Nautilus Minerals Inc (NUS.TO) said on Monday that it had agreed to sell about 1.1 million metric tonnes (1.21 million tons) of material from its Solwara 1 deposit located off the coast of Papua New Guinea to Chinese copper smelter Tongling Nonferrous Metals Group Co Ltd (000630.SZ).
Toronto-based Nautilus, which is focused on exploring for mineral deposits on the ocean floor, said the three-year deal with Tongling would commence upon delivery of first product from Solwara 1, which is targeted around the end of 2013.
Nautilus said Tongling would import the product into China and then process it through its facilities in the city of Tongling. After production of a copper concentrate, the product will be smelted in Tongling's industrial complex.
The quality of the copper concentrate produced will determine the purchase price that Tongling will pay.
The agreement includes a provision for an early payment of 90 percent of the price upon loading of the export vessel in Papua New Guinea. Final payment is based on the recovery of copper, gold and silver, with deductions for logistics, smelter treatment and refining charges, along with other processing costs.
Nautilus' Solwara 1 deposit located in the Bismarck Sea is expected to produce copper, gold and silver. The company's top shareholders are European iron ore miner Metalloinvest and diversified miner Anglo American PLC (AAL.L), which own 21 percent and 11 percent interests, respectively.
(Reporting by Euan Rocha; Editing by Gerald E. McCormick and Lisa Von Ahn)