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