects).
Hydrothermal venting is active at the White Lady site, where low-salinity fluid at a temperature of up to 290°C has been observed. By contrast, only low-temperature fluids are being vented at Mussel Hill and SO99.
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The SO99 hydrothermal field is reported as being about 500 m wide and 800 m long. It contains numerous black smoker chimneys, some of which are on hydrothermal mounds up to 10m thick.
More than 2,000 kg of chimney fragments were recovered from SO99 by using the TV grab aboard the RV Sonne in 1999. The principal sulphide minerals observed were chalcopyrite, cubanite, bornite, covellite, pyrite, marcasite, sphalerite, wurtzite, greenockite and fahlore. Gangue minerals were anhydrite, barite and quartz.
In 2001 the Japanese Jamstec marine science research cruise drilled 22 holes in the vicinity of the SO99 Field. Of the 22 holes drilled, massive sulphides were reported from eight of them, with thicknesses up to 7 m.
A summary of grab and dredge samples from various mounds and prospects are presented in Table 8-3. Note that the assay grades reported are from scientific reports and may be based on samples that were specifically selected for detailed analysis and scientific research on the formation and genesis of sea-floor massive sulphide systems. In addition, many samples were not assayed for gold, and the grades stated only reflect the grades of those samples selected for analyses, and may not reflect the average value of any SMS deposit.
Table 8-3: Summary of grab and dredge samples from the North Fiji tenements
Number Au Ag Cu Zn Pb Location of (ppm) (ppm) (%) (%) (%) Samples Père Lachaise 4.05 216 17.85 5.85 0.03 30 SO99 Field 3.59 306 0.58 12.83 0.15 28 White Lady Not assayed Not assayed 7.99 4.69 0.04 16 Yogi Mound* 1.14 68.4 0.60 15.13 Not assayed 27 * samples collected by scientific research groups and assayed by Placer Dome in 2005. Data from Hannington et al., (2004)
8.20 Valu Fa Ridge (Southern Lau Basin, Tonga)
Numerous areas of hydrothermal venting and activity have been noted in the Lau Basin, and grab sampling has returned samples with metal grades similar to sampling of similar sites in PNG and Fiji (Table 8-4). As with the PNG and Fiji sampling, the samples reported below are from scientific reports and may be based on samples that were specifically selected for analysis and scientific research on the formation and genesis of sea-floor massive sulphide systems. The samples may not therefore reflect the average of any SMS deposit.
Table 8-4: Summary of grab and dredge samples from the Valu Fa tenements
Number Au Ag Cu Zn Location of (ppm) (ppm) (%) (%) Samples White Church 2.59 83.4 0.41 6.51 44 Northern Valu Fa Ridge Site 2 2.34 86.3 9.53 13.91 12 Northern Valu Fa Ridge Site 3 1.91 88.6 4.42 24.34 7 Vai Lili 3.32 123.6 5.35 26.88 89 Hine Hina 1.43 405.2 1.63 10.96 26 * samples collected by scientific research groups. Data from Hannington et al., (2004)
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Figure 8-8: Location of sampling sites from marine science research cruises in the Lau Basin
8.20.1 Tahi Moana 1
The mineralisation at the two Tahi Moana 1 sub areas is zinc-rich with significant gold and silver content. The average grade of sulphide samples returned from samples is 26 % Zn, 1.3 % Cu, 3.4 g/t Au and 147 g/t Ag.
8.20.2 Tahi Moana 2
The mineralisation at Tahi Moana 2 is sulphide-poor compared to Tahi Moana 1, but some samples returned significant gold and silver content. The average grade of sulphide samples returned from chimneys of the two Tahi Moana 2 sub-areas are 5.4% Zn, 0.2 % Cu, 2.0 g/t Au and 95 g/t Ag.
8.20.3 Tahi Moana 3
No chimney samples could be collected due to the softness of the material.
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8.20.4 Tahi Moana 4
The returned chimney sample showed low base-metal grades but relatively high gold and silver content.
8.20.5 Tahi Moana 5
Assays of material collected from the Tahi Moana 5 sub-areas were highly variable, but averaged 10.0 % Zn, 1.2 % Cu, 15.8 g/t Au and 546 g/t Ag. Lead was also anomalously high in the Tahi Moana 5 areas compared to the other SMS prospects visited during the cruise with an average lead content of 2.1 %.
8.20.6 Tahi Moana 6
Assays of material collected from the Tahi Moana 6 area averaged 27 % Zn, 0.4 % Cu, 7.5 g/t Au and 239 g/t Ag.
8.20.7 White Church
The mineralisation at White Church is zinc-rich with significant gold and silver content. The average grade of sulphide samples returned from chimneys is 19 % Zn, 0.6 % Cu, 3.0 g/t Au and 87 g/t Ag.
8.20.8 NVFR Site 2
The mineralisation at NVFR 2 is zinc-rich with significant gold and silver content. The average grade of sulphide samples returned from chimneys is 24 % zinc, 0.7 % copper, 5.7 g/t gold and 128 g/t silver.
8.20.9 NVFR Site 3
The mineralisation at NVFR 3 is generally sphalerite-rich with significant gold and silver content. The average grade of sulphide samples returned from chimneys of the three NVFR 3 sub-areas are 23 % Zn, 1.8 % Cu, 3.3 g/t Au and 115 g/t Ag.
8.20.10 Mariner
Assays of material collected from the Mariner site averaged 24 % Zn, 3.6 % Cu (strongly influenced by one sample of 10.45 % Cu), 3.8 g/t Au and 80 g/t Ag.
8.20.11 Hine Hina 1
Assays indicate differences in ore geology between the Hine Hina 1a and 1b sites with the 1a site containing higher copper content and the 1b site containing a higher zinc contents. Chimney material collected from Hine Hina 1a averaged 16.9 % Zn, 5.2 % Cu, 4.8 g/t Au and 209 g/t Ag, and from Hine Hina 1b 38 % Zn, 4.1 % Cu, 4.6 g/t Au and 139 g/t Ag.
8.20.12 Tui Malila 1
Assays of material collected from the Tui Malila sub-areas averaged 22 % Zn, 0.9 % Cu, 4.1 g/t Au and 84 g/t Ag.
8.21 NE Lau Basin, Tonga
Hydrothermal venting and activity have been noted in the NE Lau Basin in Tonga, and grab sampling has returned samples with metal grades similar to similar sites in southern Tonga, PNG and Fiji (Table 8-4), Figure 8). The samples reported below are from scientific reports and may be based on samples that were specifically selected for analysis and scientific research on the formation and genesis of sea-floor massive sulphide systems. The samples may not therefore reflect the average of any SMS deposit.
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8.21.1 Maka
The mineralisation at Maka is generally chalcopyrite-rich but with significant gold and high silver content. Three chimney samples were collected from the Maka site and assayed. Material collected from the Maka site averaged 6.0 % Zn, 5.4 % Cu, 4.6 g/t Au and 62 g/t Ag.
8.21.2 Tunu-Sosisi
The mineralisation at Tunu-Sosisi is sulphide-rich (abundant in chalcopyrite and sphalerite) with samples returning significant gold and silver results. Three chimney samples were collected from the Sosisi site and assayed two were collected from the Tunu site and assayed. Material collected from the Sosisi site averaged 12.4 % Zn, 17.0 % Cu, 19.2 g/t Au and 208 g/t Ag. Formal assays of material collected from the Tunu site averaged 1.8 % Zn, 10.3 % Cu, 22.0 g/t Au and 121 g/t Ag.
8.21.3 Pia
The mineralisation at Pia is sulphide-rich, but generally more sphalerite-rich. Samples returned significant gold and silver content. Six chimney samples were collected from the Pia site; averaged 17.6 % zinc, 4.6 % copper, 20.6 g/t gold and 191 g/t silver.
8.21.4 Nuia
The Niua SMS system (Volcano P area), comprises two sub-areas approximately 1.3km apart in crater like depressions. Niua 2 is at a water depth of 900 mBSL with a strike length of 230 m and width of 170 m. Niua 3 is at a water depth of 1,180 mBSL with a strike length of 270 m and width of 250 m.
The mineralisation at Nuia is sulphide-rich (abundant in chalcopyrite and sphalerite) with samples returning significant gold and silver results. Results show site Nuia 3 to be more sphalerite-rich than Nuia 2. Three chimney samples were collected from the Nuia (Nuia 2 and Nuia 3) site and assayed. Assays of material collected from the Nuia site averaged 15.3 % zinc, 8.1 % copper, 13.7 g/t gold and 313 g/t silver.
8.21.5 Tahi Moana 7
One dredge operation was completed over Tahi Moana 7 with basalts and sulphides recovered. Average assay results for 19 samples collected indicate high Zn (27.8%), Au (10.2 g/t) and anomalous Cu (2.5%) and Ag (81 g/t).
8.21.6 FRSC02
One camera tow operation was conducted in the Central Fonualei. It was planned to capture the FRSC02 site and the main plume anomaly detected on the current cruise. This camera tow failed to gain any footage due to a technical failure, but it recovered one piece of sulphide, probably knocked off a sulphide chimney in the area. A 600 g sample of massive sulphide was recovered from the camera frame, Two subsequent short small dredge sampling lines did not return further sulphide samples. The assay results from the single sample shows anomalous Cu (12.6%), and Au (10.8 g/t).
8.21.7 Kings Triple Junction
Previous MSR cruises to the Kings Triple Junction site recovered dredge samples rich in Zn, Cu and Ag (Table 8-5). Note that the assay grades reported are from scientific reports and may be based on samples that were specifically selected for detailed analysis and scientific research on the formation and genesis of sea-floor massive sulphide systems. In addition, samples were not assayed for gold, and the grades stated only reflect the grades of those samples selected for analyses, and may not reflect the average value of any SMS deposit.
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Table 8-5: Summary of grab samples from the NE Lau basin tenements
Number Au Ag Cu Zn Location of (ppm) (ppm) (%) (%) Samples King’s Triple Junction Not reported 17.5 5.59 28.20 78 Compiled from various marine science research cruises. Data from Hannington et al., (2004)
8.22 Solomon Islands
Three areas of hydrothermal venting and precipitates, including minor sulphides, have been identified in the East Solomons. These are the Grover, Stanton and Starfish seamounts. These three sites all fall under competitor’s tenements, however, they suggest the SMS prospectivity of the adjacent areas of the seafloor over which Nautilus Minerals has applied for tenements.
8.23 Vanuatu
Five areas of hydrothermal activity have been identified within Vanuatu’s EEZ by marine scientific research organisations, at a seamount in the Tikopia area, Temakons, Nifonea Ridge, 94SO2, and Oscostar. Currently, Nautilus Minerals holds tenements over seafloor areas in the vicinity of Temakons, Nifonea Ridge and 94SO2, although none of these mineralised locations fall within Nautilus Minerals’ tenement holdings.
Temakons, which was formerly known as 94SO1, is a seamount at the northern end of the Vate Trough, which is the northernmost of the Coriolis Troughs. Seafloor sampling here has recovered hydrothermal sediments, several chimneys, and iron rich hydrothermal rocks, while deep towed camera footage also identified fauna common at hydrothermal vents.
Nifonea Ridge, found on a ridge across the Vate Trough, consists of at least three separate zones of hydrothermal activity within an area measuring 2400m x 600m, with the largest field at around 600 m by 400m. Extensive hydrothermal fauna, spire-like structures (some of which may be sulphide chimneys) and yellow-brown oxide crusts were photographed but dredging recovered only fauna and iron oxyhydroxides.
94SO2 is located at the western end of a ridge separating the Erromango and Futuna troughs, which are the two southernmost of the Coriolis Troughs. Seafloor sampling and camera footage at this site revealed reddish brown sediments, presumed to be of hydrothermal origin, as well as corals and fish.
Oscostar is an active submarine volcano, located approximately 100km south of the southernmost of the Coriolis Troughs. Seafloor sampling here recovered sulfidic scoria breccia and agglomerate, and quenched native sulphur.
8.24 Clarion Clipperton Zone (CCZ)
The block areas covered by the Tonga Offshore Mining application are held by “The Enterprise”, and as such were available to developing nations to apply for. Sampling programs undertaken by previous explorers in the area of the application include German, French, American and Korean teams, and provide the basis of a database held by the ISA, and were used to define the application areas in the Tonga Offshore Mining application.
Sample sites shown have been variously sampled by a combination of grab samplers, box corers, gravity cores and multi-corers. As a result, sample quality, spacing and assay reliability vary greatly from sample to sample, and block to block.
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A plan of the sample locations is presented in Figure 8-9; the sample statistics for the samples inside the Nautilus areas are tabulated in Table 8-6 to Table 8-11; for reference, the samples in the CCZ but outside the Nautilus areas are presented in Table 8-12.
Figure 8-9: Location of sampling sites in the CCZ.
Table 8-6: Summary of historic grab samples Zone A
Abundance Mn (%) Co (%) Ni (%)t Cu (%) (kg/m2) Count 18 18 18 18 18 Minimum 21.46 0.15 0.71 0.46 2.68 Maximum 30.05 0.30 1.47 1.51 17.93 Mean 25.40 0.22 1.14 1.00 10.12 Median 25.50 0.21 1.15 1.02 9.19 Standard Deviation 2.44 0.04 0.24 0.35 5.08 CV 0.10 0.18 0.21 0.35 0.50
Table 8-7: Summary of historic grab samples Zone B
Abundance Mn (%) Co (%) Ni (%)t Cu (%) (kg/m2) Count 88 88 88 88 88 Minimum 10.30 0.02 0.53 0.40 0.03 Maximum 31.20 0.35 1.51 1.40 26.00 Mean 25.40 0.25 1.16 0.94 8.82 Median 26.55 0.25 1.23 1.02 8.09 Standard Deviation 4.19 0.06 0.23 0.26 5.87 CV 0.16 0.22 0.20 0.27 0.67
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Table 8-8: Summary of historic grab samples Zone C
Abundance Mn (%) Co (%) Ni (%)t Cu (%) (kg/m2) Count 78 78 78 78 78 Minimum 22.01 0.14 0.93 0.71 1.35 Maximum 30.90 0.32 1.42 1.44 21.25 Mean 27.91 0.25 1.27 1.15 9.98 Median 28.55 0.25 1.29 1.19 9.17 Standard Deviation 2.13 0.03 0.10 0.15 4.20 CV 0.08 0.13 0.08 0.13 0.42
Table 8-9: Summary of historic grab samples Zone D
Abundance Mn (%) Co (%) Ni (%)t Cu (%) (kg/m2) Count 42 42 42 42 42 Minimum 22.79 0.19 1.09 0.79 0.12 Maximum 30.45 0.30 1.44 1.36 16.37 Mean 28.52 0.22 1.31 1.16 7.68 Median 28.76 0.22 1.32 1.17 7.78 Standard Deviation 1.47 0.02 0.08 0.10 4.09 CV 0.05 0.10 0.06 0.08 0.53
Table 8-10: Historic grab samples Zone E
Abundance Longitude Latitude Water Depth (m) Mn (%) Co (%) Ni (%)t Cu (%) (kg/m2) -124.162 12.8331 4542 26.83 0.16 1.11 1.14 18.18 -123.669 12.8293 4497 24.04 0.21 1.01 0.88 6.73 -124.667 12.8284 4851 25.64 0.18 1.21 1.04 9.24
Table 8-11: Historic grab samples Zone F
Abundance Longitude Latitude Water Depth (m) Mn (%) Co (%) Ni (%)t Cu (%) (kg/m2) -118.33 10.35 4073 32.4 0.17 1.33 1.31 9.3 -118.33 10.35 4073 32.4 0.16 1.27 1.29 13.7
Table 8-12: Summary of historic CCZ grab samples outside Nautilus’ Zones
Abundance Mn (%) Co (%) Ni (%)t Cu (%) (kg/m2) Count 2188 2188 2188 2188 2188 Minimum 4.14 0.05 0.15 0.12 0.01 Maximum 35.62 3.23 1.75 1.62 52.20 Mean 27.47 0.21 1.25 1.04 8.21 Median 28.47 0.21 1.30 1.09 7.10 Standard Deviation 4.06 0.08 0.20 0.24 6.06 CV 0.15 0.40 0.16 0.24 0.74
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9. Exploration
9.1 Exploration Strategy
SMS deposits are formed where rising hot rising hydrothermal fluids mix with cold sea water at seafloor spreading centres, back-arc basins and along submarine volcanic arcs. The Bismarck Sea is a back-arc basin characterised by bimodal volcanics, which are common characteristics of terrestrial VHMS terranes. Nautilus applies the understanding of the formation of VHMS deposits to locate and map outcropping SMS systems in the Bismarck Sea.
Nautilus has a five step exploration strategy prior to development. The steps are:
Project Generation – Identify and secure title over the most prospective areas for SMS mineralisation. Target Generation – Identify and rank sufficient high quality targets to ensure new SMS systems can be discovered at a sufficient rate to provide continual growth options to Nautilus. Target Testing – Discover new SMS systems at a sufficient rate to provide continual growth options to Nautilus. Prospect Delineation – Focus resource evaluation work with mapping, sampling and geophysics. Resource Evaluation – Drilling, resource estimation, metallurgical test work and environmental impact statement.
At each stage of the process from 1 to 5, Nautilus assigns a prospectivity rank to each area to prioritise expenditure.
9.2 Project Generation
Nautilus identifies features prospective for SMS within territorial waters and Economic Exclusive Zones (EEZ) of SW Pacific countries. These areas are under the jurisdiction of national exploration and mining laws, which avoids issues in international waters related to the lack of jurisdiction, lack of internationally ratified mining and exploration laws, and uncertain tenure status.
After identifying a prospective terrane, Nautilus conducts extensive literature and data searches of public- domain scientific reports and databases, to identify historical research cruises that have occurred over the prospective areas. These MSR cruises have largely been funded by international, governmental or scientific bodies, and many have investigated areas prospective for SMS deposits over the last 3 decades. Many features that are associated with the formation of SMS deposits have been identified on historical MSR cruises, including iron-oxide crusts, metalliferous sediments, active hydrothermal vents, vent dispersion plumes in the water column, active volcanic complexes, altered and mineralised rocks, as well as maps of the geology and structure of the seafloor. As part of these studies, samples of mineralised material have been recovered from the seafloor ;( although they are sampled for scientific research purposes, and may not be in themselves representative of the grades of any mineralisation). Notwithstanding this, Nautilus has found these results to be useful indicators of mineralisation, and follow-up dredging, grab sampling and scout drilling by Nautilus generally returns grades that are broadly similar in metal tenor to the grades from the previous scientific programs. Based on the results of this type of research compilation work, Nautilus applies for tenements covering the most prospective areas in territorial waters and associated Economic Exclusion Zones (EEZ).
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9.3 Target Generation
Having secured tenure over prospective tenements, Nautilus generates larger project areas and smaller target areas for further consideration and investigation. SMS deposits are commonly present as raised sulphide mounds on the seafloor, with either fossil or active black smoker chimneys, which may be up to 20+ m in height. Targets are identified – by using regional geophysical and geochemical methods such as:
Sidescan sonar Multibeam bathymetry Magnetics 3D plume mapping (Eh, temperature, conductivity, turbidity) Water chemistry testing
9.4 Target Testing
Possible SMS targets are confirmed or tested by direct inspection using a Remote Operated Vehicle (ROV), and physical sampling of seafloor rocks, which may use:
ROV mapping using by video cameras on a systematic grid or traverse through the target area Grab sampling from the ROV to select samples from the target area Camera tows
9.5 Prospect Delineation
Nautilus uses detailed grid based mapping, sample collection, and ROV-based geophysical surveys such as electromagnetics and magnetics to define the approximate resource boundaries on the seafloor. These are used along with high-resolution bathymetry surveys.
9.6 Resource Evaluation
Nautilus progresses the best prospects to resource status by undertaking systematic resource drilling and sampling, followed by resource estimation. Detailed bathymetry and grid-based geophysics are used to define the resource boundaries, prior to drilling.
9.7 Exploration Potential
Of the 17 SMS systems and two “sulphate systems” identified to date in the Bismarck Sea, only Solwara 1 has been systematically drill tested. In early 2008, a NI43-101 compliant Mineral Resource was estimated for Solwara 1, based on the 2007 drilling program. This drilling program did not drill the entire thickness of the SMS deposit due to drill rig limitations, Therefore further mineralisation potential is present immediately below the current Mineral Resource at many locations. Nautilus has constructed provisional thickness contours of the SMS deposit as shown on Figure 10.2.
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9.8 NOAA Tonga Target Generation Cruise (RV Kilo Moana)
This Marine Science Research cruise KM1008 was organised by the NOAA PMEL Vents Group, aboard the RV Kilo Moana from 28th April to 11th May 2010. The purpose of this research cruise was to complete CTD and camera tow operations over previously known and new areas of interest in the NE Lau Basin for venting and volcanic eruptions. A Nautilus Minerals geologist attended this cruise as an observer as many of the sites of interest lay on Nautilus Minerals tenements.
The main operations undertaken during this cruise include:
Bathymetric seafloor mapping using EM122 multibeam system; Plume hunting – including tow yo operations and vertical CTD casts Camera Tows.
The bathymetric seafloor mapping undertaken during this cruise is shown in Figure 9-1.
Vertical casts and tow-yo plume hunting surveys were completed over several targets including West Mata to check on the eruption activity. A multi-layered plume was located there, with the highest point exceeding last year’s survey by a further 100m. At Mata Ua, a strong plume was located. Tows over Mata Ono and Mata Fitu at the far northern edge of the survey area both produced plumes. Other anomalies in the area were detected indicating this area is hydrothermally and volcanically active.
Figure 9-1: NE Lau Basin showing multibeam survey area Image courtesy of NOAA/PMEL
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Camera Tows were undertaken over several targets that indicate strong hydrothermal and/or volcanic activity. Along the ridge crest of the Mata Tolu feature, a plume was intercepted at ~2200m, and also on the summit. The recovered video confirms diffuse venting and chimney structures, just short of the ridge crest on the south side. One cluster of chimneys was observed (Figure 9-2), that have the appearance of sulphides. However, as no samples were collected the composition was not confirmed.
The NOAA Kilo Moana 2010 MSR cruise to the NE Lau Basin, Tonga was successful in locating hydrothermal or volcanic plumes and indications of mineralisation on Nautilus Minerals’ Tongan tenement, highlighting the SMS prospectivity of this part of the Lau Basin.
Figure 9-2: Chimney cluster at Mata Tolu Image captured by WHOI deep tow camera system
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10. Drilling
10.1 February 2006 Scout Drilling (DP Hunter)
Forty-two diamond drill holes for a total of 380.95m were drilled in February 2006 by a Seacore R100 Marine Drill mounted on the DP Hunter. Several holes were drilled in to each major hydrothermal mound in Solwara 1, at locations chosen for ease of drilling. All drill holes were drilled vertically. Core recovery averaged approximately 41%. The results of the 2006 drilling program were used in the development of a geological model for Solwara 1, but were not used in the 2007 resource estimate (Section 16). A detailed account of the results from this program is provided in Jankowski and Hodkiewicz (2006).
10.2 2007 Mineral Resource and Metallurgical Drilling (MV Wave Mercury)
In 2007, Nautilus completed a 111 hole drilling program from the MV Wave Mercury using ROVs lowered onto the seabed. The following summarises the drilling for 2007 based on documentation by Lipton (2008), and a visit to the Wave Mercury by Bruce Sommerville of SRK.
Drilling was carried out using two custom-built submersible drilling rigs mounted on remote operated vehicles (ROVs) as shown in Figure 10-1. Each rig consisted of a conventional core barrel and drill rod system designed to produce core of 52mm diameter. The core barrels and drill rods were stored on board each drill rig in a carousel. Each rod and core barrel was 2.0 m in length, and the core barrels each had a 1.75m core recovery capability. The configuration of the carousel and rods allowed a maximum drilling depth of about 20m. The drilling operations were managed by Canyon Drilling Inc. (“Canyon). All operations were remotely controlled by Canyon drilling crews onboard the Wave Mercury via an um”bilical cable. A live video link (Figure 10-2) was available to drill crews and geologist on board.
Drillers record the drilling information on a drill record sheet as follows:
Run Number; Barrel Number; The barrel number is engraved onto each barrel (Figure 10-3); Split tube (Y/N); Start and end depths; Any comments, including ground hardness; and Drillers log sheets
The drillers log sheets also include recovery information; however this is independently recorded by the geologists upon removing the core from the core barrels.
Core recovery was variable during the 2007 drilling program but there was a significant improvement in recovery compared to the 2006 drill program. Total core recovery averaged approximately 60% and Lipton (2008) reports that core recovery averaged 73% in the massive sulphide zone. However some holes still returned very poor recoveries of less than 30%.
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Figure 10-1: Submersible drilling rig (ROV T203)
Figure 10-2: Submarine drilling video capture of ROV T203
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Figure 10-3: Numbered Core Barrels
10.3 2008 Scout Drilling (MV NorSky)
10.3.1 Program description
In 2008, the same drilling technology as used in 2007 was used for a scout drilling program. Thirty-one holes for a total of 176.03m were drilled at Solwara 1, Solwara 4 and 8, Solwara 5 and Solwara 10 (Table 10-1; Figure 10-4).
The 2008 drilling program was designed to test a number of relatively weak electromagnetic anomalies or sulphide outcrops identified by ROV dives in 2007 and 2008. Each dive of the drill program was generally designed to complete two short "scout holes", with around 8 to 9 metres of rods available for each hole if ground conditions allowed.
Overall core recovery during 2008 was 41%, which is significantly lower than the recovery in 2007 (approximately 60%). The lower recovery may have resulted from the large number of sites tested, alternating very soft and hard material, and the highly fractured nature of the near surface material. Operator inexperience also contributed to poor recoveries given the short nature of the program relative to 2007, when recovery improved with operator experience. (White et al, 2009,
All holes were logged and sampled in the same manner as in 2007, and samples were analysed at ALS Chemex in Brisbane.
Significant intersections were selected to enclose individual mineralised samples of drill-core with grades greater than 3% Cu, 9% Zn, 3 g/t Au or 100g/t Ag. Zones of core loss bounded by mineralised samples, and interpreted from drilling data to be the result of poor drilling performance (as opposed to a change in material type) is allocated the average grade of the samples above and below the core loss, before length-weighted average grades for the significant interval are calculated separately for Cu, Zn, Au and Ag. If the overall recovery for the interval was less than than 50% the interval is flagged as having low recovery with a warning that the calculated grades may not be representative of the entire interval.
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Table 10-1: Summary of 2008 scout drilling.
Prospect Holes Metres Solwara 1 18 120.57 Solwara 4 and 8 4 18.43 Solwara 5 4 17.77 Solwara 10 5 19.26
Figure 10-4: Solwara 2008 drill program summary.
10.3.2 Solwara 1
Three holes for 24.33 m were at a newly discovered zone 250 m north of the Inferred Resource. Overall recovery was poor for the drillholes, and sampling was limited to the limited intervals of good recovery. All three holes ended in sulphide mineralisation. The drilling also indicates that high-grade mineralisation does exist locally under volcanic rock as well as sediment cover.
Table 10-2: Solwara 1 North Zone 2008 drilling significant intersections.
Hole From To Interval Recovery Cu Pb Zn Au Ag Comments (m) (m) (m) (%) (%) (%) (%) (g/t) (g/t Semi-massive SD148 1.45 2.01 0.56 100% 1.16 1.54 17.00 19.49 380 sulphide Massive sulphide; SD148 5.32 7.00 1.68 40% 8.08 0.10 0.37 4.64 15 end of hole SD149 1.12 2.05 0.93 100% 12.88 0.16 4.36 20.56 121 Massive sulphide Massive sulphide; SD149 3.96 4.08 0.12 100% 11.95 0.04 0.21 3.87 22 end of hole Massive sulphide; SD162 7.12 8.39 1.27 100% 9.07 0.14 2.48 16.84 124 end of hole
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Eight holes for 96.24 m were drilled at Solwara 1 at the margins of the existing Inferred Resource. The thicknesses and grades (Table 10-3) were broadly in line with what was expected from the previous drilling. The two holes without significant intersections (SD157 and SD158) were drilled just outside the resource boundary to test for possible extensions. The resource has not been re-estimated with these new holes.
Table 10-3: Solwara 1 Resource Area 2008 drilling significant intersections.
Hole From To Interval Recovery Cu Pb Zn Au Ag Comments (m) (m) (m) (%) (%) (%) (%) (g/t) (g/t Massive and semi-massive SD151 0.26 9.25 8.99 45% 3.35 0.05 0.07 3.64 19 sulphide; end of hole Massive sulphide and hydrothermally altered clay- rich volcanic; rock end of SD152 1.31 8.48 7.17 85% 13.21 0.07 0.65 11.41 40 hole SD154 1.37 5.24 3.87 54% 10.23 0.06 0.22 7.88 36 Massive sulphide SD155 0.70 1.12 0.42 100% 22.8 0.02 0.07 5.25 45 Massive sulphide SD156 1.05 2.05 1.00 100% 11.45 0.06 0.22 19.81 58 Massive sulphide SD157 No significant Intersections SD158 No significant Intersections Massive sulphide; end of SD161 2.88 3.50 0.62 100% 12.6 0.37 0.8 12.5 34 hole
Five other drill holes (SD 147, 150, 153, 159, and 164) for 27.3m were drilled to test weak EM anomalies near the Inferred Resource, however failed to intersect any sulphide mineralisation or anomalous material.
10.3.3 Solwara 5
Four holes for 17.77 m were drilled at Solwara 5 targeting a small EM anomaly co-incident with a chimney field. All four holes intersected high-grade copper or zinc mineralisation (Table 10-4) both in massive sulphide and in the overlying sediment cover. Three of the four holes ended in mineralisation, which is open both at depth and laterally.
Table 10-4: Solwara 5 2008 drilling significant intersections.
From To Interval Recovery Cu Pb Zn Au Ag Hole (m) (m) (m) (%) (%) (%) (%) (g/t) (g/t Comments Massive sulphide end SD_S5_001 1.22 1.71 0.49 100% 24.3 0.07 0.76 7.14 37 of hole Volcanic breccia with SD_S5_002 1.08 2.95 1.87 100% 20.25 0.08 0.95 7.38 56 sulphide matrix SD_S5_002 8.87 9.02 0.15 100% 7.42 0.02 0.05 1.27 14 end of hole Clay; Lithified clastic SD_S5_003 0.71 2.31 1.60 100% 1.35 0.42 5.9 9.57 120 sediment; end of hole Massive sulphide; fresh and partly SD_S5_004 0.19 3.54 3.35 27% 3.92 0.32 3.76 14.47 157 altered volcanic rock
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10.3.4 Solwara 10
Five holes for 19.26 m were drilled at Solwara 10, where zinc rich chimneys had been observed over a strike length of 680 m. The EM response over the prospect is generally weak and irregular. Four drill holes intersected zinc-rich mineralisation and one hole intersected copper-rich mineralisation. All holes contained elevated gold and silver (Table 10-5).
The Solwara 10 mineralisation is different from the Solwara 1 mineralisation, being dominated by zinc sulphides rather than copper sulphides. Some of the mineralisation drilled occurs in veins and breccias, rather than massive sulphide.
Table 10-5: Solwara 10 2008 drilling significant intersections.
From To Interval Recovery Cu Pb Zn Au Ag Hole (m) (m) (m) (%) (%) (%) (%) (g/t) (g/t Comments Massive and semi- massive sulphide; end SD_S10_001 0.33 1.65 1.32 100% 1.68 0.15 49.81 3.21 209 of hole Massive sulphide; partly altered volcanic SD_S10_002 0.91 2.03 1.12 100% 1.54 0.16 29.2 2.77 166 rock Hydrothermally altered SD_S10_002 3.91 4.21 0.3 100% 4.5 0.02 6.31 0.22 30 clay-rich volcanic rock SD_S10_003 0.3 0.8 0.5 100% 0.31 0.1 29.5 1.4 145 Massive sulphide Volcanic breccia with sulphide matrix; SD_S10_005 0.73 1.22 0.49 100% 0.51 0.1 24 0.35 62 altered volcanic rock
10.3.5 Solwara 4 and 8
Four holes for 18.43 m were drilled in the Solwara 4 and 8 area, where local low-order EM anomalies were defined. Drilling returned mixed results, with highest assay grades of 25.2% Cu, 13.4% Zn and 27.0 g/t Au.
Table 10-6: Solwara 4 and 8 2008 drilling significant intersections.
From To Interval Recovery Cu Pb Zn Au Ag Hole (m) (m) (m) (%) (%) (%) (%) (g/t) (g/t Comments Massive SD_S4_002 0.78 1.25 0.47 100% 25.2 0.11 1.7 5.19 45 sulphide Massive SD_S4_003 2.14 4.1 1.96 33% 5.2 0.18 10.07 15.93 121 sulphide
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10.4 2010-2011 Mineral Resource Drilling (REM Etive)
Nautilus commenced a drilling program at Solwara 1 in November 2010, aboard TS Marine’s REM Etive. This program used the new ROVdrill 3 system developed by Seafloor Geoservices (Figure 10-5). The ROVdrill 3 unit has been designed using experience gained from previous Nautilus drilling programs, and has several significant technological improvements. Amongst these is a new style wire line 400F coring system unique to seafloor drilling.
Key technical features include:
1. Working depth rating to 2000m 2. Wire line rotary, push sampling and CPT 3. Coring depth rating 80m 4. Inner tube capacity of 40 tubes, each 2.38m long 5. Larger diameter (70 mm) core; 6. Rods 100mm outside diameter by 3m long 7. Casing 125mm outside diameter by 3m long 8. Drill casing system to 40 m depth 9. Ability to drill multiple holes on a single dive 10. Landing systems of Suction Caisson and four leg jack up that has >30 ° slope landing capability 11. Real time drill parameter data feedback 12. A “look-up camera” that allows geologists to view drill core on the rig within the inner-tubes 13. Mud injection system 14. Removable tool tray for quicker on deck turnaround
These improvements are intended to provide better core recovery, more representative samples and more efficient drilling operations.
The objectives of the 2010-2011 drilling program are to:
1. Increase the quantum of inferred and indicated resource estimates at Solwara 1; 2. Increase the confidence classification of the resource; 3. Obtain additional geotechnical data for mine plan development at Solwara 1; 4. Acquire representative samples for metallurgical test work to optimise ore processing;
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Figure 10-5: ROVdrill 3 drilling rig being launched from the REM Etive.
A total of 24 holes (SD165 to SD188) were completed at 17 planned sites for a total of 451.86 metres at Solwara 1, between 11th November and 31st December 2010 (Figure 10-6). An overall recovery of 48.6% was achieved.
Figure 10-6: Drill location map Solwara 1 November-December 2010.
Drilling and geophysical data from Solwara 1 suggest that the sulphide mineralisation occurs as chimney- mounds with associated underlying sub-horizontal sulphide lenses. Conceptual models of the mineral system suggest the presence of sub-vertical feeder zones under the mounds and lenses. The majority of sulphide mineralisation intersected is massive nature and only minor indications of copper mineralisation in vertical structures has been identified during core logging; it was expected that most intersects of
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Most holes were cased to a minimum of two lengths to preserve surface integrity of the collar. Holes were cased further as required to prevent caving, return loss and any other down holes problems that might cause the hole to be abandoned.
Varying ground conditions required different parameters of rotation, water flow, bit weight and torque. These are controlled by the driller and monitored by Nautilus during the drilling. Four main types of lithology were identified that required a specific drilling strategy to be applied whilst drilling:
1. Upper zones unconsolidated sediment, 0-4m maximum 2. Upper zones of competent massive sulphides 1 to >20 m 3. Clay Rich Rock – usually beneath sulphides – generally 5 to >20 m 4. Fresh to Altered Volcanic Rocks - 0 to >35m Drillhole positions were measured by an USBL (ultra-short base line) acoustic survey during drilling. The survey combined the offset of a beacon attached to the drill rig with the position recorded by the surface vessel’s differential GPS system. In general, the survey accuracy in the horizontal plane is approximately 2- 5 m. The reported survey location in the vertical plane is recorded into Nautilus’ acQuire database but for reporting purposes all collars are draped vertically onto the project’s bathymetric model.
All holes were drilled from a vertical position (as measured by the pitch and roll of the drill rig) with no downhole orientation surveys taken. All holes were logged and sampled. Samples for geochemical analysis were submitted to SGS Australia Pty Ltd.
The significant intersections received from drillholes completed before 31 December 2010 are tabulated in Table 10-7. A further 10 drillholes will be completed in 2011.
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Table 10-7: Solwara 1 2010 drilling significant intersections.
From To Length Recovery Au Ag Cu Zn Comment Hole (m) (m) (m) (%) (g/t) (g/t) (%) (%)
SD165 1.72 1.98 0.26 100 18.5 103.0 0.3 10.5 SD166 1.72 2.94 1.22 100 16.7 37.4 21.2 0.3
SD167 2.02 21.22 19.2 13 4.3 30.5 8.6 0.7
SD169 2.08 13.57 11.49 49 2.8 9.2 5 0.1 SD171 1.93 10.45 8.52 63 4.2 13.2 4.1 0.1 Interval is open to depth.
SD172 1.98 10.2 8.22 25 9.2 24.3 12.6 0.1
SD174 0.8 3.57 2.77 32 4.8 23.6 12.2 0.2 Interval is dominated by core loss. SD175 2.44 4.53 2.09 100 6.8 26.4 5.9 0.1
1.14 11.19 10.05 87 3.5 14.9 3.8 0.1
SD176 11.21 18.24 7.03 80 1.5 1.7 0.6 0.0 Open at depth. 1.06 8.55 7.49 67 2.9 13.0 4.6 0.4 Intervals separated by core loss.
SD177 12.25 20.1 7.85 70 3.4 7.3 10.2 0.0
1.38 2.16 0.78 100 9.6 76.1 9.7 0.9 Intervals separated by core loss.
4.76 5.2 0.44 100 4.1 8.0 9.5 0.6
SD178 7.05 9.72 2.67 71 4.3 26.8 11.5 3.3
2.08 3.99 1.91 85 11.0 64.0 19.8 1.1 Intervals separated by core loss.
6.11 6.46 0.35 100 21.6 34.0 6.3 0.7
8.3 8.77 0.47 100 4.1 8.0 24.3 0.1
10.58 16.06 5.48 62 6.5 3.0 14.9 0.0 17.4 17.99 0.59 100 0.8 1.0 1.4 0.0
SD179 18.92 19.17 0.25 100 2.5 1.0 5.4 0.0
Interval separated by core loss; individual 0.72 8.35 7.63 51 5.3 8.6 8.9 0.3 intervals contain significant core loss.
SD180 14.75 16.25 1.5 51 1.9 1.0 10.0 0.0 SD181
SD182 1.28 4.38 3.1 71 4.3 43.4 6.9 0.1
Intervals separated by low-grade and barren 0.25 1.64 1.39 71 3.8 71.6 9.1 2.1 alteration.
SD183 8.94 9.83 0.89 100 0.3 1.0 4.9 0.1
SD184 0.35 4.44 4.09 89 5.0 38.6 10.7 1.1 Interval is open to depth.
SD185 0.5 1.13 0.63 100 5.5 7.0 7.5 0.5 Interval is open to depth. 0.45 9.39 8.94 99 2.0 7.1 3.2 1.2
9.39 23.75 14.36 84 1.5 1.6 0.7 0.5 High-angle vein ~65deg to core axis - not true SD186 24.64 29 4.36 60 1.9 1.0 7.9 0.0 width.
SD187 0.84 5.05 4.21 43 4.5 20.5 9.2 2.0 Open at depth.
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11. Sampling Method and Approach
11.1 2005, 2006 and 2007 Grab Sampling
Detailed descriptions of dredging (March 2005; MV Genesis) and grab sampling (March 2006; DP Hunter, July 2006; RV Melville) campaigns, are presented in Jankowski and Hodkiewicz (2006). The same procedures were followed during the 2007 exploration program on the RV Wave Mercury (White et al., 2007).
11.2 2007 and 2008 Mineral Resource and Metallurgical Drilling (MV Wave Mercury and MV NorSky)
The core sampling and logging procedures used during the 2007 resource and metallurgical sampling program are described in Lipton (2008). The 2007 drilling program was designed to test the inferred location of the deposit initially on a 50m by 50m grid, with subsequent infill to a 25m by 25m grid. The rugged terrain, particularly near the chimney mounds, prevented the location of the drill holes on a regular grid. However, over much of the deposit a final drill hole spacing of approximately 30m was achieved. A list of the drillhole samples from the 2007 drilling program, used for the mineral resource estimate, is presented in Appendix A of Lipton (2008).
Core handling and logging used the following procedures:
Each core is barrel is removed from the carousel and put into barrel racks. Barrels are opened in the order that is recorded on the geologist log sheet. The geologists and the driller confirm that the correct barrel is being opened. After the core is removed from the barrel, the core is photographed, before being handled any further. At this stage, the core is measured and recoveries on the drillers log sheet are recorded by the geologists. Core is placed in core trays, by geologists. Core trays have been numbered and checked by the senior geologist before core transfer takes place. At this stage, the geologists add the core blocks and a measured length of foam is to the core tray to signify core loss. For the first barrel, the core loss marker was placed at the start of the hole. For subsequent samples, the loss maker was placed at the end of the core run. Core barrels and equipment are cleaned by the drillers as the geologist measure and handle the recovered core. It was clear that the process of putting core into the core trays was carried out with great care and diligence by the geologists and the drill crew. Appropriate procedures have been followed. Geologists mark the core to define the different geological and ore type intervals (Figure 18-1). These geological boundaries are then used as sample boundaries. In the case of geological units longer than 1.3m, several samples were taken within the same geological interval. Sample numbers and sampling breaks are clearly marked by geologist. Holes are analysed using a hand held Niton XRF. Each sample interval is measured at least 10 times to provide a realistic average grade. XRF data is not added to the acQuire database, but is stored in Excel spreadsheets. Data are entered into the acQuire database on a lap top computer. The database provides data entry validation in terms of the logging code used. Other data entry validation measures includes unique sample ID’s and no over lapping intervals. No sample (NS) log codes are used for lost core.
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Core is photographed by the geologists before sampling. An example from hole SD 122 is shown in (Figure 11-2). Drill logs are reviewed and approved by a senior geologist.
Sub-sampling of core for chemical assay was not observed. Inspection of the core stored on board clearly shows that sub-sampling is via half core. When taken, the duplicate comprises of the remaining half core. Foam markers are added to the core tray to mark the half core position, (Figure 11-3). Other features of the drilling, for example lost core and cave in material, are also clearly marked.
Figure 11.1: Drill core mark up (hole SD 130) before sampling
Figure 11-2: Core photos for hole SD 112 before (left) and after sample mark up (right) Source: Photos from Nautilus Minerals Inc.
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Figure 11-3: Drill storage after sampling (Hole SD068) showing half core duplicate
11.3 2007 Drillhole Logging Procedures
Lipton (2008) details the logging procedures used during the 2007 sampling program. This section, together with Section 13 of this report, summarises these procedures.
Geologists identify each unique geological interval within the core and details of the lithological types and mineralogy are entered into acQuireTM via a data entry screen on a tablet PC. The system allows for validation of logging intervals and codes at the time of logging to ensure consistency between geologists.
11.4 2010 Drillhole Logging Procedures
Once the drill rig was recovered to the deck of the REM Etive at the end of each deployment, core was extracted from the inner-tube splits under the direct observation of Nautilus’ staff before a formal hand-over of the drill core to Nautilus. All logging procedures used during the project are documented as formal work instructions and all data entry is made via customised data entry forms into an acQuire™ database. Geological logging took place according to the following workflow:
Core photography in the splits Core recovery measurement Transfer of core into core trays Review core recovery and identify zones of core loss Place down-hole depth marks onto core trays Photograph core in the core trays Analysis by handheld XRF at points every 10cm down-hole distance along the core Lithological, mineralogical and geotechnical logging
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Material extracted for geotechnical strength testing, moisture and density measurements (returned before samples submitted to SGS)
Logging codes are presented in Figure 11-4. A handheld XRF Analyser (NITON XL3t 900s GOLDD) was used to obtain indications of the grade of drill core. An XRF reading is also taken on the pulp residues returned from the SGS preparation laboratory for each submitted sample. A suite of reference material, including commercially certified reference materials (CRMs) are used to regularly test the calibration of the XRF analyser.
Mud‐silt‐sand‐gravel SS Unconsolidated to weakly consolidated sediments. Grain‐size, 'cohesive muds' and sulphide
clasts to be noted during detailed logging. Cemented sediment SC Any sedimentary material that has been cemented by fine‐grained/cryptocrystalline sulphide units or sulphate minerals and/or amorphous opaline silica. May contain filled or open worm Sediment burrows and gastropod shell‐fragments replaced by sulphides. Sparry precipitate PT Precipitate of sulphate crystals, often with bladed barite, found within or at the base of the sediment units. Crystal size is generally larger than within the cemented sediments with bladed barite visible to the naked‐eye and fractured surfaces on the rock having a "sparry" appearance. Does not contain any sedimentary features or relict clasts. Chimney Facies CF Similar appearance to the internal texture seen in surface chimney samples. Zoning of sulphides around open conduits is a key diagnostic feature. Any other indication of open channel‐ways (including open vugs with visible coatings of euhedral sulphides) also suggests chimney building processes at work. Chimney structures can be identified from the detailed bathymetry, and drill holes proximal to these are likely to intersect Chimney Facies under any cover sediments. Chimney Facies are usually found at the top of sulphide dominated mineralisation but their root‐zone of feeder channel‐ways may extend to depth in drill core.
units Sulphide dominant rock RI Sulphide dominated. Total sulphide percent is greater than the
Material that has no sum of anhydrite+clay. Sulphides are dominated by pyrite; relict texture indicating sulphates are dominated by anhydrite but may include barite. a sediment or volcanic Generally found in a ‘footwall’ position below the main ore zone parent. No obvious open, but may also occur lateral to the root‐zone of Chimneys.
Hydrothermal Sulphate dominant rock RAor previously open, Sulphate dominated. Total sulphate percent is greater than the sum channel‐ways showing of sulphides+clay. Sulphates are dominated by anhydrite but may zoned mineral‐ include barite.; sulphides are dominated by pyrite but may include precipitation (as seen in chalcopyrite. Generally found in a ‘footwall’ position below the the Chimney Facies), but main ore zone ybut ma also occur lateral to the root‐zone of may contain sealed Chimneys. Clay dominant rock RC veins (commonly of Clay dominated. Total clay percent is greater than the sum of anhydrite). Formed from sulphides+sulphates. Sulphates are dominated by anhydrite but replacement and vein may include barite; sulphides are dominated by pyrite but may infill of an unknown include chalcopyrite. Generally found in a ‘footwall’ position precursor lithology. below the emain or zone but may also occur lateral to the root‐ zone of Chimneys.
Volcaniclastic breccia VB Matrix‐poor volcaniclastic breccia with close‐packed clasts of the coherent volcanic material. May be altered but retains textural evidence of a volcanic precursor lithology.
units Coherent volcanic VC Dark, glassy or cryptocrystalline, often feldspar phyric and vesicular. May be altered but Volcanic retains textural evidence of a volcanic precursor lithology. Core loss xL Void xV Natural void interpreted from drillers data/comments and supported by evidence in core. Figure 11-4: 2010 Logging codes .
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11.5 2008 Solwara and Exploration Grab Sampling (MV NorSky)
ROV grab sampling is intended to collect a set of mineralised chimney samples to characterise the tenor of the chimney fields; it is not possible to sample any underlying mineralisation in the sulphidic mounds without drilling equipment.
The samples are taken using hydraulic-operated arms on the ROV. These arms are capable of picking up and manipulating loose objects, as well as grasping and breaking off parts of standing chimneys. The samples are placed either in the Geobox’ or the chimney cage. The Geobox comprises nine numbered compartments, each approximately 25cm by 25cm by 30cm, mounted on a slide out platform on the front of the ROV (Figure 11-5; Figure 11-6). The chimney cage (Figure 11-7) contains eight plastic garbage bins, is lowered on a separate line to the ROV and can hold larger samples than the Geobox, up to 250kg each.
Sample locations are chosen by the geologist supervising the ROV dive. Mineralised samples may be taken either from standing chimneys or chimney debris; samples of non-mineralised volcanic rock are also taken to improve geological understanding of the target area. Sample numbers area assigned at the time of sampling from a pre-printed set of sample number tags. Sample numbers and descriptions are loaded directly into Nautilus’ acQuire database during sampling.
Figure 11-5: ‘Geobox’ used to hold samples on the front of the ROV
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Figure 11-6: Chimney sample 20060 (Tahi Moana 1) being loaded into the ‘Geobox’
Figure 11-7: Chimney sample cage
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11.6 2008 Teck Exploration Grab Sampling (MV DeaSurveyor)
MV DeaSurveyor was equipped with a Phoenix Remora 6000 series 25hp work class ROV, equipped with equipped with forward looking sonar, low‐light video, and dual 6 function manipulators. Two high resolution cameras, one digital video, and one14‐208 digital and high powered HMI lights were fitted.
All of video footage from the ROV operations on the seafloor were captured onto hard drive; corresponding geological logging was also recorded by the VirtualSoft system and exported to a GIS format. Sampling philosophy was similar to that used in the Nautilus programs.
11.7 2009 Solwara and Exploration Grab Sampling (MV Fugro Solstice)
ROV grab sampling procedures for the 2009 MV Fugro Solstice campaign were similar to the 2008 MV NorSky program (Section 11.5).
11.8 2009 Water Sampling
A rosette containing twelve 5L Niskin bottles for collecting water samples was mounted on the frame of the tow-yo carousel or sled (Figure 11-8). Observers on the vessel triggered the bottles remotely, either to capture samples within plume anomalies or to define background grades for a region. Processing of water samples included some or all of the following:
Small water samples were sealed in copper tubes for subsequent helium analysis at NOAA pH measurements were completed onboard Water was filtered to collect particulates for geochemical analysis at ALS Chemex in Brisbane.
On recovery of the CTD sled, the water bottles were sub-sampled for 3He, pH, particulate matter (all potentially indicators of hydrothermal activity). For 3He, samples were drawn into 60cm sections of 1.6cm diameter Cu tubing from which all air had been flushed. The tubes were cold-weld sealed into two 25cm sub-sections and stored for shipment to the NOAA He Laboratory in Newport, OR, USA where helium isotopes and abundances are measured using a 21-cm-radius mass ratioing mass spectrometer with a 1σ precision of 0.2% for 3He/4He ratios and an accuracy of 1% for the absolute He concentration. pH samples were drawn into 60 mL plastic bottles, being careful to displace all air bubbles and overflowing at least three bottle volumes before sealing with fluid-displacing screw caps. Buffers and samples were allowed to come to thermal equilibrium in a bucket of water (~40 minutes) before being measured with a combination pH electrode and temperature thermister for quantification. Replicate precision was ±0.005 pH units and the detection limit for anomalies in pH was -0.01 to – 0.02 pH units.
After sub-sampling for He and pH, selected water samples were filtered for particulate matter on 47 mm diameter, 0.4 μm pore diameter polycarbonate membranes using vacuum filtration. In order to filter about 7 L of plume water (a target volume established by historical determinations) duplicate water samples were tripped at all depths intended for filtration. The particulate samples were rinsed with purified water adjusted to pH ~ 7.5 to remove residual sea salt, then stored in plastic petri-slides for transport to the ALS Laboratory Group in Brisbane for quantification by digestion-ICP/AES.
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Figure 11-8: CTD sled with water bottles mounted inside the main frame.
11.9 Historic CCZ Sampling
Five data sets of polymetallic nodule abundance and metal content have been collated by the ISA, covering the area 110° to 160° W Longitude and 0° to 20° North Latitude (Figure 11-9). The sources of the data are:
1. All publicly available data in the International Seabed Authority’s Central Data Repository (CDR); 2. A proprietary database used with the permission of the Lockheed‐Martin Corporation 3. Data sets provided by the Government of the Republic of Korea; 4. Data sets provided by the China Ocean Mineral Resources Research and Development Association 5. Data sets provided by The Interoceanmetal Joint Organization.
Virtually all the samples were obtained by free‐fall grab samplers, although a few results from box core recoveries are also included. Abundance (weight of nodules per unit area on the seafloor, (usually with units kg/m2) is estimated simply by dividing the weight of recovered nodules by the surface area covered by the open jaws of the sampler (~0.25 ‐0.5 m2 coverage). Free‐fall grab samplers are the best tools available for the assessment of nodule abundance, but they consistently underestimate the actual abundance (Hennigar, Dick and Foell,1986).
Metal content in the samples collected was determined by a variety of methods, including atomic absorption and X‐ray fluorescence. No specific information is available on sample preparation methods; the various consortia reportedly used polymetallic nodule Certified Reference materials that were used for QA/QC, however the results of these are not recorded.
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Figure 11-9: CCZ historic grab sample locations. =
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12. Sample Preparation, Analyses and Security
12.1 Sample Retrieval
Samples are brought to the surface in the Geobox or chimney cage. When on deck, each individual sample is put into pre-numbered sample bags, and transferred to a refrigerated container (reefer). Samples are stored in the reefer until sampled.
12.2 Sample Preparation
Samples stored in the reefer are brought out to be processed one at a time on the deck. All samples are photographed and weighed. A pneumatic hammer is used to take a sample of approximately 6kg from the base of each chimney sample, taking a slice across the complete cross-section. If a duplicate sample is to be taken (1 in 10 samples), this is taken as a slice of the complete cross-section across the chimney next to the original sample.
12.3 Handheld XRF
12.3.1 Introduction
A Niton XLT592 handheld XRF unit is used onboard to analyse samples. These analyses are only suitable as a general indication of the tenor of base metal mineralisation and are not suitable for use in resource estimation, because:
The instrument only measure grades from the surface and near-surface part of a specimen; The specimen has not been crushed or pulverised to create a representative subsample; and Readings are not corrected for matrix effects
Nevertheless, despite these limitations the XRF tool does produce readings that are sufficiently accurate for identification of mineralisation and management of the exploration program.
12.3.2 Procedures
Ten readings by the XRF unit are taken on each sub-sample of collected chimney material (Table 12-1). The sample number, prospect name and operator details are entered into the XRF unit, and then downloaded along with the readings to Nautilus’ acQuire database system.
During 2009, a range of standard materials provided by the manufacturer of the XRF unit were measured during each batch of work.
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Figure 12-1: Niton handheld XRF measuring cut face of chimney sample
Table 12-1: Niton handheld XRF elements and detection limits
Element Detection Limit Cu 1% Pb 1% Zn 1% Fe 4%
12.4 Sample Preparation
12.4.1 Dredging - March 2005 (MV Genesis)
Dredging runs recovered samples ranging from less than 1kg to over 250kg, most of which was mud and grit. From each dredge run, all fragments greater than approximately 25mm was collected and cut by diamond saw to produce a composite sample, or samples, for analysis, with the remainder retained as a reference or to be used for later metallurgical test work. For the smaller pieces, approximately half was included in the composite; larger pieces were quartered. Only dredging runs where sulphides from the SMS deposits had been recovered were sampled.
The samples were bagged into individual numbered calico bags lined with plastic bags, which were packed in plastic polyweave sacks and plastic drums for transport by commercial freight forwarders to the commercial assay laboratory. Small amounts of the remaining sample (generally no more than 100g) were taken for scientific research purposes by the independent researchers on the cruises. The remainder was bagged in the same way as the dispatched assay samples and stored by Nautilus in a storage facility in Brisbane, Australia.
The sample preparation flowsheet is:
Samples are received
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Samples are sorted, received weights are captured, samples are placed on drying racks and put in oven. Sample numbers and analysis required are entered into the system generating barcode labels and worksheets. After drying, samples are coarse crushed then fine crushed. A quartz flush is also crushed between each sample and retained. Samples over 3.4kg are split, the coarse residue is stored in a plastic bag, the analytical split is placed in an alfoil tray. Samples are pulverized in sequence and the retained quartz flush is also pulverized between each sample.
12.4.2 Grab Sampling - March 2006 (DP Hunter), July 2006 (RV Melville)
The grab sampling returned to the surface irregular sample sizes, ranging from 2kg to 250kg. These grab samples were sub-sampled by cutting a slice of about 1kg to 6kg through the rock, generally perpendicular to the long axis of the chimney to adequately represent the zonation of the chimneys, which tend to be Cu-rich in the core and Zn-rich on the outside.
The submitted samples were bagged into individual numbered calico bags lined with plastic bags, which were packed in plastic polyweave sacks for transport by commercial freight forwarders to the commercial assay laboratory. Small amounts of the remaining sample (generally no more than 100g) were taken for scientific research purposes by the independent researchers on the cruises. The remainder was bagged in the same way as the dispatched assay samples and stored by Nautilus in a storage facility in Brisbane, Australia.
12.5 Grab Sampling - 2007 (MV Wave Mercury)
Sample preparation for the grab samples collected during the 2007 program followed that of the 2006 campaig. In 2007, the chimney samples were sliced radially with a power saw, to obtain a sample approximately 3cm thick through the full width of the chimney.
12.6 Grab Sampling - 2008 (MV NorSky)
After a study on sample variability from chimneys collected in 2007 (Pitard 2007) sub-samples from chimney samples collected in 2008 were taken from the base of the returned chimney by jack-hammer or geologist’s hammer. Sub-samples for analysis were packed in heavy-duty plastic bags together with a pre-printed, plasticised sample-number tag.
Duplicate samples were inserted at a rate of 1 per 10 primary samples by taking an additional sub-sample from the original grab sample.
Blank samples were inserted at a rate of 1 per 10 primary samples. Builder’s sand sourced from Brisbane, Australia, was used as the blank material.
Commercial certified reference material (CRMs) were inserted at a rate of 1 per 10 primary samples. CRMs were selected arbitrarily from a range of material supplied by Geostats or OREAS.
12.7 Grab Sampling - 2009 (MV Fugro Solstice)
Sample preparation for the grab samples collected during the 2009 program followed that of the 2008 campaig. Duplicate samples were inserted at a rate of 1 per 15 primary samples by taking an additional sub- sample from the original grab sample.
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One low-grade base-metal certified reference material (CRM) and one low-grade gold CRM were inserted at a rate of 1 per 15 primary samples to act as quantified blanks within the sample sequence. Both low-grade CRMs were supplied by Geostats; the low-grade base metal CRM was GBM998-5 and the low-grade gold CRM was GLG907-1. The Low-grade material was produced from a barren basaltic rock.
One base-metal CRM and one gold CRM were inserted at a rate of 1 per 15 primary samples. Available CRMs were selected to cover a low to high grade material produced from sulphide ore-types. CRMs were selected arbitrarily from a range of material supplied by Geostats.
12.8 2007 Mineral Resource and Metallurgical Drilling (MV Wave Mercury)
Geochemical sampling of drill core was carried out by Nautilus personnel after the on-board geotechnical testwork had been completed and the geotechnical test residues returned to the core trays. The drill core was cut longitudinally in half with a diamond saw, unless the core was very soft in which case a chisel or knife was used.
Each sample was placed in a labelled plastic sample bag and a sample ticket was stapled to the bag for reference. For odd numbered holes the right hand half of the core (looking up the core tray) was sampled, for even numbered holes the left hand half of the core was sampled.
Duplicate core samples were collected at a rate of 1 for every 10 regular samples. The duplicate sample interval was replaced in the core tray with a rectangular bar of polystyrene foam cut to the length of the duplicate sample and marked with the word “Duplicate” and the duplicate sample number.
Each sample was packed into labelled green plastic bags and vacuum sealed. Samples are stored in refrigerated shipping containers. Core is added to the refrigerated units immediately after the handling of core into the core trays. Samples are only removed from the refrigerated units for logging and geotechnical tests.
Core and chimney samples from the 2007 program were analysed by ALS Laboratory Group in laboratories in Brisbane and Townsville. The laboratories are NATA certified. The samples were dried and crushed to 70% passing 2 mm in a jaw crusher. A rotary splitter was used to split 1kg which was then pulverised in a ring mill to better than 85% passing 75μm.
12.9 Sample Analysis
12.9.1 2006 Programs
Samples from the March 2006 dredge programme, the February 2006 grab sampling and scout drilling program, and the July 2006 grab sampling program were assayed by ALS Chemex in Brisbane, Australia. Other assay results have been collated from numerous sources, in the most part scientific papers and no information on analytical methods or laboratories is available.
A suite of 32 elements was analysed by ALS Chemex in Brisbane, Australia. This facility has ISO 9001:2000 registration and is accredited by NATA (National Australian Testing Association). Atomic Absorption Spectrometry (AAS) was used for Au; Inductively Coupled Plasma-Mass Spectrometry (ICP-MS) was used for Te; Inductively Coupled Plasma-Atomic Emission Spectrometry (ICP-AES) was used for all other elements (Table 12-2).
12.9.2 2007 to 2009 Programs
Samples from the 2007 to 2009 programs were assayed by ALS Chemex in Brisbane and Townsville. Cu, Ag, Pb and Zn were measured by ore-grade analysis using inductively coupled plasma atomic emission spectrophotometry (ICPAES) following an aqua regia digest. A number of stabilising compounds are used in
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx │128 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report March 2011 the digestion to keep Cu, Zn, Pb and Ag in solution at high concentrations. Au was assayed by fire assay using a 30g charge and an AAS finish. Due to the high sulphide content, the fire assay charges were reduced for many samples. Al, As, Be, Bi, Ca, Cd, Co, Cr, Fe, K, Mg, Mn, Mo, Na, Ni, P, S, Sb, Sr, Ti, V, W, Hg, Se, Te and Li were analysed by ICPAES after a four acid digest; Ba was analysed by XRF.
ALS uses an extensive set of quality control procedures, including the use of blanks, duplicates and certified reference materials to monitor the quality of the sample preparation and analyses, and protocols for reanalysis of batches if results are unsatisfactory. Nautilus carried out its own quality control procedures, including the insertion of duplicates, blanks, certified reference materials (CRM) and matrix-matched secondary reference material.
Table 12-2: Assayed elements, detection limits and analytical methods ALS Chemex
Element Detection Limit Units Method Au 0.01 ppm AAS Ag 1 ppm ICP-AES Cu 0.01 % ICP-AES Pb 0.01 % ICP-AES Zn 0.01 % ICP-AES Al 0.01 % ICP-AES As 2 ppm ICP-AES Ba 10 ppm ICP-AES Be 0.5 ppm ICP-AES Bi 2 ppm ICP-AES Ca 0.01 % ICP-AES Cd 0.5 ppm ICP-AES Co 1 ppm ICP-AES Cr 1 ppm ICP-AES Fe 0.01 % ICP-AES Ga 10 ICP-AES Hg 1 ppm ICP-AES K 0.01 % ICP-AES Mg 0.01 % ICP-AES Mn 5 ppm ICP-AES Mo 1 ppm ICP-AES Na 0.01 % ICP-AES Ni 1 ppm ICP-AES P 10 ppm ICP-AES S 0.01 % ICP-AES Sb 2 ppm ICP-AES Se ppm ICP-AES Si 0.01 % ICP-AES Sr 1 ppm ICP-AES Te 0/01 ppm ICP-MS Ti 0.01 % ICP-AES V 1 ppm ICP-AES W 10 ppm ICP-AES
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12.10 Metal analysis of particulate matter filtered from Niskin water samples
Water samples of between 2-10 litres were filtered through a filter pad which collected very fine particulate matter that was floating in the water column anomaly detected by the real time sensors on the CTD unit. This filter pad is sent to ALS Chemex Environmental Laboratory in Brisbane for analysis. The filter pad and particulate matter are dissolved together in aqua regia and analysed through solution on a ICP-MS. A suite of 26 elements commonly associated with SMS systems assayed.
12.11 Bulk density
Measurements of dry bulk density were determined on samples of drill core and chimneys, as described in detail by Lipton (2008). Bulk densities were assigned to each geological unit as described in Table 12-3. Lipton (2008) reports that three density measures were used including water Archimedean, Water Displacement and calliper methods from the drill core. Lipton (2008) has compared various methods of density measurements to confirm the suitability of the methods used.
Table 12-3: Dry bulk density grades assigned to stratigraphic domains
Zone Domain code Dry bulk density (t/m3) UCS 200 1.2 LS 300 2.4 MS 400 3.0 Basement (altered volcanics) 500 2.2 Chimney 600 2.2 Source: Lipton (2008)
12.12 Sample Security
Security tags were applied to all shipping containers (plastic drums or polyweave sacks). Holes were drilled through the lids and sides of each drum at two diametrically opposite points. Security tags were then applied so that lids could not be opened without the removal of the tags. For the polyweave sacks, the security tags were used to close the neck of the sack. Upon receipt at ALS Chemex Laboratories in Brisbane, all original signed security tags were found to be in place and there was no evidence that the samples had been tampered with. Security tags were removed; samples were inspected and prepared for quarantine heat treatment on site at ALS Chemex. Following quarantine, samples were further processed onsite at ALS Chemex under standard laboratory security procedures.
Since the 2007 program, samples for dispatch have been placed into individually numbered plastic boxes with lids attached by tape and cable-tiles, including two cable-ties with unique embossed security numbers. The sample boxes and secure ID tags were numbered and photographed prior to handover to agent or courier. Details of the samples in each box are sent to the assay laboratory. The assay laboratory is required to report the condition of the box, and that the security tags are in place.
In SRK’s opinion, the sampling methodology, sample preparation, sample analysis and sample security procedures used for the sampling programs are appropriately designed and were implemented correctly.
12.13 2010-2011 Drilling (REM Etive)
Sampling took place according to the following workflow:
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Identification of sample intervals for a single drill hole. (Ideal sample lengths were targeted to be 1m. Samples did not cross significant material type changes or zones of core loss). Sequence of unique sample numbers allocated to the drill hole and sample data marked on associated sample cards. Certified reference materials (CRM), low-grade CRMs to act as blanks, and field duplicates, inserted into the sample sequence. Core cut into two halves, one half cut into quarters. Quarter core taken as sample Sample weight recorded Samples submitted directly to the SGS sample preparation facility onboard Core tray photographed after sampling and moved to refrigerated storage (4deg C)
Poor core recovery during the drill project has affected the sample quality. Core loss within a single drill-run is allocated to a single interval; this may not represent the actual interval where core loss has occurred and adds uncertainty to defining the interval of recovered material within a drill run. Nautilus assigns any core loss of the first run of a hole to the upper section of that run; core loss in all following runs is assigned to the bottom section of each run. As drill run lengths were limited during 2010-2011 to the capacity of the inner- tube length of 2.28 m, the potential error in the defined from-to for each intervals will be limited within this amount.
Mineralised intervals down the hole were selected for reporting, based on geological logging, handheld XRF analysis of pulverised quarter-core samples, and laboratory assays. Handheld XRF analysis and laboratory assay of the pulps from samples within the selected mineralized intervals have generally returned >3% Cu or >9% Zn. Some adjoining or internal lower-grade samples below these thresholds have been included in the interval length, where: 1) they are of similar material; 2) compose only a minor portion of the interval; and 3) the introduction of these lower grade samples does not dilute the weighted average grade of the total interval to less than 3% Cu or 9% Zn.
Some intervals were separated out where there was a length of core loss considered to be sufficient enough to lose continuity within the overall interval, or where there was a significant lithological or mineralogical change in the recovered material. Zones of core loss included within an interval were assigned the average Cu and Zn grade of the recovered material either side of that core loss. Zones of core loss either side of the recovered material were not included in the calculated interval. All reported Cu and Zn values within the interval are length-weighted averages of individual samples.
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12.14 2010-2011 Drilling Programme
SGS Australia Pty Ltd manages and runs an independent onboard sample preparation facility for the REME10 drilling project. No aspect of sample preparation was conducted by an employee, officer, director or associate of the issuer. All core samples undergo the same sample preparation process as follows:
Samples received from Nautilus in calico bags with a sample submission sheet. Samples sorted, registered into the lab management system and assigned a job number. Samples dried at 105°C in the original calico bag. Samples crushed to 70% -6.3mm using a Boyd crusher (dry screening of every 20th sample tested and recorded as a check) Nominal 1kg split taken from crushed material using a riffle splitter and then pulverised to 90% - 75µm in a Labtech LM-2 pulveriser using chrome-steel bowls and pucks (wet screening of every 20th sample tested and recorded as a check). Nominal 150g of the pulverised sample is placed in a wire-tied paper pulp envelope. Pulp envelopes are placed into a plastic bag which is nitrogen purged and then heat sealed. The plastic bag is then placed in cardboard box and sealed with packing tape. Details of lab job are marked onto the outside of the cardboard box.
Under a documented chain of custody, sealed boxes of pulps are transferred to shore in Kokopo, Papua New Guinea, and are then sent via TNT Air Cargo to SGS’s analysis facility in Garbutt (Townsville), Australia.
A nominal 30g of pulp is provided to Nautilus in a small plastic envelope separately to the remainder of the coarse and pulp reject material which is returned in nitrogen purged, heat-sealed bags.
Sample assaying was completed by laboratories of SGS Australia Pty Ltd.. SGS operates quality systems based on international standards ISO/IEC17025:1999 "General requirements for competence of calibration and testing laboratories", and ISO9001:2008 "Quality Management Systems -- Requirements". SGS’s Australian Mineral Services are also accredited by Australia’s National Association of Testing Authorities (NATA).
Elements were reported by the following methods:
Au: Determined by fire assay using a lead collection technique on a 30g sample charge (method FAA303).
Ag, Cu, Pb, Zn: Digestion in hot Aqua Regia followed by ICP-OES determination (method DIG15Q/ICP15Q). Digests reporting over-grade from this method are re-determined by AAS (method AAS15Q).
Al, As, Be, Bi, Ca, Cd, Co, Cr, Fe, K, Li, Mg, Mn, Mo, Na, Ni, P, S, Sb, Sr, Ti, V, W: Four-acid digest (nitric, hydrochloric, hydrofluoric and perchloric) followed by ICP-OES determination (method DIG40Q/ICP40Q). Digests reporting over-grade As are diluted and re-determined by ICP-OES (method DIG43B/ICP43B). Samples reporting over-grade S are vaporised by leuco/eltra furnace before determination in an infra red cell (method CSD06V).
Hg, Se, Te: Digestion in Aqua Regia at low temperature followed by ICP-MS determination (method DIG12S/IMS12S).
Si: Sample is fused with sodium peroxide before being leached with hydrochloric acid followed by determination by ICP-OES (method DIG90Q/ICP90Q).
Before sample preparation, QAQC material is inserted into each batch of samples by Nautilus. A range of certified reference material (CRM) supplied by Geostats of O’Connor (Perth), Australia is used by Nautilus.
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Within a sequence of 14 primary samples the following CRMs are inserted giving a nominal ratio of 6 CRMs to 14 primary samples:
GBM309-14 (low-grade Cu, high-grade Zn,) G909-3 (high-grade Au) GBM906-16 (high-grade Cu, low-grade Zn) GBMS304-2 (low-grade Cu, medium-grade Au, low-grade Ag) GBM904-1 (barren grades of Cu and Zn; used as a “blank”) GLG907-1 (barren grade of Au; used as a “blank”)
Additionally 1 core duplicate is submitted from within every nominal 14 primary samples by submitting a second sample of quarter-core.
Once analysis results are received by Nautilus the reported values for CRMs are checked to be before data is accepted into Nautilus’ acQuire™ database. If CRMs are outside 3 standard deviations, or repeatedly outside 2 standard deviations of the certified values, SGS is requested to show control of the method before re-determining the samples.
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13. Data Verification
13.1 Quality Assurance/Quality Control
Nautilus implemented an assay QA/QC program of repeats, duplicates, blanks, and commercially available Certified Reference Materials (CRM). During 2007 and 2008 QAQC material was inserted into sample dispatches at the rate of 4 QAQC samples per 10 primary samples. During 2009 ROV programs QAQC material was inserted into sample dispatches at the rate of 5 QAQC samples per 15 primary samples.
13.2 Pulp Repeats
Selected pulp samples from grab samples were reassayed during 2008 using the same method as the original sample aliquot, to test the pulp homogeneity, digestion and assay process. Eleven grab samples from the Solwara group of deposits were reassayed for multiple elements. The results (Table 13-1; Table 13-2) show no statistical biases and the scatterplots (Figure 13-1; Figure 13-2; Figure 13-3) do not identify any obvious errors.
Table 13-1: Grab sample pulp repeats Cu, Pb and Zn results
Original Cu Repeat Cu Original Pb Repeat Pb Original Zn Repeat Zn Count 11 11 11 11 11 11 Minimum 0.01 0.01 0.005 0.005 0.02 0.02 Maximum 29.4 30.2 2.33 2.39 36.2 37 Mean 9.57 9.58 0.88 0.90 11.26 11.31 Median 9.39 9.54 1.03 1.05 6.62 6.77 Standard Deviation 9.80 9.92 0.74 0.77 13.27 13.36 Coefficient of Variation 1.02 1.04 0.84 0.86 1.18 1.18
Table 13-2: Grab sample pulp repeats Au and Ag results
Original Au Repeat Au Original Ag Repeat Ag Count 11 11 11 11 Minimum 0.03 0.02 0.5 0.5 Maximum 35.8 34.9 345 342 Mean 11.67 11.77 170.64 171.00 Median 12.0 12.4 189 187 Standard Deviation 11.05 10.97 118.52 119.09 Coefficient of Variation 0.95 0.93 0.69 0.70
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40
30
20
Pulp Repeat Assay Pulp Repeat Assay (%) 10
0 0 5 10 15 20 25 30 35 40 Original Assay (%)
Cu Pb Zn
Figure 13-1: Original and pulp repeat Cu, Pb and Zn assays, Solwara grab samples
40
30
20
10 Pulp Repeat Assay Pulp Repeat Assay (ppm)
0 0 5 10 15 20 25 30 35 40 Original Assay (ppm)
Au
Figure 13-2: Original and pulp repeat Au, Solwara grab samples
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400
300
200
100 Pulp Repeat Assay Pulp Repeat Assay (ppm)
0 0 100 200 300 400 Original Assay (ppm)
Ag
Figure 13-3: Original and pulp repeat Ag, Solwara grab samples
Fifty-six pulps from Solwara 1 drillholes were reassayed during 2008, using the same method as the original samples. The repeat results (Table 13-3) show no obvious bias in the statistics, and a very good correspondence on the scatterplot (Figure 13-4) except for one sample with an original value of 13.5ppm and a repeat of 3.89ppm.
Table 13-3: Drillhole pulp repeats Au results
Original Repeat
Count 56 56 Minimum 0.01 0.01 Maximum 37.9 38.9 Mean 7.41 7.26 Median 4.9 4.62 Standard Deviation 7.82 8.04 Coefficient of Variation 1.05 1.11
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50
40
30
20 Repeat Au (ppm) Repeat Au
10
0 0 1020304050 Original Au (ppm)
Figure 13-4: Original and pulp repeat Au assays, Solwara 1 drillholes
13.3 Coarse Repeats
Coarse repeats were taken during 2008 at the assay laboratory from stored coarse-rejects. The results are tabulated in Table 13-4 and Table 13-5. These show that the repeat assays are very similar to the original, suggesting that the original split is representative of the sample crushed.
Table 13-4: Grab sample coarse repeats Cu, Pb and Zn results
Original Cu Repeat Cu Original Pb Repeat Pb Original Zn Repeat Zn Count 9 9 9 9 9 9 Minimum 0.08 0.09 0.1 0.09 1.14 1.16 Maximum 30 30.2 1.9 1.95 34.5 33.6 Mean 10.78 10.73 0.71 0.68 12.1 11.67 Median 8.09 8.08 0.67 0.54 5.43 5.19 Standard Deviation 10.58 10.67 0.52 0.55 11.60 11.12 Coefficient of Variation 0.98 0.99 0.73 0.80 0.96 0.95
Table 13-5: Grab sample coarse repeats Au and Ag results
Original Au Repeat Au Original Ag Repeat Ag Count 9 9 9 9 Minimum 57 55 0.08 0.1 Maximum 320 331 50.1 47.5 Mean 189.56 186.89 19.24 18.76 Median 158 164 18.7 19.2 Standard Deviation 77.77 80.47 15.38 14.63 Coefficient of Variation 0.41 0.43 0.80 0.78
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13.4 Field Duplicates
A total of 78 duplicate samples were obtained by collecting the second half of the core from the core trays of holes drilled during 2007 and 2008. Each duplicate sample was submitted in the same batch as the original sample. Fifty-six duplicate samples of chimneys were obtained by collecting a second slice of chimney from adjacent to the original slice. Results are tabulated in Table 13-6 to Table 13-9. These show that the duplicate grades are similar to the original grades; this suggests that the samples taken are representative of the material sampled.
Table 13-6: Grab sample field duplicate repeats Cu, Pb and Zn results
Original Cu Repeat Cu Original Pb Repeat Pb Original Zn Repeat Zn Count 56 56 56 56 56 56 Minimum 0.02 0.01 0.01 0.005 0.02 0.01 Maximum 31.3 30.8 8.54 10.25 34.5 37.5 Mean 8.99 8.38 1.47 1.52 7.47 7.32 Median 5.7 6.42 0.485 0.56 3.51 3.68 Standard Deviation 8.87 8.22 2.30 2.62 9.16 8.91 Coefficient of Variation 0.99 0.98 1.57 1.73 1.23 1.22
Table 13-7: Grab sample field duplicate repeats Au and Ag results
Original Au Repeat Au Original Ag Repeat Ag Count 62 62 56 56 Minimum 1 0.5 0.01 0.01 Maximum 884 857 64.8 62.1 Mean 196.49 204.50 15.58 15.86 Median 138 134 13.55 15.35 Standard Deviation 209.85 211.47 14.78 13.51 Coefficient of Variation 1.07 1.03 0.95 0.85
Table 13-8: Drillhole field duplicate repeats Cu, Pb and Zn results
Original Cu Repeat Cu Original Pb Repeat Pb Original Zn Repeat Zn Count 78 78 78 78 78 78 Minimum 0.01 0.01 0.005 0.005 0.005 0.005 Maximum 19.95 20.3 1.08 2.69 5.52 11.65 Mean 6.79 5.30 0.11 0.11 0.57 0.47 Median 5.015 2.765 0.04 0.055 0.13 0.05 Standard Deviation 5.72 5.64 0.19 0.31 1.03 1.42 Coefficient of Variation 0.84 1.06 1.72 2.73 1.80 3.05
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Table 13-9: Drillhole field duplicate repeats Au and Ag results
Original Au Repeat Au Original Ag Repeat Ag Count 78 78 78 78 Minimum 0.5 0.5 0.02 0.005 Maximum 136 335 24.8 25.7 Mean 26.71 26.62 5.82 5.49 Median 15.5 8 3.78 3.885 Standard Deviation 31.11 50.72 5.55 5.70 Coefficient of Variation 1.16 1.91 0.95 1.04
13.5 Blanks
Sample blanks submitted during 2007 and 2008 consisted of ordinary silicate sand. Assay of the blanks showed below detection limit grades for Cu, Pb, Zn, Ag and Au. During the sampling programme, approximately 500g was placed in a normal sample bag with a sample number in the ordinary sequence and submitted to the laboratory. Analysis of the results (Table 13-10 and Table 13-11) shows that there has been some low level contamination in the laboratory; the mean grades are about 1% of the average tenor of the Nautilus samples, suggesting that there is a 1% between-sample contamination. This contamination may occur in the laboratory during the sample preparation process. This level is not high enough to materially alter the interpretation of the assay results; however it should be followed up by a review of laboratory procedures.
During the 2009 grab sampling program very low-grade CRM material was used in place of the blank.
Table 13-10: Grab sample blanks results
Cu Pb Zn Ag Au Count 23 23 23 33 23 Minimum 0.01 0.005 0.005 0.5 0.01 Maximum 0.45 0.04 0.4 11.1 0.39 Mean 0.08 0.01 0.05 2.37 0.10 Median 0.03 0.01 0.02 1.4 0.04 Standard Deviation 0.10 0.01 0.08 2.54 0.12 Coefficient of Variation 1.32 0.76 1.58 1.07 1.12
Table 13-11: Drillhole sample blanks results
Cu Pb Zn Ag Au Count 107 107 107 109 46 Minimum 0.005 0.005 0.005 0.5 0.01 Maximum 0.43 0.01 0.02 6 0.27 Mean 0.02 0.01 0.01 1.12 0.03 Median 0.01 0.005 0.005 0.5 0.01 Standard Deviation 0.06 0.00 0.00 1.13 0.05 Coefficient of Variation 2.50 0.20 0.44 1.02 1.67
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13.6 Certified Reference Materials
Commercially prepared Certified Reference Materials (CRMs) are used to control the accuracy of the assaying process. Sixteen different CRMs are used (Table 13-12) with base metal or precious metal grades similar to mineralised grades.
Table 13-12: Reference Materials ppm grades and 95% Confidence Intervals.
CRM Source Cu Pb Zn Ag Au GBM304-11 104,011±897 1648±27 109±9 GBM304-16 22,721±259 728±18 718±22 GBM305-15 262,422 GBM906-13 21,682±217 108±6 3036±59 3.74±0.33 GBM906-16 106,807±1267 239±16 4783±179 GBMS304-2 Geostats 14,325±87.14 820 ±7.84 57±1.19 5.1±0.11 6.04± 0.05 GBMS304-4 Pty Ltd 2,293 ±20.39 271 2.6 149 2 0.8±0.05 5.67±0.05 G308-8 2.45±0.12 G907-6 7.25±0.29 0.0056±0.000 0.0008 GBM998-5 0.0084±0.004 7 ±0.0006 GLG907-1 0.00387±0.00309 OREAS- 7.15±1.0 10Pb OREAS-24P Ore 52 2.9 114 1 Research & OREAS61d Exploration OREAS62d Pty Ltd 8.37 10.5 OREAS_62P 21.5 11.3 b
13.7 Standard Reference Materials
During 2007 Nautilus produced a Standard Reference Material (“SRM”) from a composite of approximately 100kg of pulverised sulphidic rejects of Solwara 1 chimney samples from the DP Hunter cruise (SRM NUSC) or drillcore samples from the 2006 drilling program (SRM NUSD). HRL Testing in Albion, Australia prepared the composite by
stage crushing pulverising to 90% passing 75μm blending 60g aliquots taken using a scoop
Aliquots were submitted to five Australian laboratories to determine the average grades of the material. The laboratories were ALS Laboratories, Brisbane, Amdel Laboratories of Thebarton, UltraTrace Laboratories of Canning Vale, Becquerel Laboratories of Malaga and Standard and Reference Laboratories, also of Malaga. The first four laboratories analysed five samples. Standard and Reference Laboratories analysed a single sample. Different assay methods were used by the various laboratories (Table 13-13). Nautilus compiled the results of the analyses. Results that were considered biased or unacceptably variable were discarded; the averages of the remaining results were taken as the reference value. The reference grades for these (NUSC and NUSD) are tabulated in Table 13-14.
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Table 13-13: Assay methods used for Standard Reference Material
Laboratory Samples 4AD, ICP-OES FA NAA Wet Chemistry HBr-Br ALS 5 Cu, Zn, Pb Au Amdel 5 Cu, Zn, Pb Au UltraTrace 5 Cu, Zn, Pb Au Becquerel 5 Cu, Pb Zn, Ag, Au Standard & Reference 1 Ag, Au Cu, Zn Pb
The average value received of the standards (Table 13-14) corresponds well with the certified grades; except for one of the low level Pb (NUSC); this suggests that the lead assays may be biased high.
Table 13-14: Standard material grades and average of assays received
Standard Count Cu Cu Pb Pb Zn Zn Ag Ag Au Au Value Average Value Average Value Average Value Average Value Average NUSC 34 10.67 10.67 0.25 0.49 2.66 2.63 186 184.74 19.4 19.71 NUSD 108 5.11 5.12 0.23 0.23 1.71 1.72 44 42.87 5.91 5.90 Base metals in %, precious metals in ppm
Analysis of the NUSC and NUSD SRMs during 2008 indicated oxidation of the material and the SRMs have since been replaced in the QAQC process by relevant CRMs produced commercially from sulphidic-matrix material.
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14. Adjacent Properties
14.1 Neptune Minerals plc
Neptune Minerals plc (“Neptune”) is engaged in exploration for SMS deposits in Papua New Guinea. Neptune was granted two exploration licences in PNG in October 2007: EL 1541 and EL1542, totalling 495 km2, which are adjacent to Nautilus’ tenement holdings in the Bismarck Sea. Neptune also held tenements offshore and the east of New Ireland, Papua New Guinea in 2009.
Neptune also held three granted prospecting permits, three prospecting permit applications and one mining pemit application in New Zealand in 2009. Information from Crown Minerals in New Zealand, the administering authority, shows Neptune’s tenement interests in New Zealand were cut back in 2009. Nautilus report that they performed no exploration work in 2009 due to funding constraints.
14.2 Bismarck Mining Corporation (PNG) Limited
Bismarck Mining Corporation (PNG) Limited is a Sydney-based private company, with a registered office in Melbourne. Bluewater and Bismarck Mining share the same Chief Executive Officer. As of November 2009, Bismarck Mining held seven exploration licences in the Bismarck Sea adjacent to Nautilus' tenements and tenement applications. Renewal applications for all of these tenements were submitted over reduced areas in 2009.
14.3 Bluewater Metals Pty Ltd
Bluewater Metals Pty Ltd is also a Sydney-based private company, with a registered office in Melbourne. Bluewater and Bismarck Mining share the same Chief Executive Officer. Bluewater Metals holds 18 granted prospecting licences in the Solomon Islands. Some are adjacent to Nautilus’ prospecting licences, while the majority are located to the east.
Bluewater Metals also holds 13 granted prospecting licences and four prospecting licence applications in Tonga and has applied for five special prospecting licences in Fiji.
In November 2009 it was announced that Odyssey Marine Exploration had acquired a minority interest in SMM Project LLC. At the time SMM Project LLC had recently purchased a majority interest in Bluewater Metals.
14.4 Korea Ocean Research & Development Institute (KORDI)
The Korea Ocean Research & Development Institute (KORDI), an agency of the Republic of Korea Ministry of Land, Transport and Maritime Affairs acquired five prospecting licences in Tonga to the east of Nautilus’ Valu Fa prospecting licences in 2008. KORDI announced they would carry out a 25 day exploration programme in January 2010 on behalf of a syndicate of four private companies, and claims it will start commercial extraction in 2012 from mid-ocean ridges.
14.5 CCZ Exploration Areas
Seven contractors to the ISA have granted exploration licences in the CCZ near Nautilus’ application:
Yuzhmorgeologiya (the Russian Federation)
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Interoceanmetal Joint Organization (consortium comprising Bulgaria, Cuba, Slovakia, Czech Republic, Poland and the Russian Federation) The Government of the Republic of Korea China Ocean Minerals Research and Development Association (COMRA) Deep Ocean Resources Development Company (Japan_ Institut français de rechèrche pour l’exploitation de la mer (France) The Federal Institute for Geosciences and Natural Resources (Germany)
The contractor licences have been granted for 15 years. Work programs and progress are reviewed annual by the Legal and Technical Committee of the ISA during its annual meeting. Each contractor is sponsored by a State, or group of States. To date, no production has taken place by these competitors.
Tonga Offshore Mining’s applications are surrounded by granted exploration tenements, and an application by Nauru Ocean Resources, as well as ground held by the “Enterprise” (the ISA Reserved Areas) (Figure 14-1). The Enterprise acts as a “land bank for the ISA, and holds ground that was worked by the original “Pioneer Investors” (those consortium who worked in the CCZ during the 1970’s and 80’s prior to the ascension of UNCLOs and part XI), and land “surrendered” to the ISA by contractors, in accordance with part XI of UNCLOS and the 1994 Implementation Agreement. These are the “Reserved Areas”, set aside by the ISA for developing nations.
Nauru Ocean Resources Inc. (NORI) holds a licence application of around 75,00km2 in various blocks within the CCZ. NORI is a private company associated with former Nautilus CEO David Heydon, and is reportedly looking to eventually go public, and develop nodule resources within the CCZ.
Figure 14-1: Location map of the CCZ showing granted exploration tenements (contractor areas), applications and ISA Reserved Areas
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15. Mineral Processing and Metallurgical Testing
15.1 Introduction
There have been four programs of metallurgical testwork on the Solwara Project:
1998 testing of five samples from different areas of various Solwara deposits; 2005 testing of a single composite sample from the Solwara 1 deposit; 2007-2008 testing of core from 24 drill holes in the Solwara 1 deposit; and 2010 further testing of core from prior Solwara 1 drilling.
15.2 1998 Testing
In 1998 Nautilus commissioned Rio Tinto Exploration’s Research and Technology Development to conduct bench assay and pilot tests on five Manus Basin samples supplied by CSIRO (Rio Tinto, 1998). Three samples were from Solwara 4a, one was from the Solwara 3 prospect, and one from the Solwara 1 prospect.
Test work carried out by Rio Tinto included stage crushing, assay, and rougher flotation. The tests flagged no unusual process issues and achieved a recovery of 90% of zinc and copper to respective bulk concentrates. The test work on these SMS composites showed their flotation characteristics to be similar to terrestrial volcanic-hosted massive sulphide (VHMS) ores.
The sample preparation flow sheet was:
Five rock samples ranging up to 2 kg in mass were used. Samples were crushed to 100% passing 3 mm. Further crushing was completed to achieve a particle size distribution where the majority of mass was between 38 and 212 µm, which is an ideal floatation size range. A sub-sample of samples BB4 and BB8 (both Solwara 4a) were selected for testing; a composite of equal parts by weight of all five samples (including those from Solwara 4a) was also prepared. The +38 -53 µm and +150 -212 µm fractions were prepared for mineralogical characterisation. Mineral liberation was quantified using a Kontron mineral image analyser.
Assay results for two of the samples are:
BB4 0.45% Cu, 41.4% Zn, 2.29% Fe, 16.6% Ba, 25.8% S. BB8 8.02% Cu, 23.6% Zn, 11.9% Fe, 17.3% Ba, 28.3% S.
Three flotation tests were performed focusing on maximising the recovery of copper and zinc to their respective sulphide concentrates.
Mineral liberation for both sphalerite and chalcopyrite were determined. Sphalerite liberation ranged from 74% to 83% in BB4 to 79 to 87% in BB8. Chalcopyrite liberation ranged from 34% to 43% in BB4, the lower copper and zinc ore, and from 80% to 89% in BB8.
Greater than 90% recovery of Cu and Zn to sulphide concentrates was achieved by rougher flotation. Given the recovery from the rougher sample, no cleaner flotation tests to achieve maximum concentrate grade were performed. The test work indicates a copper flotation pH of 6.5.
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15.3 2005 Testing
A composite sample of mineralisation from the Solwara 1 prospect was tested by Placer Dome Inc. in 2005 (Jiang & Aylmore, 2006). The sample consisted largely of chalcopyrite, pyrite, and barite. Minor quantities of marcasite, sphalerite, galena, rutile and quartz were also present, with trace amounts of tennantite, anglesite/cerussite, bornite, covellite, Fe-oxides, and carbonates.
Bulk flotation recovered 97% of the Cu, 93% of the Ag, 90% of the Pb, 96% of the Zn and 75% of the Au present. This concentrate assayed 26.64% Cu, 3.38% Pb, 4.92% Zn, 440g/t As and 15.51g/t Au. Separation of individual copper, lead and zinc mineral components by sequential flotation and differential flotation approaches was not successful. However, mineralogical results indicate that liberation and separation of minerals containing lead and zinc should be possible at a finer grind size. The sample was compared to other terrestrial massive sulphide ores (Osborne, Australia; Duck Pond Mine, Canada; and Brunswick, Canada). The metallurgical characteristics of the concentrate produced from the seafloor sulphide were similar to these mining operations.
15.4 2007 Testing
Taylor (2007) defined eight ore types, based on logging of a selection of 29 out of the total of 111 resource drill holes drilled in 2007 (Table 15-1). Metallurgical samples of each of these ore types were then composited from 24 new core holes drilled specifically for metallurgical testing. These holes were located as close as possible to resource drill holes and designed to produce proportions of each ore type representative of its abundance in the deposit. Two composite chimney metallurgical samples were also collected, one zinc-rich and one zinc-poor. Sample locations of the drill hole and chimney metallurgical samples are shown in Figure 15-1 and Figure 15-2 respectively.
The metallurgical samples were cleaned in fresh water, dried, vacuum sealed, placed in a nitrogen purged container and shipped to the AMMTEC Limited laboratory in Perth, Australia. The samples were dispatched as whole core.
Table 15-1: 2007 drill hole metallurgical samples with ore type descriptions
Sample Sample Material Type Description Mass (kg) 1 Chalcopyrite-pyrite -sphalerite mineralisation as veins, blebs, clasts, breccias and disseminations 132 within sedimentary units above the massive sulphide horizon 2 Vuggy and porous chalcopyrite-pyrite mineralisation within the massive sulphide horizon 322 3 Dense massive sulphide (chalcopyrite-pyrite), rare vugs; can be banded. Main part of massive 137 sulphide horizon 4 Brecciated massive to semi-massive sulphide, chalcopyrite-pyrite 313 5 Dominant anhydrite/barite overprint, veins within altered footwall volcanics pyrite-chalcopyrite 74 Transition zone between massive sulphide horizon and footwall. 6 Chalcopyrite-pyrite mineralisation with anhydrite overprint and veins within altered footwall 24 volcanic rocks. Transition zone between massive sulphide horizon and footwall. 7 Altered brecciated footwall volcanics with disseminated and vein pyrite-chalcopyrite 87 8 Altered basaltic volcanics brecciated with blebs and disseminated pyrite-chalcopyrite 23 cpy – chalcopyrite, py – pyrite, -spl – sphalerite
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398800 399200 399600 NEW IRELAND EL 1196 Namatanai
Solwara 5 Solwara 1
EL 1374
01020km
9581200 9581200
398800 399200 399600
2007 drill hole - metallurgical test site
2007 Drill hole 0 100 200 300m
High grade chimney outcrops UTM Projection. Zone 56. WGS84 Datum. Surface extent of mineralised system
Figure 15-1: Location of the metallurgical test samples from drill holes
Figure 15-2: Location of the metallurgical test sample from chimneys
15.5 2008 Testing
Further metallurgical test work was performed by Mineralurgy Pty Ltd in 2008 (Munro & Johnson, 2008). The emphasis of this work was on producing a saleable Cu concentrate with payable precious metals rather than a Zn concentrate, as Zn-rich material is a relatively minor proportion of the Solwara 1 resource.
Mineralogical studies showed that the dominant Cu-bearing mineral is chalcopyrite, with lesser amounts of bornite, chalcocite and covellite. A very low proportion of the Cu content is in the As-bearing phases of tetrahedrite, tennantite and enargite, so that a high copper recovery should not contain unacceptably high As. Arsenopyrite occurs in up to 1% of the ore and may report to the concentrate.
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Pyrite is the dominant gangue mineral and the pyrite: chalcopyrite mass ratio is around 2:1, which is favourable for flotation separation. The test work to date shows that a saleable Cu concentrate of 25% to 30% Cu can be produced by conventional grinding and flotation. Copper recovery is 85% to 90% and gold recovery around 25%, with about 80% of the remaining gold able to be recovered into a pyrite concentrate.
The Bond Ball Work Index ranges from 10 to 12 kWh/t, which is a moderate value for mineral processing.
Testing of samples of low grade material from the footwall of the SMS gave similar recoveries of copper as the ore-grade samples. This suggests that the inclusion of any mining dilution in the ore stream should not adversely affect copper processing.
Neither saleability of the pyrite concentrate nor economic processing options for it have yet been established.
15.6 2010 Testing
Following on from the 2008 work, additional metallurgical tests were conducted at the Burnie Research Laboratory (BRL) using similar sample materials to that for AMMTEC. These tests were aimed at generating design data for a concentrator. They followed the flowsheet and reagent regime from the 2008 AMMTEC grinding and flotation work, with the addition of locked cycle testing plus solid-liquid separation work on thickening and filtration. The thickening and filtration testwork was undertaken to aid design of the dewatering section for processing run-of-mine ore on the mining vessel.
Laboratory batch flotation tests completely replicated the results of the 2008 AMMTEC work. Examination of 2008 test data suggested that a gold recovery to the copper concentrate might be increased to ~45% by targeting a lower grade concentrate of 20% Cu. This was partially confirmed by interpolation of individual test results from BRL’s work and subsequently in 2011 by locked cycle flotation tests.
Laboratory locked cycle flotation testing on a blend of likely feed produced a 25% Cu copper concentrate at 92% recovery; the higher copper recovery at lower concentrate grade compared to the 2008 work being the expected result when going from an open circuit batch test to the locked cycle one. These results require the standard discount applied in the industry when predicting the metallurgical performance of a production plant treating Solwara 1 material.
Quantitative mineralogy showed that the copper concentrate approached industrial quality at just under 80% w/w copper sulphides while pyrite concentrates from single stage rougher flotation was surprisingly good at well over 80% w/w iron sulphides.
In January 2011 materials examined and tested from the deposit during the 2008 and 2010 test work campaigns are as follows.
Mineragraphy – on 21 core samples from 16 drill holes Quantitative Mineralogy – on 10 samples composited from 24 different drill holes and 28 grab samples Metallurgical test work – on same 10 samples as for Quantitative Mineralogy above. Variability samples for quantitative mineralogy on 21 samples from 17 drill holes and 9 chimney grab samples.
To date mineralogical examination and metallurgical test work has been done on material from 61 drill holes (35% of the total) and 37 chimney grab samples. The shallowness of the drill holes into Solwara 1 (<20m), uniformity of the mineralization types recognised and the excellent correlation between mineralogy and metallurgical response gives high confidence in the prediction of metallurgical performance for the quoted mineral resource.
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15.7 Mineral Processing Design Basis
The objective of the metallurgical test programs completed to date has been to put the processing of Solwara 1 material in the context of the characteristics of other volcanogenic massive sulphide (VMS) deposits i.e. to show that its submarine occurrence does not directly impact on processing.
While there has been a significant sampling program undertaken by Nautilus Minerals, it is not yet clear if individual samples are representative of the variability within the ore body at depth as samples processed to data have been confined to the top 20m of the deposit.
Variability samples were also examined to determine whether each sample had clear similarities in its properties to those of the composite example of that ore type (as used for metallurgical design). The examination concluded the composites were suitable for flow sheet development.
The results of the mineralogical and metallurgical test work to date can be summarised as follows:
Copper is present almost exclusively as chalcopyrite. Chalcopyrite liberation is significant at a sizing of 80%-40 µm with the test flow sheet using a primary grind of 80%-55 µm and regrinding of rougher concentrate to 80%-25 µm. Treatment by conventional grinding and flotation processing produced copper concentrates grading 25 to 30% Cu, copper recovery in the laboratory in open circuit tests has been 85-90%. Laboratory locked cycle flotation test on a blend of likely feed produced a 25% Cu copper concentrate at 92% recovery; these results require the standard discount applied in the industry when predicting the metallurgical performance of a production plant treating Solwara 1 material. Arsenic is the only significant deleterious element in the ore with the main carrier being arsenopyrite with some contribution from tennantite, and possibly orpiment, however, arsenic levels in concentrates from samples tested were below typical penalty levels. Gold is “refractory” being mostly associated with pyrite. Gold recovery to a 25% Cu copper concentrate is ~25%; this would increase to ~45% by making a lower grade concentrate at 20% Cu which contained more auriferous pyrite.. Around 65-70% of the gold content can be recovered into a pyrite concentrate from the copper flotation section tailing when making a 25% Cu copper concentrate. This pyrite concentrate would average about 7—9 g/t Au and ~45% sulphur. At least 80-90% of the gold reporting to the pyrite concentrate can be extracted by the conventional technologies of roasting / cyanidation or pressure oxidation / cyanidation. This would give a total ‘gold recovery’ to copper concentrate + bullion of 75 to 90%. Melnikovite or ‘primitive pyrite’, which accounts for around 15% of the pyrite, has a gold content of ~44 g/t Au compared with crystalline pyrite at ~4 g/t Au i.e. an order of magnitude higher. The samples tested have Bond Ball Work Index values in the range of 10-12 kWh/t indicating a low to medium resistance to comminution.
These results have not been optimised but the following important points should be noted:
Quantitative mineralogical data is an excellent predictor of sulphide flotation performance. Copper flotation results are consistent across all samples tested and for three laboratories (two in Australia and one in China). Flotation work has included both batch and locked cycle tests.
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Dilution with low grade materials or ‘country rock’ should not affect copper metallurgical performance. Copper concentrates are ‘clean’ and should not present any problems for treatment by custom copper smelters. Gold recovery can be significantly increased by reducing the target copper concentrate grade from 25% Cu to 20% Cu. Production of an auriferous pyrite concentrate will be necessary to get ‘gold recovery’ to copper concentrate and doré bullion to 75 to 90%. Exposure of the materials tested to ambient conditions for up to 8 weeks has not caused any major deterioration in metallurgical performance. The only attempt at making a zinc concentrate gave an encouraging result, with a product high in precious metals that might be upgraded by the established technique of reverse flotation.
Metallurgical ore types in the deposit can be resolved into the following groups:
Type 1: iron sulphide-chalcopyrite mineralization with low sphalerite; pyrite is the dominant gangue mineral Type 1A which comprises most of the above Type 1B: arsenic content may be elevated due to the presence of tennantite/enargite Type 1C with relatively more non sulphide gangue Type 1D: complex textural association of chalcopyrite with pyrite Type 2: iron sulphide-chalcopyrite mineralization with elevated sphalerite (and galena) content; to date this is confined to the chimney-type material Type 2A: sphalerite has to be depressed during copper flotation Type 2B: sphalerite head grade is sufficiently high to warrant production of a zinc concentrate
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16. Mineral Resource and Mineral Reserve Estimates
The Mineral Resource for the Solwara 1 deposit was estimated by Ian Lipton of Golder Associates (“Golder”) following the 2007 data collection program. This estimate was reported in a Technical Report pursuant to NI43-101 (Lipton, 2008); this report is available on the SEDAR website. Mr Ian Lipton is the Qualified Person for the estimate, which is summarised in Table 16-1.
Table 16-1: Mineral Resources for Solwara 1 (Lipton 2008)
Classification Domain Tonnes Cu (%) Au (g/t) Ag (g/t) Zn (%) Indicated Massive sulphide 870,000 6.8 4.8 23 0.4 Inferred Chimney 80,000 11 17 170 6 Inferred Lithified Sediment 2,000 4.5 5.2 36 0.6 Inferred Massive sulphide 1,200,000 7.3 6.5 28 0.4 Indicated Total 870,000 6.8 4.8 23 0.4 Inferred Total 1,300,000 7.5 7.2 37 0.8 Note: Rounding may result in errors in reproducing the totals from the individual components.
Lipton (2008) considers that the following risks and uncertainties may materially influence the resource estimate:
A significant number of drill holes (44%) ended in massive sulphide material. In such instances, and where no adjacent drill hole information was available from which the true thickness could be reasonably interpreted, the base of the drill hole was interpreted to be the base of the massive sulphides. The massive sulphide resource is therefore open at depth in some areas. Although a few drillhole intercepts in the basement zone exceeded the cut-off grade, material in this zone was excluded from the resource estimate, as these widely spaced drill hole intercepts were erratic and their grade correlation was unclear. Drillhole intercepts in the unconsolidated sediment suggested that this zone contains some material above cut-off grade. Whilst this may be likely in the form of chimney rubble or interstitial sulphide precipitation, this material has been excluded from the resource estimate No drill holes were located on top of the exposed chimney mounds, consequently, the block grade estimates for interpreted massive sulphide material below these mounds is based on holes drilled adjacent to these mounds. It is possible that the massive sulphide material beneath the chimney mounds may have a different mineralogical composition being closer to the interpreted source of the mineralising fluid. Average core loss of around 30% could result in estimation bias if the core loss was preferentially related to low or high grade material. Closed-spaced (<5m) drilling for metallurgical samples suggests that the probability of such preferential core loss is low. Significant lateral extrapolation of massive sulphide mineralisation to the boundaries of the EM anomaly was supported by all holes drilled in 2007. However, a large proportion of the Inferred Resource relies on this EM anomaly in areas that have not been tested by drilling. The EM provides no information on base metal grades. Furthermore, it is not possible to determine the thickness of the conductor sulphide material from the EM data, thus, the interpreted thickness of massive sulphide in areas distant to drilling is of low confidence. The EM anomaly is open at the western end of the deposit. The higher-grade chimney mounds have only essentially been surface sampled by breaking off protruding chimney pieces. The interpreted depth of the chimney mounds is based on an automated algorithm that produces a truncated bathymetry that is considered geologically reasonable. However, until these mounds are tested by drilling, their grade, density and depth
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should be considered of low confidence. If the chimney mound/massive sulphide interface is not correctly positioned then the risk to the contained metal is considered to be low to moderate as the higher-grade/lower density chimney material would most likely be substituted by lower grade/higher density massive sulphide material.
The Mineral Resource for Solwara 1 has not yet been re-estimated using the 2008 Drilling results. Nautilus intends to re-estimate the resource after completion of the 2010-2011 programme described above.
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17. Other Relevant Information
In June 2010, in conjunction with Clough Engineering, Ausenco, Mineralurgy and Golder Associates, SRK completed a NI 43-101 Technical Report on the the Offshore Production System Definition and Cost Study associated with the Solwara 1 deposit (Blackburn et al.; 2010). The development project offshore production system comprises the following elements:
Seafloor Production Tools (SPTs). Riser and Lifting System (RALS). Production Support Vessel (PSV) with dewatering facilities. Ore transportation to the port of Rabaul.
SPTs will be used to excavate the massive sulphide material from the seafloor. The excavated material will be pumped as slurry to the production support vessel via the RALS. The pumped slurry will be dewatered at surface and then be transferred to cargo barges for transportation to shore for stockpiling. The ore will subsequently be offloaded into bulk carriers for transportation to a concentrator treatment plant and then subsequent processing and delivery to the concentrate market.
Key interpretations / conclusions from the technical report include:-
Nautilus’ development plan strategy has been to initially focus on the key / less developed elements of the production system associated with cutting and lifting produced ore from the seafloor to the surface. In December 2008, during the downturn in the global financial market, Nautilus suspended the project which included the partial suspension of contracts / purchase orders associated with key technologies (SMTs, subsea lift pump and RALS design). Since that time, the project has continued engineering, commercial evaluation and progress on long term procurement activities. Nautilus intends to re-sanction and recommence the project build subject to Nautilus Board approval. The development project is considered technically feasible. The Solwara 1 average daily production rate is 3,710 tonnes per day (1.35Mtpa) excluding site initiation and shut-down. Over the production period, the average copper equivalent grade is 9.2%. The total capital cost for the offshore system to deliver dewatered ore on board transportation barges to the port of Rabaul including contingency (17.5%) is US$383 million. The operating cost (excluding contingency) is estimated to be US$237,000 per day or approximately US$64 per tonne of mined ore transported to port of Rabaul (based on production rate of 1.35 Mtpa). Allowing for a 10% contingency, the above operating costs become $261,000 per day or approximately $70 per tonne. First ore is scheduled 30 months after project sanction.
In November 2008, Nautilus announced that Anglo American increased its shareholding in the Nautilus from 5.7% to 11.1% by acquiring 5,177,066 shares at CAD1.33 (USD1.13)* and 3,756,636 shares at CAD1.46 (USD1.24)* pursuant to an anti-dilution right granted to it, that the subscription has now been completed. Total funds received were approximately CAD12.4 million (USD10.5 million). Nautilus made an application for 8,933,702 common shares to be admitted to AIM and TSX. The shares were admitted to trading in November 2008.
On 17 February 2009, Nautilus announced that Teck Cominco Limited had confirmed its exploration expenditure in Papua New Guinea and Tong during 2008 to be US$14.8 million. This exceeded the minimum expenditure required for Teck to earn the right to form a joint venture with Nautilus in the countries
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Teck also advised Nautilus that it wishes to retain the right to joint venture with Nautilus in Fiji, New Zealand, Japan, and Northern Marianas, subject to the grant of title.
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18. Interpretation and Conclusions
The geology of the SMS systems in the Nautilus exploration tenements is similar to that of volcanic-hosted massive sulphide (VHMS) deposits in terrestrial settings throughout the world (e.g. Hellyer in western Tasmania, Australia and Eskay Creek in north-west British Columbia, Canada). It is widely accepted by the scientific community that the SMS deposits forming on the seafloor today are direct modern-day equivalents of these terrestrial VHMS systems.
Based on recent exploration, Nautilus is able to demonstrate a track record of success with respect to the discovery of active and fossil SMS systems containing Cu-Zn-Au-Ag mineralisation. Nautilus has built a pipeline of exploration prospects within its offshore exploration tenements in Papua New Guinea and Tonga. Most significantly Nautilus has progressed prospects in Papua New Guinea, in addition to Solwara 1, where resource drilling is required to estimate size potential.
In Tonga a large inventory of quality exploration targets awaits testing and drilling
Nautilus has also lodged tenement applications over known SMS systems in the North Fiji Basin.
Based on reviews of several engineering studies completed for Nautilus, and recent advances in seafloor engineering, largely driven by the petroleum and telecommunications industries, SRK is of the opinion that there is available to Nautilus the necessary equipment and technology to explore for, and potentially develop and mine these SMS systems.
SRK completed five site visits of certain Nautilus PNG tenements between 2005 and 2008, and reviewed remote data gathering and sampling methods.
The exploration techniques used by Nautilus are appropriate and reasonable for defining the nature and extent of Cu-Zn-Au-Ag mineralisation in the SMS systems on the exploration tenements. The exploration sequence is:
1 Location of active and fossilised spreading centres and rift zones in national waters and associated economic exclusions zones (EEZ). 2 Preliminary compilation of historic research data generated from over 25 years of offshore activity in the EEZ. 3 Direct detection of SMS mineralisation, using: 4 Water geochemistry and plume sensors; 5 side-scan sonar/bathymetry/sub-bottom profiling and mapping using video cameras; 6 deep-tow magnetic, electrical, electromagnetic and other geophysical methods; 7 dredging and direct sampling with an ROV. 8 Core drilling, in order to determine the in-situ continuity of thickness and grade of massive sulphide mineralisation.
Following a drilling program in 2007, Golder carried out a Mineral Resource estimate for the Solwara 1 deposit. The Mineral Resource (Lipton, 2008) estimate was carried out to conform to the principles of the National Instrument 43-101 and is reported to contain an Indicated Resource of 870 Kt at 6.8% Cu, 4.8 g/t Au, 23 g/t Ag and 0.4% Zn, and an Inferred Resource of 1,300 Kt at 7.5% Cu, 7.2 g/t Au, 37 g/t Ag and 0.8% Zn. The Indicated Resources are composed of sea floor massive sulphides while the Inferred Resources include lithified sediments and chimney material in addition to the seafloor massive sulphides. No resource estimates have been defined for any other prospect, and as such, these areas are considered speculative by nature, and involve varying degrees of moderate to high exploration and financial risk.
However, SRK is of the view that the projects are sufficiently prospective to warrant exploration with the techniques and programs indicated to SRK during the assessment. In SRK’s opinion the directors and staff of Nautilus have the appropriate technical and management expertise to manage the proposed exploration program.
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19. Recommendations
It is recommended that the 2010 REM Etive drill program continue in the Bismarck Sea into 2011, to enable:
An increased understanding of the Solwara 1 resource and geotechnical properties; Drilling at Solwara 5, Solwara 12 and the Solwara 1 North Zone, to test the depth extent and continuity of mineralisation Estimate an Inferred Resource for Solwara 5, Solwara 12 and the Solwara 1 North Zone where appropriate.
This program is likely to be in excess of 1,500 linear metres total drilling.
Nautilus has distributed Invitations to Tender for 3D geophysical methods. These may assist mapping out the size and shape of massive sulphide bodies to augment the data acquired through drilling.
Nautilus has been investigating the inclusion of Autonomous Underwater Vehicles (“AUV”) in their exploration process to improve the quality and efficiency of exploration data acquisition. Invitations to Tender for AUV contracts in both the Bismarck Sea and Tonga have been sent to several subsea market suppliers. AUVs may offer a further step-change improvement in converting any new targets in the Solwara project area to SMS prospects.
Although there are prospective sites where AUV technology could be deployed; there are also prospective areas within the Bismarck Sea that are appropriate for ship based bathymetry and backscatter data. Such data may reveal additional prospective sites for AUV surveys, which may rank favourably against those already identified from existing data.
Nautilus has numerous targets in Tonga that require testing, including 32 plume targets defined in 2009. Nautilus intends using AUV mapping for follow-up, which may be more efficient than the ROV programmes previously deployed. AUV mapping will efficiently identify and measure the area of any new SMS prospects and allow prioritisation for future ROV programs.
In SRK’s opinion, Nautilus’ proposed activities are appropriate for exploring for new SMS deposits and adding to the current SMS resources.
Exploration for polymetallic nodules in the Clarion Clipperton Zone (CCZ) represents a new opportunity for Nautilus. Previous work has highlighted the resource potential within the CCZ area in the Pacific Ocean. Since the previous work in this area was done in the 1970’s, deepsea engineering technology has advanced significantly. Many of the techniques Nautilus Minerals is developing for SMS production may also be applicable to the commercialisation of polymetallic nodule production.
United Nations Convention on the Law of the Sea (UNCLOS) has been adopted, and the International Seabed Authority (ISA) established, with responsibility for controlling all deep-sea mining in international sea areas. In 2001-02, the Authority signed 15-year contracts with several parties, giving them exclusive rights to explore for nodules in similar regions of the seabed, each 75,000 km2 in size. It is recommended that Nautilus pursue its exploration license applications through the ISA, as sponsored by the Kingdom of Tonga.
Once granted, an exclusive exploration license within the Clarion Clipperton Zone (CCZ) the following work program is recommended:
In Year 1, a compilation and detailed review of all existing data on the exploration area under contract, including detailed literature reviews of possible metallurgical treatment methods. Nautilus has already obtained samples recovered in previous nodule sampling programs by third parties. Initial metallurgical test work of these samples may help in the design of the subsequent exploration, bulk sampling and testing programs. In the Year two and Three, carry out exploration cruises. These cruises should include seafloor surveying, sampling, and environmental studies. The principal aim of this work would be to
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establish the size and grade of the resource, to appropriate modern commercial resource reporting standards (e.g. NI 43-101), and obtain sufficient bulk sample to allow the principal metallurgical characteristics to be determined.
On completion of the exploration cruises, the following programs may also be undertaken:
Base line environmental studies; Resource estimation studies; Engineering and metallurgical studies, and design work for both the onshore and offshore components; and Preliminary economic and commercial studies to provide scoping estimates for CAPEX and OPEX for mining, transportation and processing options.
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20. Date and Signature
Phil Jankowski SRK Consulting (Australasia) Pty Ltd Tel: +61 8 9288 2000 Fax: +61 8 9288 2001 Email: [email protected]
CERTIFICATE OF QUALIFIED PERSON To Accompany the Report entitled “Nautilus Minerals Incorporated NI43-101 Technical Report 2010 PNG, Tonga, Fiji, Solomon Islands, New Zealand, Vanuatu and the ISA” dated 23 March 2011.
I, Philip Edward Jankowski, do hereby certify that:
1. I am a graduate from the Australian National University with a Bachelor of Science degree in Geology in 1986 and a Graduate Diploma in 1988; and a graduate from the University of Western Australia with a Master of Science degree in Geology in 2000. 2. I have continually practiced my profession since 1988. 3. I am a Member of The Australasian Institute of Mining and Metallurgy and a Chartered Professional. 4. I am a Principal Consultant with SRK (Australasia) Pty Ltd, a firm of consulting geologists and engineers which has been practicing in this profession since 1974. I hold office at 10 Richardson Street, West Perth, WA 6005, Australia. 5. I have 22 years’ mining industry experience, including mine geology and exploration roles and, I have worked as a geologist in open pit and underground gold mines and as a resource geologist. 6. I have read the definition of “qualified person” as set out in National Instrument 43-101 (“NI 43- 101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be a qualified person for the purpose of NI 43-101. 7. I completed a site visit which consisted of a five day trip on the RV Melville (24 to 30 July 2006) and witnessed ROV sampling and a trip in the MV NorSky (20 September to 3 October 2009) and witnessed ROV sampling; and on the REM Etive (25 to 30 January 2011) and witnessed core drilling. 8. I have no personal knowledge, as of the date of this Certificate, of any material fact or change, which is not reflected in this report, the omission to disclose that would make this report misleading. 9. Neither I, nor any affiliated entity of mine is at present, or under an agreement, arrangement or understanding expects to become, an insider, associate, affiliated entity or employee of Nautilus Minerals Incorporated, and/or any associated or affiliated entities. 10. Neither I nor any affiliated persons or entity of mine, own, directly or indirectly, nor expect to receive, any interest in the properties or securities of Nautilus Minerals Incorporated, or any associated or affiliated companies. 11. I am independent of Nautilus Minerals Incorporated, in accordance with the application of Section 1.5 of NI 43-101. 12. I have not had any involvement with the Exploration Tenements that are the subject of this Report, prior to the review commissioned by Nautilus Minerals Incorporated. 13. I have read the NI 43-101 and Form 43-101F1, and have prepared the technical report in compliance with NI 43-101 and Form 43-101F1. 14. I consent to the filing of this Report with the relevant securities commission, stock exchange and other regulatory authorities as may be determined, including general publication in hardcopy and electronic formats to shareholders and to the public.
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Dated this 23rd day of March 2010.
SRK Consulting
Phil Jankowski MSc MAusIMM (CP)
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21. References
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Appendices
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendices SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report March 2011
Appendix1: Solwara 1 2010 Drill assay results
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendix 1 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report February 2011
Hole From To (m) Length Lithology Recovery % Au g/t Ag g/t Cu (%) Zn (%) Pb (%) (m) (m) SD165 0.00 1.72 1.72 Core Loss 0% Cemented 20.4 137 0.34 11.6 0.907 SD165 1.72 1.83 0.11 Sediment 100% Sparry 16.5 69 0.2 9.35 0.302 SD165 1.83 1.98 0.15 Precipitate 100% Coherent 0.09 3 0.02 0.08 0.015 SD165 1.98 2.47 0.49 Volcanic 100% SD165 2.47 4.04 1.57 Core Loss 0% SD166 0.00 1.72 1.72 Core Loss 0% Sparry 5.57 119 1.1 0.86 0.17 SD166 1.72 1.84 0.12 Precipitate 100% SD166 1.84 1.99 0.15 Conduit Facies 100% 12.9 26 37.7 <0.025 0.021 Cemented 20.8 38 17 0.41 0.15 SD166 1.99 2.57 0.58 Sediment 100% SD166 2.57 2.94 0.37 Conduit Facies 100% 11.8 41 21.1 0.1 0.055 SD166 2.94 20.97 18.03 Core Loss 0% Volcaniclastic 1.16 3 0.25 0.03 0.008 SD166 20.97 21.66 0.69 Breccia 100% SD166 21.66 25.64 3.98 Core Loss 0% Volcaniclastic 1.29 3 0.64 <0.025 0.007 SD166 25.64 25.76 0.12 Breccia 100% SD166 25.76 30.31 4.55 Core Loss 0% Volcaniclastic 0.39 <2 0.18 <0.025 0.004 SD166 30.31 31.12 0.81 Breccia 100% Volcaniclastic 0.73 2 1.7 <0.025 0.008 SD166 31.12 31.94 0.82 Breccia 100% SD166 31.94 35.08 3.14 Core Loss 0% SD167 0.00 2.02 2.02 Core Loss 0% SD167 2.02 2.47 0.45 Conduit Facies 100% 3.7 24 3.04 0.99 0.072 Sediment, silt-
SD167 2.47 2.90 0.43 sand-gravel 100% Cemented
SD167 2.90 2.95 0.05 Sediment 100% SD167 2.95 4.38 1.43 Core Loss 0% SD167 4.38 4.65 0.27 Conduit Facies 100% 8.68 53 3.16 2.45 0.109 SD167 4.65 6.70 2.05 Core Loss 0% Sulphide 4.22 23 4.87 0.1 0.058 SD167 6.70 7.23 0.53 Dominant Rock 100% SD167 7.23 10.41 3.18 Core Loss 0% Sulphide 2.39 23 16.6 0.08 0.028 SD167 10.41 10.48 0.07 Dominant Rock 100% SD167 10.48 12.70 2.22 Core Loss 0% Sulphide 4.22 38 5.45 0.65 0.089 SD167 12.70 12.86 0.16 Dominant Rock 100% SD167 12.86 15.01 2.15 Core Loss 0% Sulphide 7.01 42 9.39 0.73 0.05 SD167 15.01 15.10 0.09 Dominant Rock 100% SD167 15.10 16.53 1.43 Core Loss 0% Sulphide 3.24 18 10.2 0.41 0.051 SD167 16.53 16.57 0.04 Dominant Rock 100% SD167 16.57 20.90 4.33 Core Loss 0% Sulphide 2.77 33 12.9 0.77 0.106 SD167 20.90 21.22 0.32 Dominant Rock 100% SD169 0.00 2.08 2.08 Core Loss 0% Cemented 3.28 23 3.08 0.34 0.17 SD169 2.08 2.22 0.14 Sediment 100% SD169 2.22 2.64 0.42 Conduit Facies 100% 5.3 40 14 0.15 0.1 SD169 2.64 3.25 0.61 Core Loss 0% Sulphide 3.65 16 7.14 0.14 0.04 SD169 3.25 3.69 0.44 Dominant Rock 100% SD169 3.69 4.42 0.73 Core Loss 0%
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendix 1-1 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report February 2011
Hole From To (m) Length Lithology Recovery % Au g/t Ag g/t Cu (%) Zn (%) Pb (%) (m) (m) Sulphide 2.19 7 3.01 0.07 0.03 SD169 4.42 5.43 1.01 Dominant Rock 100% Sulphide 3.1 12 4.96 0.32 0.1 SD169 5.43 6.34 0.91 Dominant Rock 100% Sulphide 1.93 6 4.21 0.35 0.12 SD169 6.34 7.22 0.88 Dominant Rock 100% SD169 7.22 7.72 0.50 Core Loss 0% Sulphide 1.03 10 5.16 0.18 0.05 SD169 7.72 7.82 0.10 Dominant Rock 100% SD169 7.82 8.64 0.82 Core Loss 0% Sulphide 1.98 3 2.61 0.06 0.05 SD169 8.64 8.91 0.27 Dominant Rock 100% SD169 8.91 9.55 0.64 Core Loss 0% Sulphide 3.41 6 3.97 0.07 0.04 SD169 9.55 9.74 0.19 Dominant Rock 100% SD169 9.74 10.46 0.72 Core Loss 0% Sulphide 2.66 2 3.15 0.05 0.04 SD169 10.46 11.11 0.65 Dominant Rock 100% SD169 11.11 11.96 0.85 Core Loss 0% Sulphide 3.1 5 6.32 0.04 0.04 SD169 11.96 12.47 0.51 Dominant Rock 100% SD169 12.47 13.49 1.02 Core Loss 0% Sulphide 2.14 4 3.8 0.04 0.04 SD169 13.49 13.57 0.08 Dominant Rock 100% SD169 13.57 15.01 1.44 Core Loss 0% SD171 0.00 0.90 0.90 Core Loss 0% Sediment, silt-
SD171 0.90 0.91 0.01 sand-gravel 100% Cemented 0.31 17 0.22 1.45 0.25 SD171 0.91 1.19 0.28 Sediment 100% SD171 1.19 1.93 0.74 Core Loss 0% Sulphide 5.73 25 8.35 0.11 0.05 SD171 1.93 2.70 0.77 Dominant Rock 100% SD171 2.70 2.85 0.15 Core Loss 0% Sulphide 6.74 34 8.02 0.24 0.07 SD171 2.85 3.64 0.79 Dominant Rock 100% Sulphide 7.89 7 4.99 0.18 0.10 SD171 3.64 4.43 0.79 Dominant Rock 100% SD171 4.43 4.93 0.50 Core Loss 0% Sulphide 4.79 20 5.71 0.09 0.06 SD171 4.93 5.67 0.74 Dominant Rock 100% SD171 5.67 6.10 0.43 Core Loss 0% Sulphide 1.88 6 1.90 0.05 0.04 SD171 6.10 6.73 0.63 Dominant Rock 100% SD171 6.73 7.27 0.54 Core Loss 0% Sulphide 2.11 5 1.47 0.06 0.04 SD171 7.27 7.95 0.68 Dominant Rock 100% SD171 7.95 8.43 0.48 Core Loss 0% Sulphide 1.98 7 1.21 0.04 0.04 SD171 8.43 9.08 0.65 Dominant Rock 100% SD171 9.08 10.13 1.05 Core Loss 0% Sulphide 4.61 9 3.40 0.07 0.05 SD171 10.13 10.45 0.32 Dominant Rock 100% SD171 10.45 10.72 0.27 Core Loss 0% SD172 0.00 1.82 1.82 Core Loss 0% Sediment, silt- 0.37 <2 0.28 0.02 0.02 SD172 1.82 1.98 0.16 sand-gravel 100% Sulphide 6.35 129 28.6 0.03 0.04 SD172 1.98 2.44 0.46 Dominant Rock 100% SD172 2.44 3.50 1.06 Core Loss 0% Sulphide 7.24 23 25.7 0.13 0.04 SD172 3.50 3.71 0.21 Dominant Rock 100%
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendix 1-2 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report February 2011
Hole From To (m) Length Lithology Recovery % Au g/t Ag g/t Cu (%) Zn (%) Pb (%) (m) (m) SD172 3.71 5.43 1.72 Core Loss 0% Sulphide 17.3 5 5.3 0.06 0.04 SD172 5.43 5.93 0.50 Dominant Rock 100% SD172 5.93 6.60 0.67 Core Loss 0% Sulphide 8.41 16 4.85 0.04 0.05 SD172 6.60 6.73 0.13 Dominant Rock 100% SD172 6.73 7.77 1.04 Core Loss 0% Sulphide 5.6 5 8.16 0.01 0.04 SD172 7.77 8.47 0.70 Dominant Rock 100% SD172 8.47 10.13 1.66 Core Loss 0% Sulphide 9.32 <2 4.14 0.03 0.03 SD172 10.13 10.20 0.07 Dominant Rock 100% SD172 10.20 12.46 2.26 Core Loss 0% SD173 0.00 0.90 0.90 Core Loss 0% Sediment, silt- 0.25 <2 0.23 0.03 0.01 SD173 0.90 1.10 0.20 sand-gravel 100% Sulphide 6.18 56 25.2 0.11 0.08 SD173 1.10 1.35 0.25 Dominant Rock 100% SD173 1.35 3.92 2.57 Core Loss 0% Clay Dominant 1.75 3 3.94 0.09 0.03 SD173 3.92 4.18 0.26 Rock 100% SD173 4.18 5.40 1.22 Core Loss 0% Clay Dominant 19.5 12 2.01 0.46 0.03 SD173 5.40 5.86 0.46 Rock 100% SD173 5.86 6.52 0.66 Core Loss 0% Clay Dominant 0.57 18 0.4 0.68 0.21 SD173 6.52 7.01 0.49 Rock 100% SD173 7.01 7.83 0.82 Core Loss 0% Coherent 0.62 <2 0.44 0.05 0.02 SD173 7.83 7.94 0.11 Volcanic 100% SD173 7.94 8.81 0.87 Core Loss 0% Volcaniclastic 0.34 <2 0.26 0.02 <0.01 SD173 8.81 9.37 0.56 Breccia 100% SD173 9.37 10.01 0.64 Core Loss 0% SD174 0.00 0.80 0.80 Core Loss 0% SD174 0.80 1.18 0.38 Conduit Facies 100% 8.23 25 21.00 0.05 0.06 SD174 1.18 1.80 0.62 Core Loss 0% Sulphide 2.53 4 6.82 0.12 0.03 SD174 1.80 2.06 0.26 Dominant Rock 100% SD174 2.06 2.76 0.70 Core Loss 0% Sulphide 3.85 27 13.10 0.10 0.03 SD174 2.76 2.91 0.15 Dominant Rock 100% SD174 2.91 3.46 0.55 Core Loss 0% Sulphide 6.30 61 7.42 0.54 0.03 SD174 3.46 3.57 0.11 Dominant Rock 100% SD174 3.57 4.83 1.26 Core Loss 0% Sulphide 1.77 10 1.52 0.10 0.03 SD174 4.83 5.08 0.25 Dominant Rock 100% SD174 5.08 7.17 2.09 Core Loss 0% Sulphate 0.84 <2 1.04 0.03 0.01 SD174 7.17 7.32 0.15 Dominant Rock 100% SD174 7.32 8.34 1.02 Core Loss 0% Sulphate 0.27 <2 0.41 0.02 <0.01 SD174 8.34 8.57 0.23 Dominant Rock 100% SD174 8.57 9.41 0.84 Core Loss 0% Sulphate 0.13 <2 0.64 <0.01 <0.01 SD174 9.41 10.41 1.00 Dominant Rock 100% Sulphate 0.15 <2 0.01 0.01 <0.01 SD174 10.41 11.33 0.92 Dominant Rock 100% Sulphate 0.14 <2 0.01 0.01 <0.01 SD174 11.33 12.25 0.92 Dominant Rock 100%
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendix 1-3 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report February 2011
Hole From To (m) Length Lithology Recovery % Au g/t Ag g/t Cu (%) Zn (%) Pb (%) (m) (m) SD174 12.25 12.56 0.31 Core Loss 0% Sulphate 0.31 <2 0.01 <0.01 <0.01 SD174 12.56 13.23 0.67 Dominant Rock 100% SD174 13.23 13.77 0.54 Core Loss 0% Sulphate 0.35 <2 0.01 0.01 <0.01 SD174 13.77 14.27 0.50 Dominant Rock 100% Sulphide 2.03 <2 0.05 0.01 <0.01 SD174 14.27 14.66 0.39 Dominant Rock 100% SD174 14.66 14.94 0.28 Core Loss 0% Sulphate 0.46 <2 0.01 <0.01 <0.01 SD174 14.94 16.02 1.08 Dominant Rock 100% SD174 16.02 16.11 0.09 Core Loss 0% Clay Dominant 0.33 <2 0.01 0.01 <0.01 SD174 16.11 17.17 1.06 Rock 100% SD174 17.17 17.28 0.11 Core Loss 0% Clay Dominant 0.32 <2 0.00 0.01 <0.01 SD174 17.28 18.18 0.90 Rock 100% SD174 18.18 18.45 0.27 Core Loss 0% Sulphate 0.13 <2 0.02 <0.01 <0.01 SD174 18.45 19.15 0.70 Dominant Rock 100% SD174 19.15 19.41 0.26 Core Loss 0% Sulphide 0.23 <2 0.07 <0.01 <0.01 SD174 19.41 19.90 0.49 Dominant Rock 100% Sulphate 0.30 <2 0.02 0.01 <0.01 SD174 19.90 20.38 0.48 Dominant Rock 100% SD174 20.38 20.58 0.20 Core Loss 0% Clay Dominant 0.16 <2 0.01 0.02 <0.01 SD174 20.58 20.90 0.32 Rock 100% Sulphide 0.20 <2 0.02 0.01 <0.01 SD174 20.90 21.54 0.64 Dominant Rock 100% SD174 21.54 21.75 0.21 Core Loss 0% SD175 0.00 1.01 1.01 Core Loss 0% Cemented 0.18 5 0.16 0.53 0.12 SD175 1.01 1.24 0.23 Sediment 100% Sparry 5.76 137 10.50 0.43 0.11 SD175 1.24 1.34 0.10 Precipitate 100% SD175 1.34 2.44 1.10 Core Loss 0% Sulphide 7.23 40 7.64 0.18 0.08 SD175 2.44 3.44 1.00 Dominant Rock 100% Sulphide 6.45 14 4.24 0.08 0.07 SD175 3.44 4.53 1.09 Dominant Rock 100% SD175 4.53 5.14 0.61 Core Loss 0% SD176 0.00 1.14 1.14 Core Loss 0% Cemented 0.28 31 0.19 6.13 1.42 SD176 1.14 1.22 0.08 Sediment 100% Sparry 4.26 94 13.00 0.31 0.06 SD176 1.22 1.80 0.58 Precipitate 100% Sulphide 7.35 67 16.60 0.09 0.06 SD176 1.80 1.94 0.14 Dominant Rock 100% SD176 1.94 2.04 0.10 Core Loss 0% Sulphide 5.86 9 2.20 0.03 0.05 SD176 2.04 3.13 1.09 Dominant Rock 100% Sulphide 5.10 12 2.79 0.07 0.06 SD176 3.13 4.03 0.90 Dominant Rock 100% SD176 4.03 4.27 0.24 Conduit Facies 100% 4.34 34 10.90 0.05 0.06 SD176 4.27 4.30 0.03 Core Loss 0% SD176 4.30 5.08 0.78 Conduit Facies 100% 3.17 25 3.74 0.09 0.07 Sulphide 3.01 7 1.35 0.07 0.07 SD176 5.08 5.33 0.25 Dominant Rock 100% SD176 5.33 5.47 0.14 Core Loss 0% Sulphide 3.60 8 2.08 0.08 0.05 SD176 5.47 6.11 0.64 Dominant Rock 100%
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendix 1-4 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report February 2011
Hole From To (m) Length Lithology Recovery % Au g/t Ag g/t Cu (%) Zn (%) Pb (%) (m) (m) SD176 6.11 6.64 0.53 Core Loss 0% Sulphide 2.60 3 1.88 <0.01 0.02 SD176 6.64 7.81 1.17 Dominant Rock 100% SD176 7.81 7.92 0.11 Core Loss 0% Sulphide 3.47 5 2.46 0.05 0.04 SD176 7.92 8.12 0.20 Dominant Rock 100% SD176 8.12 8.28 0.16 Core Loss 0% Sulphide 1.94 3 2.57 <0.01 0.02 SD176 8.28 9.18 0.90 Dominant Rock 100% SD176 9.18 9.25 0.07 Core Loss 0% Sulphide 3.94 10 5.75 0.09 0.03 SD176 9.25 10.06 0.81 Dominant Rock 100% SD176 10.06 10.22 0.16 Core Loss 0% Sulphide 1.57 2 2.32 <0.01 0.02 SD176 10.22 11.19 0.97 Dominant Rock 100% SD176 11.19 11.21 0.02 Core Loss 0% Sulphide 1.87 <2 0.86 <0.01 0.02 SD176 11.21 11.99 0.78 Dominant Rock 100% SD176 11.99 12.43 0.44 Core Loss 0% Sulphide 1.25 <2 0.45 <0.01 0.01 SD176 12.43 13.26 0.83 Dominant Rock 100% SD176 13.26 13.55 0.29 Core Loss 0% Sulphide 1.18 <2 0.41 0.03 0.02 SD176 13.55 14.29 0.74 Dominant Rock 100% SD176 14.29 14.52 0.23 Core Loss 0% Sulphide 1.35 <2 0.39 <0.01 0.01 SD176 14.52 15.62 1.10 Dominant Rock 100% SD176 15.62 15.74 0.12 Core Loss 0% Sulphide 1.33 3 0.43 <0.01 0.01 SD176 15.74 16.53 0.79 Dominant Rock 100% SD176 16.53 16.86 0.33 Core Loss 0% Sulphide 1.69 <2 0.57 <0.01 0.02 SD176 16.86 17.55 0.69 Dominant Rock 100% Sulphide 1.95 5 1.88 <0.01 0.02 SD176 17.55 18.24 0.69 Dominant Rock 100% SD176 18.24 18.35 0.11 Core Loss 0% SD177 0.00 1.06 1.06 Core Loss 0% Cemented 3.55 56 4.79 5.22 1.51 SD177 1.06 1.20 0.14 Sediment 100% Sparry 5.24 75 7.16 5.31 1.75 SD177 1.20 1.40 0.20 Precipitate 100% Sulphide 4.24 12 6.14 0.08 0.04 SD177 1.40 1.77 0.37 Dominant Rock 100% SD177 1.77 2.37 0.60 Core Loss 0% Sulphide 3.09 8 3.54 0.17 0.06 SD177 2.37 3.13 0.76 Dominant Rock 100% SD177 3.13 4.32 1.19 Core Loss 0% Sulphide 2.90 13 3.95 0.46 0.08 SD177 4.32 5.54 1.22 Dominant Rock 100% SD177 5.54 5.59 0.05 Core Loss 0% Sulphide 2.67 9 3.94 0.22 0.08 SD177 5.59 6.21 0.62 Dominant Rock 100% SD177 6.21 6.53 0.32 Core Loss 0% Sulphide 2.04 8 4.53 0.07 0.04 SD177 6.53 7.58 1.05 Dominant Rock 100% SD177 7.58 7.87 0.29 Core Loss 0% Sulphide 2.49 14 6.61 0.10 0.04 SD177 7.87 8.55 0.68 Dominant Rock 100% SD177 8.55 9.91 1.36 Core Loss 0% Sulphide
SD177 9.91 9.94 0.03 Dominant Rock 100%
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendix 1-5 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report February 2011
Hole From To (m) Length Lithology Recovery % Au g/t Ag g/t Cu (%) Zn (%) Pb (%) (m) (m) SD177 9.94 12.25 2.31 Core Loss 0% Sulphide 3.45 10 11.80 0.04 0.04 SD177 12.25 12.48 0.23 Dominant Rock 100% SD177 12.48 12.83 0.35 Core Loss 0% Sulphide 2.37 10 8.68 0.09 0.05 SD177 12.83 12.93 0.10 Dominant Rock 100% SD177 12.93 13.20 0.27 Core Loss 0% Sulphide 2.54 8 11.60 0.13 0.04 SD177 13.20 14.25 1.05 Dominant Rock 100% SD177 14.25 14.42 0.17 Core Loss 0% Sulphide 3.10 7 13.00 0.01 0.03 SD177 14.42 15.75 1.33 Dominant Rock 100% SD177 15.75 15.96 0.21 Core Loss 0% Sulphide 4.69 15 13.90 0.01 0.04 SD177 15.96 16.68 0.72 Dominant Rock 100% SD177 16.68 17.47 0.79 Core Loss 0% Sulphide 4.69 5 6.72 <0.01 0.03 SD177 17.47 18.65 1.18 Dominant Rock 100% SD177 18.65 19.18 0.53 Core Loss 0% Sulphide 1.57 <2 6.49 <0.01 0.01 SD177 19.18 20.10 0.92 Dominant Rock 100% SD177 20.10 20.68 0.58 Core Loss 0% Sulphide 1.44 <2 0.88 <0.01 0.02 SD177 20.68 21.20 0.52 Dominant Rock 100% Sulphate 0.70 <2 0.14 <0.01 0.01 SD177 21.20 21.87 0.67 Dominant Rock 100% SD177 21.87 22.20 0.33 Core Loss 0% Sulphate 0.56 <2 0.09 <0.01 <0.01 SD177 22.20 23.18 0.98 Dominant Rock 100% SD177 23.18 23.68 0.50 Core Loss 0% Sulphate 0.66 <2 0.07 0.02 0.03 SD177 23.68 23.95 0.27 Dominant Rock 100% SD177 23.95 25.19 1.24 Core Loss 0% Sulphate 0.77 <2 0.04 <0.01 <0.01 SD177 25.19 26.33 1.14 Dominant Rock 100% SD177 26.33 26.70 0.37 Core Loss 0% Sulphate 0.30 <2 0.04 0.01 <0.01 SD177 26.70 27.46 0.76 Dominant Rock 100% SD177 27.46 28.19 0.73 Core Loss 0% Sulphate 0.23 <2 0.01 <0.01 <0.01 SD177 28.19 28.92 0.73 Dominant Rock 100% Sulphate 0.19 <2 0.06 <0.01 <0.01 SD177 28.92 29.64 0.72 Dominant Rock 100% SD177 29.64 29.69 0.05 Core Loss 0% Sulphate 0.18 <2 0.02 <0.01 <0.01 SD177 29.69 30.58 0.89 Dominant Rock 100% Sulphate 0.14 <2 0.02 <0.01 <0.01 SD177 30.58 31.47 0.89 Dominant Rock 100% SD177 31.47 32.70 1.23 Core Loss 0% Sulphate 0.17 <2 0.01 <0.01 <0.01 SD177 32.70 33.89 1.19 Dominant Rock 100% SD177 33.89 34.20 0.31 Core Loss 0% Sulphate 0.35 <2 0.01 <0.01 <0.01 SD177 34.20 35.40 1.20 Dominant Rock 100% SD177 35.40 36.48 1.08 Core Loss 0% Sulphate 0.10 <2 0.00 <0.01 <0.01 SD177 36.48 37.56 1.08 Dominant Rock 100% Sulphate 0.11 <2 0.00 <0.01 <0.01 SD177 37.56 38.63 1.07 Dominant Rock 100% SD177 38.63 38.78 0.15 Core Loss 0% Clay Dominant 0.12 <2 0.01 <0.01 <0.01 SD177 38.78 39.60 0.82 Rock 100%
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendix 1-6 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report February 2011
Hole From To (m) Length Lithology Recovery % Au g/t Ag g/t Cu (%) Zn (%) Pb (%) (m) (m) Sulphate 0.05 <2 0.01 0.04 <0.01 SD177 39.60 39.96 0.36 Dominant Rock 100% SD177 39.96 40.20 0.24 Core Loss 0% Clay Dominant 0.12 <2 0.01 <0.01 <0.01 SD177 40.20 41.26 1.06 Rock 100% Clay Dominant 0.17 <2 0.02 <0.01 <0.01 SD177 41.26 42.32 1.06 Rock 100% SD177 42.32 42.48 0.16 Core Loss 0% SD178 0.00 1.38 1.38 Core Loss 0% Sparry 8.50 96 8.32 1.35 0.17 SD178 1.38 1.83 0.45 Precipitate 100% Sulphide 11.20 49 11.50 0.27 0.06 SD178 1.83 2.16 0.33 Dominant Rock 100% SD178 2.16 4.76 2.60 Core Loss 0% Sulphide 4.05 8 9.53 0.57 0.11 SD178 4.76 5.20 0.44 Dominant Rock 100% SD178 5.20 7.05 1.85 Core Loss 0% Sulphide 4.23 12 13.20 2.04 0.43 SD178 7.05 7.68 0.63 Dominant Rock 100% SD178 7.68 7.84 0.16 Core Loss 0% Sulphide 4.52 38 12.70 4.60 0.11 SD178 7.84 8.70 0.86 Dominant Rock 100% SD178 8.70 9.32 0.62 Core Loss 0% Sulphide 4.03 22 7.61 2.18 0.20 SD178 9.32 9.72 0.40 Dominant Rock 100% SD178 9.72 10.76 1.04 Core Loss 0% Clay Dominant 1.71 <2 0.97 0.10 0.02 SD178 10.76 11.71 0.95 Rock 100% SD178 11.71 12.07 0.36 Core Loss 0% Clay Dominant 0.52 2 0.57 <0.01 <0.01 SD178 12.07 12.65 0.58 Rock 100% SD178 12.65 13.40 0.75 Core Loss 0% Clay Dominant 2.36 12 5.47 0.18 0.02 SD178 13.40 13.57 0.17 Rock 100% SD178 13.57 14.63 1.06 Core Loss 0% Sulphate 0.21 <2 0.05 <0.01 <0.01 SD178 14.63 15.40 0.77 Dominant Rock 100% SD178 15.40 15.70 0.30 Core Loss 0% Sulphate 0.40 <2 0.73 <0.01 <0.01 SD178 15.70 15.96 0.26 Dominant Rock 100% SD178 15.96 16.78 0.82 Core Loss 0% Sulphate 0.11 <2 0.01 <0.01 <0.01 SD178 16.78 17.97 1.19 Dominant Rock 100% SD178 17.97 18.00 0.03 Core Loss 0% Sulphate 0.14 <2 0.01 <0.01 <0.01 SD178 18.00 18.86 0.86 Dominant Rock 100% SD178 18.86 19.22 0.36 Core Loss 0% Sulphate 0.27 <2 0.01 <0.01 <0.01 SD178 19.22 19.60 0.38 Dominant Rock 100% SD178 19.60 20.74 1.14 Core Loss 0% SD179 0.00 1.92 1.92 Core Loss 0% Sediment, silt- 0.09 2 0.15 0.08 <0.01 SD179 1.92 2.08 0.16 sand-gravel 100% Sulphide 9.49 53 18.90 1.10 0.22 SD179 2.08 2.30 0.22 Dominant Rock 100% Sulphide 11.30 41 20.40 0.71 0.13 SD179 2.30 3.53 1.23 Dominant Rock 100% SD179 3.53 3.81 0.28 Core Loss 0% Sulphide 10.90 170 17.90 2.53 0.77 SD179 3.81 3.99 0.18 Dominant Rock 100% SD179 3.99 6.11 2.12 Core Loss 0%
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendix 1-7 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report February 2011
Hole From To (m) Length Lithology Recovery % Au g/t Ag g/t Cu (%) Zn (%) Pb (%) (m) (m) Sediment, silt- 21.60 34 6.26 0.70 0.04 SD179 6.11 6.46 0.35 sand-gravel 100% SD179 6.46 8.30 1.84 Core Loss 0% Sulphide 4.06 8 24.30 0.06 0.03 SD179 8.30 8.77 0.47 Dominant Rock 100% SD179 8.77 10.58 1.81 Core Loss 0% Sulphide 6.98 7 15.40 0.07 0.03 SD179 10.58 10.87 0.29 Dominant Rock 100% SD179 10.87 11.43 0.56 Core Loss 0% Sulphide 6.37 5 18.90 0.03 0.04 SD179 11.43 12.02 0.59 Dominant Rock 100% SD179 12.02 12.45 0.43 Core Loss 0% Sulphide 11.00 3 16.90 0.04 0.04 SD179 12.45 13.48 1.03 Dominant Rock 100% SD179 13.48 13.95 0.47 Core Loss 0% Sulphide 4.62 <2 14.60 0.02 0.03 SD179 13.95 14.70 0.75 Dominant Rock 100% SD179 14.70 15.34 0.64 Core Loss 0% Sulphide 2.78 <2 9.98 0.02 0.03 SD179 15.34 15.65 0.31 Dominant Rock 100% Sulphate 1.55 <2 4.62 0.03 0.01 SD179 15.65 16.06 0.41 Dominant Rock 100% SD179 16.06 17.40 1.34 Core Loss 0% Sulphide 3.70 <2 8.00 0.04 0.02 SD179 17.40 17.50 0.10 Dominant Rock 100% Sulphate 0.18 <2 0.10 0.02 <0.01 SD179 17.50 17.99 0.49 Dominant Rock 100% SD179 17.99 18.92 0.93 Core Loss 0% Sulphate 2.20 <2 5.21 0.03 0.02 SD179 18.92 18.97 0.05 Dominant Rock 100% Sulphide 2.58 <2 5.43 0.03 0.02 SD179 18.97 19.17 0.20 Dominant Rock 100% SD179 19.17 20.42 1.25 Core Loss 0% Clay Dominant 0.29 <2 0.05 0.03 <0.01 SD179 20.42 21.19 0.77 Rock 100% SD179 21.19 22.76 1.57 Core Loss 0% SD180 0.00 0.72 0.72 Core Loss 0% Sparry 3.30 11 4.49 0.30 0.08 SD180 0.72 1.17 0.45 Precipitate 100% Sulphide 3.57 13 8.74 0.58 0.15 SD180 1.17 1.51 0.34 Dominant Rock 100% SD180 1.51 1.78 0.27 Core Loss 0% Sulphide 3.16 <2 4.65 0.18 0.04 SD180 1.78 2.75 0.97 Dominant Rock 100% SD180 2.75 3.00 0.25 Core Loss 0% Sulphide 3.34 3 4.20 0.07 0.04 SD180 3.00 3.68 0.68 Dominant Rock 100% SD180 3.68 4.22 0.54 Core Loss 0% Sulphide 4.42 18 7.72 0.67 0.07 SD180 4.22 4.47 0.25 Dominant Rock 100% SD180 4.47 4.78 0.31 Core Loss 0% Sulphide 6.20 9 5.26 0.51 0.11 SD180 4.78 4.99 0.21 Dominant Rock 100% SD180 4.99 6.30 1.31 Core Loss 0% Sulphide 5.15 9 14.50 0.18 0.07 SD180 6.30 6.71 0.41 Dominant Rock 100% SD180 6.71 7.76 1.05 Core Loss 0% Sulphide 11.20 13 15.70 0.06 0.06 SD180 7.76 8.35 0.59 Dominant Rock 100% SD180 8.35 14.75 6.40 Core Loss 0% Sulphide 3.12 <2 13.90 0.06 0.03 SD180 14.75 15.03 0.28 Dominant Rock 100%
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendix 1-8 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report February 2011
Hole From To (m) Length Lithology Recovery % Au g/t Ag g/t Cu (%) Zn (%) Pb (%) (m) (m) SD180 15.03 15.76 0.73 Core Loss 0% Sulphide 0.97 <2 7.14 0.03 0.02 SD180 15.76 16.25 0.49 Dominant Rock 100% SD180 16.25 16.47 0.22 Core Loss 0% Sulphide 0.75 <2 1.56 0.10 0.02 SD180 16.47 17.37 0.90 Dominant Rock 100% SD180 17.37 17.96 0.59 Core Loss 0% Sulphide 0.61 <2 0.48 0.06 0.02 SD180 17.96 18.84 0.88 Dominant Rock 100% Sulphide 1.30 <2 0.79 0.03 0.02 SD180 18.84 19.72 0.88 Dominant Rock 100% SD180 19.72 19.78 0.06 Core Loss 0% Sulphide 1.00 <2 1.11 0.07 0.03 SD180 19.78 21.16 1.38 Dominant Rock 100% SD180 21.16 21.29 0.13 Core Loss 0% Sulphide 0.43 <2 0.85 0.01 0.01 SD180 21.29 22.22 0.93 Dominant Rock 100% SD180 22.22 22.77 0.55 Core Loss 0% Sulphide 0.81 <2 0.21 0.01 <0.01 SD180 22.77 23.50 0.73 Dominant Rock 100% Sulphide 0.40 <2 0.22 0.10 0.02 SD180 23.50 24.23 0.73 Dominant Rock 100% SD180 24.23 24.28 0.05 Core Loss 0% Sulphide 0.44 <2 0.13 0.02 <0.01 SD180 24.28 24.77 0.49 Dominant Rock 100% SD180 24.77 25.78 1.01 Core Loss 0% Clay Dominant 0.22 <2 0.08 0.02 0.04 SD180 25.78 26.95 1.17 Rock 100% SD180 26.95 27.33 0.38 Core Loss 0% Sulphate 0.06 <2 0.02 0.01 <0.01 SD180 27.33 28.33 1.00 Dominant Rock 100% Sulphate 0.06 <2 0.11 0.01 <0.01 SD180 28.33 29.30 0.97 Dominant Rock 100% Sulphate 0.11 <2 0.03 0.03 0.02 SD180 29.30 30.08 0.78 Dominant Rock 100% SD180 30.08 30.30 0.22 Core Loss 0% Sulphate 0.23 <2 0.02 <0.01 0.02 SD180 30.30 31.32 1.02 Dominant Rock 100% SD180 31.32 31.78 0.46 Core Loss 0% Sulphate 0.13 <2 0.03 <0.01 <0.01 SD180 31.78 32.54 0.76 Dominant Rock 100% Sulphate 0.14 <2 0.03 <0.01 <0.01 SD180 32.54 33.30 0.76 Dominant Rock 100% Clay Dominant 0.18 <2 0.04 <0.01 <0.01 SD180 33.30 34.03 0.73 Rock 100% Clay Dominant 0.13 <2 0.02 0.01 <0.01 SD180 34.03 34.77 0.74 Rock 100% Sulphate 0.09 <2 0.02 0.03 <0.01 SD180 34.77 35.50 0.73 Dominant Rock 100% Sulphate 0.15 <2 0.02 0.01 <0.01 SD180 35.50 36.30 0.80 Dominant Rock 100% SD180 36.23 36.30 0.07 Core Loss 0% Sulphate 0.15 <2 0.03 0.02 <0.01 SD180 36.30 37.64 1.34 Dominant Rock 100% SD180 37.64 37.77 0.13 Core Loss 0% Sulphate 0.07 <2 0.04 0.19 0.02 SD180 37.77 38.77 1.00 Dominant Rock 100% Sulphate 0.17 <2 0.03 0.03 <0.01 SD180 38.77 39.77 1.00 Dominant Rock 100% Sulphate 0.25 <2 0.04 0.01 <0.01 SD180 39.77 40.75 0.98 Dominant Rock 100% SD180 40.75 40.77 0.02 Core Loss 0%
SD180 40.77 41.77 1.00 Coherent 100% 0.28 <2 0.02 0.01 <0.01
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendix 1-9 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report February 2011
Hole From To (m) Length Lithology Recovery % Au g/t Ag g/t Cu (%) Zn (%) Pb (%) (m) (m) Volcanic Coherent 0.07 <2 0.06 0.02 <0.01 SD180 41.77 42.77 1.00 Volcanic 100% Coherent 0.04 <2 0.02 0.03 <0.01 SD180 42.77 43.76 0.99 Volcanic 100% Coherent 0.10 <2 0.01 0.02 <0.01 SD180 43.76 44.50 0.74 Volcanic 100% Coherent 0.19 <2 0.01 0.02 <0.01 SD180 44.50 45.25 0.75 Volcanic 100% SD181 0.00 0.69 0.69 Core Loss 0% Cemented SD181 0.69 1.26 0.57 Sediment 100% 0.05 69 0.19 0.91 0.20 SD181 1.26 3.34 2.08 Core Loss 0% Sediment, SD181 3.34 4.14 0.80 cohesive mud 100% 0.12 13 0.75 0.05 0.10 SD181 4.14 4.70 0.56 Core Loss 0% Sediment, SD181 4.70 5.22 0.52 cohesive mud 100% 0.09 21 0.21 <0.01 0.06 SD181 5.22 6.01 0.79 Core Loss 0% Clay Dominant SD181 6.01 6.43 0.42 Rock 100% 0.07 8 0.17 0.03 0.03 SD181 6.43 7.61 1.18 Core Loss 0% Sparry SD181 7.61 7.78 0.17 Precipitate 100% 0.17 <2 1.83 <0.01 0.08 SD181 7.78 9.89 2.11 Core Loss 0% Clay Dominant SD181 9.89 10.24 0.35 Rock 100% 0.21 5 1.35 0.10 0.05 SD181 10.24 11.41 1.17 Core Loss 0% Sparry
SD181 11.41 11.43 0.02 Precipitate 100% SD181 11.43 12.45 1.02 Core Loss 0% Sparry
SD181 12.45 12.55 0.10 Precipitate 100% SD181 12.55 13.27 0.72 Core Loss 0% Sparry SD181 13.27 13.57 0.30 Precipitate 100% 1.85 4 0.39 0.02 0.03 SD181 13.57 14.50 0.93 Core Loss 0% Coherent SD181 14.50 14.92 0.42 Volcanic 100% 0.41 <2 0.28 0.02 0.02 SD181 14.92 15.57 0.65 Core Loss 0% Coherent SD181 15.57 16.40 0.83 Volcanic 100% 0.28 10 0.13 0.01 0.02 SD181 16.40 16.62 0.22 Core Loss 0% SD182 0.00 1.20 1.20 Core Loss 0% Sediment, silt-
SD182 1.20 1.22 0.02 sand-gravel 100% SD182 1.22 1.28 0.06 Core Loss 0% Sediment, silt- 2.39 11 2.54 0.08 0.05 SD182 1.28 1.77 0.49 sand-gravel 100% Sparry 5.37 34 10.10 0.08 0.06 SD182 1.77 1.91 0.14 Precipitate 100% Cemented 6.54 97 9.50 0.15 0.08 SD182 1.91 2.53 0.62 Sediment 100% SD182 2.53 2.63 0.10 Core Loss 0% Cemented 6.58 65 11.90 0.19 0.08 SD182 2.63 2.86 0.23 Sediment 100% SD182 2.86 3.65 0.79 Core Loss 0% Sediment, silt- 1.66 10 3.07 0.07 0.03 SD182 3.65 3.87 0.22 sand-gravel 100% Sediment, silt- 6.35 45 10.70 0.23 0.08 SD182 3.87 4.05 0.18 sand-gravel 100%
SD182 4.05 4.38 0.33 Sediment, silt- 100% 1.74 4 1.75 0.06 0.03
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendix 1-10 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report February 2011
Hole From To (m) Length Lithology Recovery % Au g/t Ag g/t Cu (%) Zn (%) Pb (%) (m) (m) sand-gravel SD182 4.38 6.87 2.49 Core Loss 0% Sulphide
SD182 6.87 6.94 0.07 Dominant Rock 100% SD182 6.94 8.94 2.00 Core Loss 0% Sulphate
SD182 8.94 9.04 0.10 Dominant Rock 100% SD182 9.04 10.29 1.25 Core Loss 0% Clay Dominant 0.73 <2 0.19 0.19 <0.01 SD182 10.29 11.29 1.00 Rock 100% SD182 11.29 11.81 0.52 Core Loss 0% Volcaniclastic 0.21 <2 0.03 0.07 <0.01 SD182 11.81 12.50 0.69 Breccia 100% Volcaniclastic 0.14 3 0.01 0.04 <0.01 SD182 12.50 13.20 0.70 Breccia 100% SD182 13.20 13.47 0.27 Core Loss 0% Volcaniclastic 0.20 <2 0.07 0.03 <0.01 SD182 13.47 14.61 1.14 Breccia 100% SD182 14.61 15.01 0.40 Core Loss 0% Volcaniclastic 0.25 <2 0.54 0.02 <0.01 SD182 15.01 16.22 1.21 Breccia 100% SD182 16.22 16.48 0.26 Core Loss 0% Volcaniclastic 0.13 <2 0.78 0.02 <0.01 SD182 16.48 17.48 1.00 Breccia 100% Volcaniclastic 0.18 <2 0.14 0.02 <0.01 SD182 17.48 18.25 0.77 Breccia 100% Volcaniclastic 0.43 <2 0.09 0.02 <0.01 SD182 18.25 19.01 0.76 Breccia 100% SD182 19.01 19.48 0.47 Core Loss 0% SD183 0.00 0.25 0.25 Core Loss 0% Sparry 5.26 258 0.86 5.74 0.73 SD183 0.25 0.54 0.29 Precipitate 100% Cemented 0.99 12 0.72 0.76 0.14 SD183 0.54 0.84 0.30 Sediment 100% Cemented 4.77 23 10.50 2.52 0.56 SD183 0.84 1.05 0.21 Sediment 100% SD183 1.05 1.46 0.41 Core Loss 0% Sulphide 3.71 30 20.30 0.05 0.03 SD183 1.46 1.64 0.18 Dominant Rock 100% SD183 1.64 2.98 1.34 Core Loss 0% Sulphate 0.16 <2 1.41 0.02 <0.01 SD183 2.98 3.69 0.71 Dominant Rock 100% SD183 3.69 4.75 1.06 Core Loss 0% Sulphate 0.11 <2 0.06 0.02 <0.01 SD183 4.75 5.47 0.72 Dominant Rock 100% Sulphate 0.10 <2 0.11 0.03 <0.01 SD183 5.47 6.20 0.73 Dominant Rock 100% SD183 6.20 6.25 0.05 Core Loss 0% Sulphate 0.16 <2 0.09 0.02 <0.01 SD183 6.25 7.48 1.23 Dominant Rock 100% SD183 7.48 7.74 0.26 Core Loss 0% Sulphate 0.20 <2 1.38 0.02 <0.01 SD183 7.74 8.94 1.20 Dominant Rock 100% Sulphide 0.27 <2 4.92 0.08 0.01 SD183 8.94 9.83 0.89 Dominant Rock 100% Sulphate 0.28 <2 0.11 0.02 <0.01 SD183 9.83 10.82 0.99 Dominant Rock 100% Sulphate 0.63 <2 0.07 0.02 <0.01 SD183 10.82 11.75 0.93 Dominant Rock 100% Clay Dominant 0.16 <2 0.07 0.03 <0.01 SD183 11.75 12.70 0.95 Rock 100% Clay Dominant 0.16 <2 0.05 0.02 <0.01 SD183 12.70 13.66 0.96 Rock 100%
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendix 1-11 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report February 2011
Hole From To (m) Length Lithology Recovery % Au g/t Ag g/t Cu (%) Zn (%) Pb (%) (m) (m) SD183 13.66 13.74 0.08 Core Loss 0% Clay Dominant 0.08 <2 0.03 0.03 <0.01 SD183 13.74 14.74 1.00 Rock 100% Clay Dominant 0.09 <2 0.02 0.03 <0.01 SD183 14.74 15.74 1.00 Rock 100% Clay Dominant 0.06 <2 0.03 0.10 <0.01 SD183 15.74 16.56 0.82 Rock 100% Clay Dominant 0.13 <2 0.03 0.03 <0.01 SD183 16.56 17.39 0.83 Rock 100% Volcaniclastic 0.05 <2 0.01 0.02 <0.01 SD183 17.39 18.34 0.95 Breccia 100% Volcaniclastic 0.06 <2 0.01 0.02 <0.01 SD183 18.34 19.45 1.11 Breccia 100% Volcaniclastic 0.07 <2 0.04 0.02 <0.01 SD183 19.45 20.45 1.00 Breccia 100% Volcaniclastic 0.06 <2 0.01 0.03 <0.01 SD183 20.45 21.46 1.01 Breccia 100% SD183 21.46 21.66 0.20 Core Loss 0% Volcaniclastic 0.06 <2 0.02 0.02 <0.01 SD183 21.66 22.77 1.11 Breccia 100% Volcaniclastic 0.08 <2 0.02 0.03 <0.01 SD183 22.77 23.77 1.00 Breccia 100% Volcaniclastic 0.04 <2 0.00 0.02 <0.01 SD183 23.77 24.57 0.80 Breccia 100% Volcaniclastic 0.05 <2 0.01 0.03 <0.01 SD183 24.57 25.36 0.79 Breccia 100% SD183 25.36 25.73 0.37 Core Loss 0% Volcaniclastic 0.04 <2 0.00 <0.01 <0.01 SD183 25.73 26.73 1.00 Breccia 100% Volcaniclastic 0.05 <2 0.00 0.02 <0.01 SD183 26.73 27.73 1.00 Breccia 100% Volcaniclastic 0.06 <2 0.01 0.03 <0.01 SD183 27.73 28.73 1.00 Breccia 100% Volcaniclastic 0.05 <2 0.01 0.02 <0.01 SD183 28.73 29.25 0.52 Breccia 100% Volcaniclastic 0.03 <2 0.01 0.09 0.02 SD183 29.25 29.77 0.52 Breccia 100% SD183 29.77 29.81 0.04 Core Loss 0% Volcaniclastic 0.06 <2 0.01 0.03 <0.01 SD183 29.81 30.81 1.00 Breccia 100% Volcaniclastic 0.07 <2 0.00 0.02 <0.01 SD183 30.81 31.81 1.00 Breccia 100% Volcaniclastic 0.03 <2 0.00 0.03 <0.01 SD183 31.81 32.81 1.00 Breccia 100% Volcaniclastic 0.04 <2 0.07 0.03 <0.01 SD183 32.81 33.81 1.00 Breccia 100% Volcaniclastic 0.04 <2 0.01 0.03 <0.01 SD183 33.81 34.81 1.00 Breccia 100% Volcaniclastic 0.05 <2 0.01 0.03 <0.01 SD183 34.81 35.33 0.52 Breccia 100% Volcaniclastic 0.03 3 0.01 0.03 <0.01 SD183 35.33 35.85 0.52 Breccia 100% SD184 0.00 0.35 0.35 Core Loss 0% Sulphide 7.74 26 21.30 0.12 0.04 SD184 0.35 0.77 0.42 Dominant Rock 100% Sediment, silt- 7.23 24 6.78 0.15 0.14 SD184 0.77 0.94 0.17 sand-gravel 100% SD184 0.94 1.08 0.14 Core Loss 0% Sparry 13.30 71 13.80 0.98 0.15 SD184 1.08 1.30 0.22 Precipitate 100% Sulphide 5.34 18 19.20 0.99 0.17 SD184 1.30 2.45 1.15 Dominant Rock 100% Sparry 3.14 11 2.93 0.67 0.10 SD184 2.45 2.79 0.34 Precipitate 100%
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendix 1-12 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report February 2011
Hole From To (m) Length Lithology Recovery % Au g/t Ag g/t Cu (%) Zn (%) Pb (%) (m) (m) SD184 2.79 3.11 0.32 Core Loss 0% Cemented 2.57 44 4.08 1.61 0.16 SD184 3.11 4.00 0.89 Sediment 100% Sparry 2.92 110 3.11 2.23 0.12 SD184 4.00 4.44 0.44 Precipitate 100% SD184 4.44 4.73 0.29 Core Loss 0% SD185 0.00 0.27 0.27 Core Loss 0% Cemented 0.34 4 0.23 0.07 0.02 SD185 0.27 0.50 0.23 Sediment 100% Cemented 5.45 7 7.51 0.48 0.15 SD185 0.50 1.13 0.63 Sediment 100% SD186 0.00 0.45 0.45 Core Loss 0% Cemented 6.18 40 6.44 0.83 0.20 SD186 0.45 1.00 0.55 Sediment 100% Cemented 0.74 3 0.30 0.05 0.05 SD186 1.00 1.33 0.33 Sediment 100% Sulphide 1.22 4 3.17 0.85 0.07 SD186 1.33 2.03 0.70 Dominant Rock 100% Sulphide 1.16 <2 1.66 2.23 0.44 SD186 2.03 2.73 0.70 Dominant Rock 100% SD186 2.73 2.91 0.18 Void 0% Sulphide 1.77 <2 2.12 1.51 0.20 SD186 2.91 3.91 1.00 Dominant Rock 100% Sulphide 2.37 4 3.16 3.03 0.28 SD186 3.91 4.91 1.00 Dominant Rock 100% Sulphide 2.36 8 1.97 0.98 0.10 SD186 4.91 6.04 1.13 Dominant Rock 100% SD186 6.04 6.17 0.13 Core Loss 0% Sulphide 1.90 7 4.78 1.27 0.21 SD186 6.17 7.33 1.16 Dominant Rock 100% Sulphide 1.47 6 4.49 0.41 0.05 SD186 7.33 8.33 1.00 Dominant Rock 100% Sulphide 2.02 7 3.63 0.32 0.07 SD186 8.33 9.39 1.06 Dominant Rock 100% Sulphide 1.39 4 1.34 1.10 0.15 SD186 9.39 10.39 1.00 Dominant Rock 100% Sulphide 1.57 <2 1.77 0.58 0.09 SD186 10.39 11.44 1.05 Dominant Rock 100% SD186 11.44 11.56 0.12 Core Loss 0% Sulphide 1.75 <2 2.78 0.33 0.05 SD186 11.56 12.23 0.67 Dominant Rock 100% Sulphide 1.35 <2 1.90 0.38 0.07 SD186 12.23 13.10 0.87 Dominant Rock 100% Sulphide 2.04 <2 0.28 0.23 0.06 SD186 13.10 13.90 0.80 Dominant Rock 100% Sulphide 1.74 <2 0.82 0.20 0.03 SD186 13.90 14.70 0.80 Dominant Rock 100% Sulphide 1.70 <2 1.56 0.20 0.07 SD186 14.70 15.06 0.36 Dominant Rock 100% Sulphide 1.72 <2 0.56 0.52 0.06 SD186 15.06 15.93 0.87 Dominant Rock 100% Sulphide 1.46 <2 0.15 0.45 0.08 SD186 15.93 16.81 0.88 Dominant Rock 100% SD186 16.81 17.09 0.28 Core Loss 0% Sulphide 1.21 <2 0.24 0.80 0.11 SD186 17.09 17.90 0.81 Dominant Rock 100% Sulphide 1.20 <2 0.12 0.67 0.09 SD186 17.90 18.70 0.80 Dominant Rock 100% Sulphide 1.65 <2 0.15 0.17 0.03 SD186 18.70 19.46 0.76 Dominant Rock 100% Sulphide 1.33 <2 0.14 0.20 0.04 SD186 19.46 20.21 0.75 Dominant Rock 100% SD186 20.21 21.21 1.00 Core Loss 0%
SD186 21.21 22.00 0.79 Sulphide 100% 1.08 <2 0.12 0.39 0.07
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendix 1-13 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report February 2011
Hole From To (m) Length Lithology Recovery % Au g/t Ag g/t Cu (%) Zn (%) Pb (%) (m) (m) Dominant Rock Sulphide 1.07 6 0.17 2.47 0.05 SD186 22.00 22.39 0.39 Dominant Rock 100% SD186 22.39 23.24 0.85 Core Loss 0% Sulphide 1.52 2 0.14 0.03 0.02 SD186 23.24 23.75 0.51 Dominant Rock 100% SD186 23.75 24.64 0.89 Core Loss 0% Sulphide 2.54 <2 9.66 0.02 0.02 SD186 24.64 25.48 0.84 Dominant Rock 100% SD186 25.48 26.45 0.97 Core Loss 0% Sulphide 1.77 <2 5.39 0.02 0.03 SD186 26.45 27.54 1.09 Dominant Rock 100% SD186 27.54 28.32 0.78 Core Loss 0% Sulphide 1.27 <2 10.20 <0.01 0.01 SD186 28.32 29.00 0.68 Dominant Rock 100% Sulphate 0.19 <2 0.16 0.02 <0.01 SD186 29.00 29.60 0.60 Dominant Rock 100% SD186 29.60 29.87 0.27 Core Loss 0% Sulphate 0.15 <2 0.05 0.01 <0.01 SD186 29.87 31.17 1.30 Dominant Rock 100% SD186 31.17 31.33 0.16 Core Loss 0% Clay Dominant 0.23 <2 0.02 0.01 <0.01 SD186 31.33 32.12 0.79 Rock 100% Sulphate 0.15 <2 0.01 0.01 <0.01 SD186 32.12 32.66 0.54 Dominant Rock 100% SD186 32.66 33.31 0.65 Core Loss 0% Sulphate 0.16 <2 0.18 0.01 <0.01 SD186 33.31 33.58 0.27 Dominant Rock 100% Clay Dominant 0.21 <2 0.06 0.01 <0.01 SD186 33.58 34.74 1.16 Rock 100% SD186 34.74 35.35 0.61 Core Loss 0% Sulphate 0.28 <2 0.03 <0.01 <0.01 SD186 35.35 35.48 0.13 Dominant Rock 100% Clay Dominant 0.24 <2 0.03 <0.01 <0.01 SD186 35.48 36.37 0.89 Rock 100% SD186 36.37 37.33 0.96 Core Loss 0% Clay Dominant 0.68 <2 0.05 <0.01 <0.01 SD186 37.33 38.14 0.81 Rock 100% SD186 38.14 39.37 1.23 Core Loss 0% Clay Dominant 0.49 <2 0.05 0.01 <0.01 SD186 39.37 40.36 0.99 Rock 100% SD186 40.36 41.41 1.05 Core Loss 0% Clay Dominant 0.82 <2 0.13 <0.01 0.01 SD186 41.41 42.44 1.03 Rock 100% SD186 42.44 43.32 0.88 Core Loss 0% Clay Dominant 0.47 <2 0.03 0.02 0.01 SD186 43.32 43.90 0.58 Rock 100% Volcaniclastic 0.71 <2 0.02 0.01 <0.01 SD186 43.90 44.47 0.57 Breccia 100% SD186 44.47 45.34 0.87 Core Loss 0% Volcaniclastic 0.65 <2 0.03 <0.01 <0.01 SD186 45.34 45.70 0.36 Breccia 100% Volcaniclastic 0.52 <2 0.05 0.02 <0.01 SD186 45.70 46.39 0.69 Breccia 100% Volcaniclastic 0.10 <2 0.08 0.08 <0.01 SD186 46.39 47.08 0.69 Breccia 100% SD186 47.08 47.37 0.29 Core Loss 0% Volcaniclastic 0.38 <2 0.06 0.02 <0.01 SD186 47.37 48.00 0.63 Breccia 100% Volcaniclastic 0.71 <2 0.05 0.01 <0.01 SD186 48.00 49.02 1.02 Breccia 100% SD186 49.02 49.33 0.31 Core Loss 0%
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendix 1-14 SRK Consulting │ NAT007 Nautilus NI43-101 Technical Report February 2011
Hole From To (m) Length Lithology Recovery % Au g/t Ag g/t Cu (%) Zn (%) Pb (%) (m) (m) Volcaniclastic 0.47 <2 0.04 0.02 <0.01 SD186 49.33 50.14 0.81 Breccia 100% Volcaniclastic 0.62 <2 0.10 0.02 <0.01 SD186 50.14 50.94 0.80 Breccia 100% SD186 50.94 51.62 0.68 Core Loss 0% SD187 0.00 0.84 0.84 Core Loss 0% Sparry 3.97 60 1.40 8.13 2.54 SD187 0.84 1.10 0.26 Precipitate 100% SD187 1.10 1.76 0.66 Core Loss 0% Sulphide 5.52 11 10.10 0.53 0.07 SD187 1.76 2.05 0.29 Dominant Rock 100% SD187 2.05 2.52 0.47 Core Loss 0% Sulphide 5.54 18 6.24 1.89 0.28 SD187 2.52 3.24 0.72 Dominant Rock 100% SD187 3.24 4.53 1.29 Core Loss 0% Sulphide 2.52 11 16.40 0.16 0.02 SD187 4.53 5.05 0.52 Dominant Rock 100% SD187 5.05 5.46 0.41 Core Loss 0%
* interval not assayed due to insufficient sample mass Note: Core from SD168 was not submitted for laboratory assay as this hole was twinned by SD169. Note: Hole SD169 was a twinned hole at the site of hole SD056 drilled during 2007. Note: Core from hole SD170 was not submitted for laboratory assay as this hole was twinned by SD171. Note: SD170 was a failed hole and drilled as SD171.
PEJ NAT007 Nautilus 43-101 Technical Report 2011 Rev3.docx Appendix 1-15