General: Nautilus Minerals looking to ocean floor as next frontier in mining
Posted on 14.03.2007 - 09:00 EDT in GENERAL NEWS by Rons_ROV_Links
Like the oil and gas industry headed offshore in search of deposits more than a half century ago, Nautilus Minerals chief executive David Heydon sees the ocean floor as the next frontier for mining companies.
And with more than $300 million in cash on the books, Heydon believes the company is ready to leave the doubters in its wake as it prepares to take its next step from exploration to production with hopes to be mining by 2010.
"The land-based areas have been explored to death," Heydon said in an interview.
"The same grades that the good old timers took out 100 years ago on land and filled their wheelbarrows up with this really rich ore is just sitting on the sea floor."
And some of the world's biggest mining companies are taking notice including Anglo-American, Barrick Gold and Teck Cominco, the most recent to invest $25 million for a stake in the junior company in what it has called a "research and development project."
"It's all about diminishing risk," Heydon said. "They want this project to succeed because if it succeeds it opens up a whole new area of exploration for them."
Nautilus isn't the only company looking to the ocean floor.
Diamond Fields International Ltd. is mining for diamonds off the coast of Namibia and companies have dredged for sand and gravel near the shore for years, but Nautilus is looking at deposits more than a kilometre underwater.
But Heydon explained the capital costs of mining underwater can actually be lower than mining on land because of the lack of a need to strip material covering the minerals, build a shaft and all the other capital requirements of building a mine.
"In fact it is cheaper to start a mine at 2,000 metres under water than it is to start a mine at 4,500 metres up in the Andes," he said. "It is much easier to put a pipe through water than it is to sink a shaft 1,500 metres through solid rock."
Nautilus's main project is the Solwara suphide deposits off the coast of Papua New Guinea that have shown to be rich in gold, copper, silver and zinc.
Belgian dredging company Jan De Nul is building a 191-metre specialized deep-sea mining ship to be named the Jules Verne to be used. The plan calls for copper and gold ore to be mined from the sea floor and pumped to the ship, then transferred to barges for transport to a land-based concentrator.
Pacific International Securities analyst Michael Gray said the company and its management should be taken seriously.
"They come from BHP Billiton where a lot of this was on the drawing board and it was thought to be quite viable," he said.
Gray said the mineral grades from the sea floor deposits are "spectacular," but he suggested that a large part of Nautilus's value comes from the vast tracts of the sea floor the company has staked out covering an area larger than the United Kingdom.
"It is one thing to have technology that could extract very high-grade metals from the sea floor economically, it is another part of their business plan to actually own essentially claims of the sea floor around various countries," he said.
"First mover status is paying off and its tough to see someone else coming in and competing in the short term," he said. © 99.9 Mix FM