Poseidon builds stronger foundation for Black Swan restart
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Poseidon is making solid progress towards the restart of its Black Swan nickel mine in Western Australia, with further metallurgical testwork and exploration to set the stage for a successful restart.
Poseidon Nickel (ASX:POS) is continuing to progress the offtake and project debt financing along with obtaining the necessary approvals for the restart of Black Swan, initially at a rate of 1.1 million tonnes per annum.
The company has secured environmental works approval and anticipates it will receive approval of the mining proposal later this year.
Poseidon has also received draft documentation from the shortlisted offtake and project debt financing parties as negotiations get closer to the finish line.
“The offtake and project debt financing work streams continue to progress well, together with obtaining all the necessary approvals for the Black Swan restart,” managing director Peter Harold said.
“While the team has made solid progress advancing the project towards the restart, we have been advised that grid power will not be available at site until late 2024.”
In the meantime, the emerging nickel producer is focused on undertaking additional metallurgical testwork to confirm the recoveries for the disseminated serpentinite ore.
“We have determined from the recent confirmatory drilling and updated resource model that further metallurgical testwork is required to confirm the recoveries used in the feasibility study for the disseminated open pit ore,” Harold explained.
“These project related factors together with the continuing tightness in the WA labour market, the lack of the availability of Kalgoorlie FIFO accommodation and the increased volatility in global commodity and equity markets have resulted in us deferring the Black Swan restart decision.”
In the grand scheme of things, the deferral is only expected to be a relatively short delay and will further derisk the project going forward. It also means, the Black Swan project will be coming back into production in what is forecast to be a better economic and nickel price environment.
“We expect the volatility in global markets to start to abate into 2024 providing a more favourable environment for project development,” Harold noted.
“We will constantly monitor the project related factors and together with external market conditions. Our primary aim remains to restart Black Swan as soon as it is feasible to do so.”
This also gives Poseidon ample opportunity to complete the prefeasibility study on the expansion of the Black Swan project to 2.2 million tonnes per annum, which could substantially increase the annual tonnage of nickel produced.
The prefeasibility study is on track for completion late in 2023.
Just last month, the company further strengthened the case for the restart of the Black Swan mine with a nearly 50% boost to the higher confidence measured and indicated resources.
While the latest resource upgrade could increase the contained nickel in the mining inventory, Poseidon will also undertake further exploration drilling at both its Black Swan and Lake Johnston projects.
“In the meantime, we will continue to add value for shareholders by completing the Black Swan Expansion Project prefeasibility study and undertake further exploration drilling at both Black Swan and Lake Johnston targeting high-grade mineralisation,” Harold said.
Previous exploration at Black Swan identified electromagnetic anomalies near the high-grade Silver Swan channel, which provide high priority targets for drill testing.
The Black Swan resource currently sits at 26.3Mt at 0.72% for 189,000t of contained nickel, of which 118,000t is in the higher confidence measured and indicated categories.
The recent substantial increase in measured and indicated resources means there is a lot more nickel for Poseidon to convert to reserves – the estimates of nickel in the ground ready to be mined.
At Lake Johnston, an initial drill program identified a potential open-ended channel up to 400m wide at Maggie Hays West which will be the focus of follow-up drilling.
Poseidon plans to drill test six additional targets along the 14km strike later this year.
The recent exploration success and new targets identified highlights the significant potential to grow the resource base.
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.