Nautilus reported that Fujian Mawei Shipbuilding Ltd, the owner of the shipyard where Nautilus’ Production Support Vessel (PSV) is being built, has notified the company that MAC Goliath Pte Ltd, the buyer of the PSV, has failed to pay the third installment of the contract price (~US$18M + interest).

According to Nautilus, under the shipbuilding contract between the Shipyard and MAC, MAC is required to rectify the default immediately, and perform corresponding obligations under the contract.

Nautilus said that If MAC fails to remedy the default within 21 days of the receipt of a notice to MAC from the Shipyard, then the Shipyard may rescind the contract. In the event that the contract is rescinded, the Shipyard has the right to either complete or not complete the PSV and to sell the PSV by private sale either in a complete or incomplete state.

In accordance with the terms of the contract, Nautilus Minerals Singapore Pte Ltd has the option to either remedy the default on behalf of MAC and/or replace MAC as a party to the contract by way of a novation or assignment within fourteen days of receipt of the notice to the Company from the Shipyard.

Nautilus said the current build of the PSV is progressing well, with construction over 70% complete. The derrick substructure was recently delivered to the Shipyard for installation on the PSV.

Foundations for two of the three Launch and Recovery Systems (LARS) are being installed, the Bulk Cutter winch has been installed, work on the cargo handling system is progressing, and both the 100T and 200T cranes have now also been installed.

Nautilus is now in discussions with the Shipyard, MAC and third parties with respect to the default and potential remedies, and will issue further updates as matters develop.