World Mining Exploration News

Offshore Developments On The Up

Recovering minerals from the sea has long had a vague, but elusive attraction. After all, the science of hydrometallurgy is based on the chemistry of recovering metals from solution, and it is well-known that the sea contains huge tonnages of dissolved metals.

In reality, however, with the exception of near-shore diamonds and construction aggregates the economics have never panned out, as anyone with a memory that goes back to the 1970s and 1980s will recall. With earlier concepts of recovering gold from seawater having been proven to be unworkable, considerable sums were then spent on evaluating deep-sea manganese deposits, with the idea of scooping up enriched nodules that would form a sort of pre-prepared concentrate. That, too, came to nothing, although in hindsight, the techniques and equipment used proved valuable in terms of advancing deep-sea exploration.

Today, the focus has changed, with the targets now being sea-floor massive sulphide (SMS) mineralisation and sub-sea epithermal vein systems, both of which offer the prospect of mineral recovery at much lower waste-to-ore ratios that could ever be achieved in conventional land-based mining. Two companies are at the forefront of this work, with Nautilus Minerals and its partners involved in evaluating the SMS potential of the Bismarck Sea while Neptune Minerals is targeting potential epithermal deposits on seamounts that represent the submerged parts of various PNG island groups.

Background to SMS

According to the Jamaica-based International Seabed Authority, most of the world’s known SMS sites are associated with mid-ocean ridges. The deposits in the southwestern Pacific, however, lie at in island-arc and back-arc spreading centres at the ocean margins, and are associated with subduction zones. The SMS deposits found in the Manus Basin, beneath the Bismarck Sea, are associated with felsic volcanism, while seafloor spreading within the Woodlark Basin to the south has also led to the formation of hydrothermal deposits.

SMS deposits are widely recognised as being the forerunner of the conventional volcanogenic massive sulphide (VMS) resources that host a significant proportion of today’s base- and precious-metal production. The principal difference, of course, is that SMS deposits are covered by at most a few metres of overburden in the form of unconsolidated seafloor sediments, with the prospect of strongly mineralised ‘chimneys’ standing proud of the sea bed.

According to a report prepared for Nautilus Minerals last year by the consulting company, SRK, around 150 sites of active or recently active hydrothermal fluid venting on the sea floor have been discovered world-wide since the first ‘black smokers’ were identified in the Bismarck Sea in 1985. Since then, the company notes, there have been numerous oceanographic expeditions to the South Pacific, with national governments from various countries having spent at least US$40 million in sponsoring SMS exploration programmes within the region. The discovery in 1991 of actively forming massive-sulphide chimneys along the Pual Ridge in the Manus Basin highlighted PNG’s potential to host high-grade SMS deposits.

SMS deposits, which form when rising hot hydrothermal fluids mix with cold sea water on the sea floor, are typically enriched in copper, zinc, gold and silver. The hydrothermal fluids in turn reflect the current regional plate activity, with the Manus and Woodlark Basins, northwest and southeast respectively of the island of New Britain, both containing spreading centres that provide new hydrothermal riser routes.

The SRK report goes on to explain that “Active sulphide deposition on the ocean floor is confined to sites where hot (>200°C) rising hydrothermal vent fluids mix with cool (2°C) ambient ocean water. Through the accumulated precipitation of the sulphides at the vent site, chimney-like structures form. These chimneys consist of anhydrite and polymetallic sulphides. The combined processes of 1) episodic flux of the hydrothermal vent fluid; 2) sea floor oxidation; and 3) seismic events contribute to the collapse of the old chimney structures and the initiation of new chimney structures. This cyclical process results in the formation of a sulphide mound on the sea floor. As the size of the mound increases, through prolonged hydrothermal activity, the mound permeability decreases to a point where precipitation, replacement and remobilisation of sulphides inside the mound can occur, resulting in a concentration of minerals”.

Mineralisation in both chimneys and collapsed mound-type deposits typically consists of chalcopyrite, sphalerite and galena, with lesser pyrite, bornite and other base-metal sulphides. Anhydrite and barite are common gangue minerals. Grades typically range from 5 to 15% for copper, 5-50% for zinc, 3-23% for lead, 2-20g/t for gold and 20-1,200 g/t for silver.

Nautilus focuses on Solwara

Of the two companies that are currently active in SMS exploration in PNG, TSX- and AIM-listed Nautilus Minerals has had the higher profile with its work on tenements in the Bismarck Sea. Its first targeted exploration programme, undertaken in conjunction with Placer Dome in 2005, consisted of an initial $3 million geophysical survey to locate sulphide deposits held in inactive vent fields. The companies’ agreement allowed Placer to earn up to a 75% interest in deposits containing more than 3 g/t gold, while Nautilus retained 100% of any base-metal deposits. Subsequent sampling and drilling confirmed the high-grade Solwara 1 copper-gold deposit, for which Nautilus produced a NI 43-101-compliant resource estimate at the end of last year.

Following Barrick Gold Corp.’s acquisition of Placer Dome in 2006, Barrick converted its interest in the Solwara joint venture into a 9.6% equity interest in the company, an interest that has subsequently reduced to under 4% as Nautilus has raised additional funding through a series of placements. By the beginning of 2008, its major shareholders included Russia-based Epion Holdings (22.4%), Teck Cominco (7.2%) and Anglo American (5.7%), with Epion alone having invested US$109 million and Teck Cominco having carried out a parallel exploration programme in 2007 over some of Nautilus’ licence areas. Last December, Teck Cominco exercised share option warrants that took its investment in Nautilus and exploration commitments to $52 million, although some of this will be targeted at exploration tenements in countries other than PNG.

During 2007, Nautilus undertook a $23 million exploration programme for high-grade SMS systems, work that included environmental studies, resource definition drilling, sampling and related metallurgical and mine development studies on the Solwara 1 deposit. Its schedule included a 111-hole drill programme using new remotely operated vehicle (ROV)-mounted drill rigs that were deployed on the sea floor, and could penetrate up to 19 m into the underlying sediments.

The company also worked with Teck Cominco and Ocean Floor Geophysics on the development of a deep-ocean electromagnetic (EM) surveying system. This produced a number of anomalies that Nautilus intends to drill-test in the future. Overall, the 2007 programme led to the discovery of four new resource areas, Solwara 5, 6, 7 and 8, to complement the existing Solwara 1 and 4 targets, while the company acquired 52 line-km of EM data from a depth of 1,500 m over Solwara 1.

In November, Nautilus published its NI43-101-compliant resource estimate for part of the Solwara 1 area, measuring some 1,300 m long by 200 m wide. This gave an indicated mineral resource of 870,000 t grading 6.8% copper, 4.8 g/t gold, 23 g/t silver and 0.4% zinc, plus an inferred mineral resource of 1.3 Mt at 7.5% copper, 7.2 g/t gold, 37 g/t silver and 0.8% zinc, both at a 4.0% copper cut-off. The company reported at the time that the deposit, which occurs as a 200 m-high hill above the sea bed, remains open to the west and at depth, with 44% of the holes drilled still in mineralisation at the end of the hole.

Subsequent development

During 2007, Nautilus raised $214 million in three equity financings to help fund development of a sea-bed mining operation on Solwara 1. In February, the company reported that the first results of metallurgical testwork on a 1.2-t drill-core sample had shown it to be mineralogically simple, with chalcopyrite the dominant copper mineral. Gangue minerals include pyrite, barite, anhydrite and minor silicate minerals, all of which can be readily separated from chalcopyrite using standard flotation techniques, Nautilus added.

Testwork also showed that most of the massive sulphide is course-grained, with grinding tests indicating that effective liberation can be achieved at around 80% minus-50 µm. Further testwork, the results of which Nautilus reported in May, has showed that standard flotation can be used to give a clean, marketable copper concentrate, grading over 28% copper, with copper recoveries at more than 85%.

In July last year, Nautilus assumed direct responsibility for the offshore development aspects of the Solwara 1 project, replacing the Belgian dredging company, Jan De Nul, with which it had signed a heads of agreement in October 2006. At that time, the company envisaged using a custom-built vessel with a remote-controlled seabed miner. The mineral-rich slurry produced by the miner would be pumped in stages up an umbilical pipe to the ship for dewatering and subsequent transfer to ocean-going barges for transport to a conventional concentrator plant to be built on New Britain.

In the event, the lapsing of the original agreement led to a redesign of the mining system, and in December Nautilus awarded a US$65 million contract to the British company,

Soil Machine Dynamics, for the design and production of two identical 190 t seafloor mining tools (SMTs) that will be used for production at a rate of up to 6,000 t/d at Solwara 1. It followed this with a US$116 million contract with Tecnip USA to provide EPCM services for the riser and lifting system (RALS ) components needed: the subsea pumps, riser pipe, riser-handling system and associated deck equipment.

In June, Nautilus completed its mining package by signing a $125 million, five-year deal with Norwegian-based North Sea Shipping for the supply of a specialist mining support vessel. With a length of 160 m and displacing 14,200 t, the ship carries a 400 t-capacity crane that can work in up to 2,500 m of water. In each case, the systems are scheduled for delivery to allow production to begin in the third quarter of 2010, assuming that permits are granted.

Transporting the recovered ore the 60 km to the proposed concentrator site at Lassul Bay will entail the use of 8,000 t-capacity self-propelled, self-unloading barges. Current planning for the concentrator itself centres on a near-shore floating unit, with feed and concentrate stockpiles on land.

Neptune targets seamounts

In May 2007, AIM-listed Neptune Minerals was awarded its first four exploration licences, covering offshore areas on the flanks of Lihir Island, with the company later receiving a further seven areas, including two in the Bismarck Sea.

Its tenements offshore New Ireland include Conical Seamount, where the highest sea-floor gold values have been found to date during previous exploration campaigns. Conical Seamount rises over 500 m from the surrounding seabed, with gold values from 40 samples collected from the summit plateau averaging 26 g/t, with a maximum of 230 g/t.

Its five new tenements offshore New Ireland cover prospective seamounts and other features that surround, and are submerged parts of the Tabar, Lihir, Tanga and Feni Island groups. The company points out that epithermal gold occurrences on these islands include Ladolam on Lihir Island and Simberi in the Tabar Island group, both of which are significant gold producers.

Neptune is now targeting high-grade epithermal polymetallic vein mineralisation similar to that sampled and drilled during research cruises on Conical Seamount in 1999 and 2002, where drilling confirmed the sub-seafloor extent of surface gold mineralisation and associated alteration to depths of at least 4.5 m. Core samples of clay-silica alteration contained average gold grades of up to 14.2 g/t over some 300 mm, and appeared to be part of a more extensive gold zone, the company notes.

However, PNG is a relatively new target for Neptune, which until recently has been focusing on SMS deposits off New Zealand. Its Project Trident there is scheduled for trial mining by 2010. In mid-2007, Newmont took at 10.9% holding in the company through investing $5 million, and now has the right of first refusal to take a majority joint-venture position on any of Neptune’s exploration projects in New Zealand, Japan and PNG.

Full steam ahead

This year, Nautilus is carrying out a six-month exploration campaign aimed at expanding its project pipeline in PNG and in Tonga. Its PNG focus is on prospective brownfield terrain near to its existing Solwara 1 and 4 deposits, with its chartered vessel, Nor Sky, having begun work during June. Meanwhile Teck Cominco is also fulfilling its exploration commitments with a $12 million exploration programme covering Nautilus’ tenements in both countries.

Teck Cominco completed the first phase of its work in May following a 28-day bathymetric mapping programme offshore PNG that was designed to define targets for subsequent geochemical surveying and ROV-based sampling. Under Phase 2 of its 2008 programme, the company is carrying out a 150-day schedule of geochemical surveying and sampling, and ROV-based sampling in both PNG and Tonga, in part following up on targets identified during its earlier surveys.

Despite its main focus being on its developing its New Zealand project, Neptune intends to begin work on its PNG tenements in early 2009 with a mapping and sampling programme. Of the various areas involved, Conical Seamount (which lies just south of the Lihir gold mine) has had the most work undertaken so far, showing what the company describes as ‘very attractive gold grades’. Neptune intends to undertake high-definition seafloor surveying and, with Newmont already on its share register, is now seeking additional joint-venture partners to accelerate its exploration and resource definition work.

There is no question that SMS deposits represent a valuable new resource. The challenge now is bring together all of the various technical solutions that are needed to turn this resource into a commercial operation, and to expand the resource base in order to ensure that such an operation has a viable lifespan.

Through the Mineral Resources Authority, PNG’s government is eager to see progress towards making use of the country’s offshore resources for the betterment of its people providing, of course, that mining can be carried out in an environmentally sympathetic way. In the mean time, the world is watching with great interest as new concepts in exploration and mining are being developed and put into service. Clearly, it is not only the junior companies that have fronted up this innovative programme that believe that it can work, and it seems highly likely that before long, PNG will have a new chapter to open in its long mining history.