June 1, 2012 / 7:34 PM / 5 years ago

Nautilus shares dive on mine delay warning

TORONTO (Reuters) - Nautilus Minerals Inc NUS.TO shares plunged more than 36 percent on Friday after the company warned that its Solwara 1 copper project could be delayed or canceled due to a dispute with Papua New Guinea over their ownership agreement for the underwater mine.

The country optioned to acquire 30 percent of the Solwara 1 project, located in its territorial waters in the Bismarck Sea, last year. As part of the agreement, Papua New Guinea must pay its share of development costs for the mine.

“Unless and until the dispute is resolved, completion will be delayed or may not occur and Nautilus must continue to carry these costs,” Nautilus said in a release.

Shares of the Toronto-based miner fell 36.1 percent to C$1.31 on the Toronto Stock Exchange in late afternoon trading on Friday. Anglo American PLC (AAL.L) holds a 9 percent stake in the company, according to Thomson Reuters data.

The dispute could slow construction and may ultimately lead to higher capital costs, the company added. Nautilus has all the necessary environmental and mining permits for the underwater copper-gold-silver mine.

Separately, Nautilus said the construction of a $150 million support vessel for the mining project may be delayed due to financing issues with its European partner.

Reporting by Julie Gordon; Editing by Jeffrey Benkoe, Gary Hill

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