Nautilus gets the green light to mine under water, will receive $118 million in compensation

After almost two years of locking horns with the Papua New Guinea government over a project's ownership, Canada-based Nautilus Minerals (TSX:NUS) is finally free to move forward with its pioneering plan to mine the seafloor.

The company, the first yet not the only one exploring the ocean floor for polymetallic massive sulphide deposits, said in a statement that the arbitrator has ruled that Papua New Guinea breached the contract signed in March 2011 under which the country optioned to acquire 30% of the Solwara 1 project, located in its territorial waters in the Bismarck Sea.

As part of the deal, PNG agreed to pay its share of development costs for the mine, a clause it decided to disregard later, sending Nautilus shares downhill and jeopardizing the future of the first commercial underwater mine in the world.

Today’s decision, however, clears up the way for Nautilus to go ahead with the project, as it requires the State to comply with its agreement obligations and so complete the purchase of the 30% interest in the Solwara 1. PNG will also have to pay Nautilus 30% of all project expenditure incurred to date, within a reasonable time after the award, the company said.

The Toronto-based firm added it has set Oct. 23 as the deadline for the Oceanic state to do what it has been ordered, which implies Nautilus should receive about US$118 million (including interest) before the end of the month.

The Solwara 1project, located in the minerals-rich Manus basin, was originally slated to begin production in the fourth quarter this year.

Nautilus shares were up almost 32% at 10:45 am ET in the Toronto Stock Exchange after the announcement.

Image by Dudarev Mikhail/Shutterstock.com