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Mining Sector: Nautilus shares plunge as it warns of likely delay to Solwara 1 project
Friday, 1st June 2012
Shares in Nautilus Minerals (LON:NUS) fell sharply in late afternoon trading after it outline two reasons why the Solwara 1 project might be delayed and face increased costs.Nautilus says there may be a delay in the finalisation of funding for the vessel to be used in connection with the project and a potential consequential delay to the programme for the vessel build.
In turn, this may result in a delay to the commencement of operations at Solwara 1.
Nautilus and its strategic partner, Harren & Partner, have been negotiating the terms of third party financing related to the production support vessel for its first development project, Solwara 1, in Papua New Guinea.
The vessel is planned to be owned and operated by the joint venture company (Vessel JV) to be formed by the parties.
Harren & Partner has advised that it will no longer be able to contribute the full amount of the equity to the Vessel JV contemplated by the agreement signed by the parties in April 2011.
The change to Harren & Partner's position, linked to a tightening of banking rules in the current European crisis and the depressed shipping market, may delay the finalisation of the terms of the third party funding and result in a consequential delay to the program for the vessel build.
And Nautilus also revealed it is in dispute with Papua New Guinea over alleged breaches to obligations under the Solwara 1 project agreement.
Nautilus has initiated the dispute resolution process, which may lead to a referral of the dispute to arbitration if it can not be resolved through further discussions amongst senior representatives of the parties over an initial 10 day period.
The state exercised its option under the agreement to acquire a 30% interest in the Solwara 1 project through its nominee, a subsidiary of Petromin PNG Holdings Limited.
However, the state asserts that Nautilus has not met certain obligations on which completion is dependent, and that Nautilus has breached the agreement.
Nautilus rejects these assertions.
Highland Gold Mining (LON:HGM) has reached an agreement to acquire LLC Klen, which holds the mining and exploration rights to the Klen gold deposit and the surrounding Verkhne-Krichalskaya property located in the Chukotka autonomous region in north eastern Russia.
The total consideration is $69m less any assigned loans. The consideration will be in cash and will be funded from the company's cash resources.
The acquisition is subject to approval by the Russian anti-monopoly authorities which is a condition precedent.
The assets are located in west-central Chukotka, approximately 250 km southwest of Bilibino. Chukotka is one of the fastest growing, investment friendly gold producing regions in Russia with immense exploratory potential.
Condor Resources (LON:CNR) posted operating losses of £1.97m for the year to the end of December - up from £502,605 last time.
The total comprehensive loss at £1.96m compared with £1.2m a year ago.
Condor's JORC code mineral resource in Nicaragua increased 41-fold in 2011 from 41,000 oz gold to 1.7 Million oz gold.
In El Salvador, Condor's JORC resource of 747,000 oz gold and 22.38 million oz silver or 1,120,000 oz gold equivalent at 2.6g/t remained unchanged during the period due to the moratorium on all exploration and mining in the country, however, 10% of the company's resource in El Salvador was gifted to a UK Charitable Foundation whose beneficiaries are the most needy and poor in that country.
Beowulf Mining (LON:BEM) reported before and after tax losses of £191,000 for the three months to the end of March - up from £125,000 last time.
The company says the results reflect its ongoing exploration activities and higher cost base.
Executive chairman Clive Sinclair-Poulton said that during the quarter the company and its wholly-owned Swedish subsidiary, Jokkmokk Iron Mines AB, had endeavoured to resolve regulatory issues over drilling on the Kallak iron ore project.
He added: "I am pleased to report that, by the end of May, these operational matters had been addressed with drilling now back under way."
He continued: "We remain positive on the outlook for the global iron ore market, as the EU still needs to import more than 80% of its demand requirements.
"Although global markets continue to be extremely volatile and uncertain, we are taking a longer term view, in the order of a five year plus timeframe.
"We are also committed to the Jokkmokk region, demonstrated by our continued desire to prove up our existing Kallak licence areas as well as the recent registration of an application for a further exploration licence area, Kallak nr3, covering an area of approximately 5.6sq km as a small direct extension to the west of the iron deposit within the Kallak nr1 licence area.
"We believe there is great potential and will continue to focus our resources on Kallak's further development.
"The group is now well placed to progress over the rest of the year with solid preparations underway for 2013 and beyond."
The sector's biggest risers were ENK (LON:ENK) and Noventa (LON:NVTA) - up by nearly 29% and more than 13% respectively.
At 4:11pm:
(LON:AMI) American Investment Trust share price was -19.5p at 355.5p
(LON:AQP) Aquarius Platinum share price was -9.2p at 64.15p
(LON:BEM) share price was 0p at 12.75p
(LON:BKY) share price was +1.75p at 24.25p
(LON:CEY) Centamin Egypt Ld share price was -0.25p at 65.05p
(LON:CHL) share price was -1.62p at 10.63p
(LON:CNR) City North Group share price was 0p at 3.75p
(LON:CZA) share price was -0.12p at 33.38p
(LON:ENK) European Nickel share price was +2.51p at 11.13p
(LON:FDI) Firestone Diamonds share price was +0.01p at 6.13p
(LON:FRES) share price was -6.5p at 1341.5p
(LON:GEMD) share price was +1.45p at 205.55p
(LON:HGM) Highland Gold Mining share price was -1.87p at 102.13p
(LON:HOC) share price was -1.6p at 430.6p
(LON:KMR) Kenmare Resources share price was +0.14p at 45.14p
(LON:NUS) share price was -17.75p at 115.25p
(LON:VED) Vedanta Resources share price was -44p at 885p
Story provided by StockMarketWire.com
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