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Nautilus estimates US$56M net cash flow from underwater Solwara 1 project

Nautilus Minerals Inc.'s preliminary economic assessment for the development of the underwater Solwara 1 project in Papua New Guinea's Bismarck Sea estimated a net cash flow, discounted at 15% per annum, of US$56 million.

At base case metal prices of US$7,319 per tonne for copper, US$1,200 per ounce for gold, and US$18.00 per ounce for silver, the internal rate of return was pegged at 28%, with an expected increase to 40% using average forward curve metal prices for copper and gold during the production period.

The study estimated a 15-month ramp-up period to steady-state production of about 3,200 tonnes per day, for payable metal production of about 20,000 tonnes of copper and 29,000 ounces of gold per quarter.

The maximum capacity of the production system is designed at about 6,000 tonnes per day, according to the Feb. 27 release.

The company has to raise an additional about US$243 million of capital expenditure until production commences.

The C1 costs are estimated at US$1.36 per pound of copper for the full deposit, and 80 U.S. cents per pound of copper at steady-state production. At about 4,500 tonnes per day, the C1 costs, net of byproducts, are expected at around 63 cents per pound of copper.

First production from the project is scheduled to start in the third quarter of 2019.

The Papua New Guinea government holds a 15% stake in the fully permitted project.