Nautilus samples deep-sea deposits (June 05, 2006)

Vancouver — Ocean-floor explorer Nautilus Minerals (NUS-V, NUSMF-O) has returned high-grade copper-gold values from drilling and sampling of a seabed sulphide zone at its Solwara 1 project off the coast of Papua New Guinea.

Conducted earlier this year in water depths of about 1,600 metres by farm-in partner Placer Dome, now part of Barrick Gold (ABX-T, ABX-N), the program defined two zones of sulphides outcropping over lengths of 900 and 400 metres and with widths varying from 80 to 200 metres. From 49 samples, an average grade of 15.5 grams gold per tonne, 9.6% copper, 138 grams silver, 5.1% zinc and 0.8% lead was returned.

The partners are testing the viability of commercially exploiting the seafloor metal deposits formed by “black smokers,” which are hydrothermal, chimney-like structures formed when ocean water is circulated through porous rock in an active volcanic zone and metal-sulphide minerals are dissolved and then redeposited into sizeable accumulations. These types of occurrences are essentially the modern-day version of the well-known volcanogenic massive sulphide (VMS) deposits that are mined throughout the world.

A total of 355 metres of ship-based drilling, in 34 core holes, was conducted in the initial program and was able to test up to 19 metres into the seabed sulphides. Recoveries averaged less than 50% due to the highly variable and friable nature of the material. The best intercept returned 11.6 metres of 9.1 grams gold and 13.1% copper plus some silver and molybdenum values with the mineralization open at depth. Nautilus is developing a remote operated vehicle (ROV)-based drilling system it anticipates will deliver better control and higher core recoveries.

A sample of 15 tonnes of material was extracted using a cutting head mounted on an ROV. The purpose of the trial was to test the mechanics of cutting and extracting potential ore material from the seafloor environment. Pump difficulties arose in moving the cut rock into a collection bin on the ROV, resulting in potentially reduced recoveries of the denser, metal-rich material.

Barrick, through its subsidiary Placer, is earning up to a 75% interest in the project (on deposits averaging greater than 3 grams gold per tonne). The senior has currently lodged a 40% interest through spending commitments of US$7 million.

With 45.1 million shares outstanding, Nautilus posts a $135-million market capitalization based on its $3.00 trading level. The company recently relisted on the TSX Venture Exchange, following the reverse takeover and reorganization of Orca Petroleum, and closed a $25-million financing.