Canadian mining firm Nautilus Minerals has entered into an agreement with Papua New Guinea (PNG) to proceed with production at its Solwara 1 gold-copper-silver underwater mining project.
As per the deal, the PNG Government will take a 15% stake in the project, for which it has already paid Nautilus a non-refundable amount of $7m.
The government also has the option to increase its stake in the project by 15% over the next year.
Previously, the government had been involved in a two-year dispute with Nautilus over the ownership of the Solwara project. In October 2013, arbitrator the Honourable Murray Gleeson AC QC ruled in favour of Nautilus.
PNG was accused by Nautilus of breaching the contract signed in March 2011, under which the country had the option to acquire 30% of the Solwara 1 project and pay its share of development costs for the mine.
This act by the PNG Government has affected Nautilus' business and the world's first commercial underwater mining project.
In addition to the dispute, Solwara was affected by weak gold and copper prices.
As compensation, the government to was asked to pay Nautilus a sum of $118m including interest.
Nautilus Minerals CEO Mike Johnston said the company was pleased to have achieved an amicable resolution of its issues with the state.
"This step represents a major vote of confidence in Nautilus Minerals and the Solwara 1 project", Johnston said.
"Through this joint venture, the state will provide a significant capital investment and will retain a direct interest in the long-term success of the project. We look forward to working closely with the state and Petromin on Solwara 1, which will generate significant economic activity within the state and the Province of New Ireland."
"The company is now focusing its attention on securing a suitable vessel arrangement and is continuing its discussions with potential vessel partners while also undertaking a tender process with shipyards experienced in building offshore construction vessels."
The Solwara 1 mine is located in the Bismark Sea in the south-western Pacific Ocean of Papua New Guinea.