Nautilus Minerals Inc. announces that the Independent State of Papua New Guinea has issued a Notice of Arbitration in relation to the dispute which has arisen under the Agreement between the parties dated 29 March 2011.
Following the initiation of the dispute resolution process by the Company on June 1, 2012 and subsequent meetings between the parties the Company had understood the State wanted to resolve the dispute, particularly in light of a letter to the Company from the Honourable Peter O’Neill CMG MP, the Prime Minister of the State, dated June 6, 2012. In that letter the Prime Minister outlined a number of key principles to be reflected in relation to the joint venture for the Solwara 1 Project. Nautilus considered this to be a suitable basis for continuation of the discussions in an attempt to resolve the dispute.
The State has now issued a Notice of Arbitration to the Company which asserts that Nautilus has not met certain obligations on which completion of the transactions contemplated by the Agreement is dependent, that Nautilus has breached the Agreement and that the State is entitled to terminate the Agreement. Nautilus has and continues to refute these assertions and maintains that it is the State who has breached the Agreement, not Nautilus.
As previously disclosed, under the Agreement the State’s nominee (a subsidiary of Petromin PNG Holdings Limited) must pay (among other amounts) its share of costs incurred in the development of the Project up to completion to acquire its Project interest. Unless and until the dispute is resolved, completion will be delayed or may not occur and Nautilus must continue to carry these costs. This may lead to Nautilus needing to slow or defer the build program for Project equipment, which would have consequential impacts on the scheduled commencement of operations and overall Project costs.
Nautilus will continue to attempt to resolve the dispute with the State in an effort to avoid a costly arbitration process. On completion of its review of the Notice and further meetings in PNG, Nautilus will provide further details of its plans by Friday, June 29, 2012.
[mappress]
Subsea World News Staff , June 20, 2012; Image: Nautilus Minerals