Nautilus Minerals Inc. (PINK: NUSMF)
, the first company to explore the ocean floor for polymetallic seafloor massive sulphide deposits, recently said that it is in dispute with the Independent State of Papua New Guinea (PNG) over the parties’ obligations to complete the agreement entered on March 29, 2011.
NUSMF is developing its first project, called Solwara 1, in the territorial waters of Papua New Guinea. The company is aiming to produce gold, silver and copper from the project.
Nautilus said that it began the dispute resolution process provided for in the agreement. The process may lead to a referral of the dispute to arbitration if it cannot be resolved through further talks amongst senior representatives of the parties over an initial 10-day period.
The dispute with PNG relates to the Solwara 1 project. Under the terms of the agreement signed in March last year, the state of PNG exercised its option to acquire a 30% interest in the Solwara 1 project through its nominee, which is a subsidiary Petromin PNG Holdings Limited. However, PNG has asserted that Nautilus has not met certain obligations on which completion is dependent. PNG has accused NUSFM of breaching the agreement. But, the company has refuted these claims.
Nautilus claims that under the agreement, PNG’s nominee must pay its share costs incurred in the development of the project up to completion in order to acquire its interest in the project. NUSMF noted that the completion of the project may be delayed or may not occur until the dispute with PNG is resolved.
Meanwhile, the Toronto-based company also announced that there may be delay in the finalization of funding for the vessel to be used in connection with the Solwaara 1 project. This may cause a potential delay to the program for the vessel build and may lead to a delay in the start of operations at Solwara 1.