The Papua New Guinea Government has placed $113m into escrow to help Canadian mining firm Nautilus Minerals during the development phase and initial production at Solwara 1 gold-copper-silver underwater mining project.
The government's decision is part of the deal signed on 24 April between Nautilus and Papua New Guinea's nominee, Eda Kopa (Solwara), a subsidiary of Petromin PNG Holdings. Under the deal, the state took a 15% stake in the project and agreed to provide full support to move the Solwara 1 project towards production.
In addition to the $113m, the Papua New Guinea Government previously paid a non-refundable amount of $7m to Nautilus for its 15% share. The government has an option to increase its stake in the project by 15% over the next year.
Following the deposit into escrow by Eda Kopa, Nautilus must now charter a production support vessel and secure certain intellectual property rights for Eda Kopa within six months.
Once both conditions are satisfied, the funds will be released to Nautilus.
Nautilus Minerals CEO Mike Johnston said the fact that the state's nominee has placed the money into escrow well in advance of the 31 July agreement deadline further demonstrates the state's support for the project in this new deep sea mining industry.
According to Nautilus, the company will now aim to secure a suitable vessel arrangement; it is currently in discussions with potential vessel partners and is 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.