Nickel buyers knocking down Poseidon’s door

Poseidon Nickel has witnessed extremely strong interest from potential customers and parties keen to help fund the planned restart of the emerging producer’s Black Swan nickel mine.

Poseidon Nickel (ASX:POS) has attracted over 30 parties interested in providing project debt and/or securing nickel concentrate offtake from the Black Swan restart.

“A key component of the Black Swan restart is the concentrate offtake and debt financing,” managing director Peter Harold said.

“These workstreams were the major focus for management over the [March] quarter.”

Poseidon is fast approaching a final investment decision after an extremely promising set of bankable feasibility study (BFS) results that demonstrate the Black Swan project in Western Australia can produce a high-grade nickel sulphide concentrate and be a profitable operation.

The study was for a 1.1Mpta mill feed option, but studies are also underway on a larger 2.2Mtpa operation.

Black Swan can produce a high-grade nickel concentrate with ~15% nickel, less than 6% magnesium oxide (MgO) and an iron to magnesium oxide ratio of 5:1 – which is highly desirable for conventional nickel smelters.

Poseidon has been working with Pure Battery Technologies since mid-2021 to investigate the suitability of nickel concentrate from the Black Swan and/or Lake Johnston projects as feed for PBT’s proposed battery material refinery in Kalgoorlie, WA.

Black Swan’s high-quality concentrate has also brought several other end users to Poseidon’s door.

“Over 30 parties expressed interest to provide project debt and/or concentrate offtake at the start of the process,” Harold explained.

“We have had several rounds of negotiations and shortlisted four parties that can provide both attractive offtake and project debt terms. These parties either have, or are close to, completing their respective due diligence on the project.

“We will further refine the shortlist during May 2023 with the aim of negotiating separate offtake and debt financing agreements during the remainder of the June 2023 quarter ahead of the final investment decision.”

In the meantime, Poseidon continues to advance the 2.2Mtpa Black Swan expansion project study, with the results of several workstreams expected to be completed during the June quarter.

Harold said the expansion project study is investigating operating the process plant at nameplate capacity of 2.2Mtpa and producing a rougher nickel concentrate suitable for HPAL, pCAM or POX plants.

“This project could enable more of the Black Swan resource to be converted to reserve, especially the talc carbonate material, leading to an increase in the annual production of nickel contained in concentrate, potentially improving project economics compared to the 1.1Mtpa smelter grade concentrate project,” he noted.

During the March quarter, Poseidon completed an 11,000m reverse circulation drilling program, from the bottom of the open pit, into the Black Swan Disseminated resource.

One of the main goals was to upgrade a significant component of the inferred resources within the proposed open pit shell to the higher confidence indicated resources category.

The higher confidence level allows for these resources to be converted to reserves.

Any increase in the reserves of the Black Swan open pit is likely to result in a longer mine life which will further enhance the project economics.

With most of the drilling results in hand, and the rest due early this month, Poseidon anticipates it will be able to release an updated resource in late May.

This article was developed in collaboration with Poseidon Nickel, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.