January 17, 2011 / 3:52 PM / 7 years ago

UPDATE 2-Nautilus wins mining lease in Papua New Guinea

* Says wins right to develop off-shore copper-gold project

* Govt has option to to take up to 30 pct stake

* Company also scouting for strategic partner

* Shares jump 20 pct to C$2.63 on TSX (Adds CEO comments, updates share price; in U.S. dollars unless noted)

TORONTO, Jan 17 (Reuters) - Nautilus Minerals (NUS.TO) said on Monday the government of Papua New Guinea has granted it a deep sea mining lease to develop its copper-gold project in the southwestern Pacific Ocean, sending its shares up 20 percent.

Toronto-based Nautilus, which is focused on exploring the sea floor for mineral deposits, said the 20-year lease covers an area of nearly 60 square kilometers (23 square miles) around its Solwara 1 project.

The Papua New Guinea government has retained an option to take up to a 30 percent stake in the Solwara 1 project as a joint venture partner, the company said in a statement.

The option is exercisable within one month. If exercised the government will contribute funds to the project in proportion to its interest, including its share of the costs incurred to date, the company said.

In addition, Nautilus said it is still in discussions with potential strategic partners to help develop the roughly $380 million project.

"It's reasonable to assume, now that we having the mining lease in place, it will allow us to move forward and put an end to those discussions in the near future," Chief Executive Stephen Rogers told Reuters.

Rogers said the project will take about 30 months to develop, but the company's board will only move forward on the project once it has a strategic partner in place.

"We have had significant interest both from the mining sector and from the services sector in partnering on this project going forward," said Rogers.

The company aims to produce about 80,000 tonnes of copper, along with 150,000 to 200,000 ounces of gold annually from the project.

Shares of Nautilus jumped 43 Canadian cents to C$2.63 by early afternoon on the Toronto Stock Exchange.

$1=$0.99 Canadian Reporting by Euan Rocha; Editing by Rob Wilson

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