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* Nautilus aims to mine copper, gold and silver from Solwara 1
* Papua New Guinea govt entitled to 15 pct stake in project
* Govt has paid Nautilus a non-refundable deposit of $7 mln (Adds details from statement, background)
April 24 (Reuters) - Nautilus Minerals Inc said it settled with the Papua New Guinea government, allowing it to start work on the world's first undersea metal mining project.
The company aims to mine copper, gold and silver from the Solwara 1 project, located in the Bismark Sea to the north of Papua New Guinea.
Under the agreement, the Papua New Guinea government is entitled to a 15 percent stake in the project and has the option to increase it by another 15 percent in the next 12 months.
The agreement is conditional to the government arranging $113 million by July 31 as part of its 15 percent share of the capital needed to complete the development phase of the project up to first production.
The government has already paid Nautilus a non-refundable deposit of $7 million for its initial 15 percent stake, the company said in a statement on Thursday.
Nautilus plans to use technology from the offshore oil and gas industry to be the first company to mine underwater metal deposits. It has been looking for a vessel that can scour the seabed for minerals.
Chief Executive Mike Johnston said on Thursday the company was in talks with potential vessel partners. It has also launched a tender process with shipyards with experience in building offshore construction vessels.
In October, an arbitrator ruled in favor of the Canadian company in a dispute with Papua New Guinea over the ownership of the Solwara project after a nearly two-year battle.
Nautilus had accused the government of not coming through on its share of financing for the project, while the government had accused Nautilus of not fulfilling some of its obligations. (Reporting By Sneha Banerjee in Bangalore; Editing by Prateek Chatterjee)