Nautilus AGM : Solwara 1 Deep Sea Mining Venture Remains a Speculative Pipe Dream

Deep Sea Mining Campaign – MiningWatch Canada

At its annual general meeting in Vancouver last week, wannabe deep sea miner Nautilus Inc. failed to inspire shareholders with confidence in its Solwara 1 venture in Papua New Guinea.[1]

Without sufficient funds to complete its equipment build, Nautilus’ 2019 mining start date for its flagship Solwara 1 project is unlikely to be met. Its financing strategy has been spectacularly unsuccessful with commercial operation delayed year after year since 2011.

Investors and local PNG communities have raised serious doubts about the company’s credibility.  Nautilus CEO Mike Johnston was put on the defensive by questions posed at the AGM regarding investment risk.

At the AGM, the Deep Sea Mining Campaign and the Vancouver-based Mining Justice Alliance reminded shareholders that Nautilus’ Annual Information Forms for financial years 2015 and 2016 describe serious environmental and economic risks that render its Solwara 1 project a purely speculative venture.[2] 

The Forms describe Solwara 1 as an experiment as both the environmental impacts and profits are complete unknowns. Nautilus has declined to conduct a preliminary economic assessment, pre-feasibility study or feasibility study – as per conventional industry practice. 

“This level of risk has scared off responsible investors. More importantly in terms of risk, the Solwara 1 project is opposed by local communities who are deeply concerned that the project will pollute the marine environment and ruin their livelihoods, health, and culture, all of which are strongly linked to the sea. The cost of conflict to mining projects has been well documented,”[3] says Dr. Helen Rosenbaum of the Deep Sea Mining Campaign.  

According to Kate Murray of the Mining Justice Alliance, “Experience with other mining projects shows us that local opposition often results in legal and/or public relations disasters for companies. In the case of Solwara 1, local opposition appears to be mounting.” She also posed the following questions to CEO Mike Johnston at the AGM:

  • “Is it true that without the normal economic and feasibility studies, the economic viability of Solwara 1 is unknown? 
  • “Is it true that the risk to shareholders of losing their entire investment in Nautilus is high and the potential returns promoted by Nautilus are purely speculative?
  • “Is this why Nautilus is struggling to obtain the investment it requires to complete the construction of its vessel and equipment?”

No clear answers to these questions were obtained.

For more information: Helen Rosenbaum, Deep Sea Mining Campaign, [email protected],  +61 413201793


[1] If it proceeds, the Solwara 1 mine will be located in the Bismarck Sea of Papua New Guinea, approximately 25 km from the coastline of New Ireland Province, about 35 km from Duke of York Islands and 60 km from Kokopo township in East New Britain.   

[2] See sections on risk factors in Annual Information Forms for financial years 2015 and 2016. For example:

“Our operations are speculative due to the high-risk nature of business related to the exploration and acquisition of rights to potential mineable deposits of metals. These risk factors could materially affect the Company’s future results and could cause actual events to differ materially from those described in forward-looking statements relating to our Company.” (FY 2016, p.52)

“... Performance, availability, reliability, maintenance, wear and life of equipment are unknown. There can be no guarantee that sub-sea engineering and recovery systems can be developed or if developed, will be employable in a commercially-viable manner.” (FY 2015, p.54)

“... while Company studies have indicated a low likelihood of risk to the aquatic environment from mining activities, the actual impact of any SMS [seafloor massive sulphide] mining operations on the environment has yet to be determined.” (FY 2015, p.61)

“Nautilus has not completed and does not intend to complete a preliminary economic assessment, pre-feasibility study or feasibility study before completing the construction and first deployment of the Seafloor Production System at the Solwara 1 Project.” 

“No independent Qualified Person has confirmed the amount of these costs or recommended that these costs be incurred. There is significant risk with this approach and no assurance can be given that the Seafloor Production System, if fully funded and completed for deployment at the Solwara 1 Project, will successfully demonstrate that seafloor resource development is commercially viable.” (FY 2015, p.52)

[3] For example: Davis, Rachel and Daniel M. Franks. 2014. “Costs of Company-Community Conflict in the Extractive Sector.” Corporate Social Responsibility Initiative Report No. 66. Cambridge, MA: Harvard Kennedy School.