VANCOUVER, Oct 3 (Reuters) - Nautilus Minerals Inc said on Thursday an arbitrator had ruled in its favor in a dispute with Papua New Guinea over the ownership of its Solwara 1 underwater copper mining project, sending shares up more than 40 percent.
The ruling comes after a nearly two year battle, during which Nautilus accused the government of Papua New Guinea of not coming through on its share of financing for the project, and Papua New Guinea accused Nautilus of not fulfilling some of its obligations.
Nautilus plans to use technology from the offshore oil and gas industry to be the first company to mine underwater metal deposits. Its first project, Solwara 1, is located in the Bismark Sea, within the territorial waters of Papua New Guinea.
The country had exercised an option to buy 30 percent of that project in 2011 and as part of the agreement was responsible for a 30 percent share of project expenses.
The arbitrator ruled that by failing to complete the purchase of the stake and pay its share of expenses, the island nation was in breach of its agreement, Nautilus said.
The arbitrator also ruled the government must complete the purchase and pay its share of costs to date within a reasonable period. Nautilus puts those costs at about $118 million.
Shares of Nautilus were up 17.5 Canadian cents at 54 Canadian cents on the Toronto Stock Exchange. (Reporting by Julie Gordon; Editing by Janet Guttsman and Bernadette Baum)