Poseidon Nickel makes strong progress with Black Swan restart strategy

Poseidon Nickel Ltd (ASX:POS, OTC:PSDNF) has made strong progress with its ‘Fill the Mill’ strategy and bankable feasibility study that are driving the Black Swan Project in Western Australia towards a potential restart.

The company adopted the ‘Fill the Mill’ strategy in July this year focused on feeding the existing 1.1 million tonnes per annum processing circuit with a combination of feed sources to maximise nickel units produced.

This strategy aims to support a project life of more than five years following the restart at Black Swan which is 50 kilometres northeast of Kalgoorlie.

“Targeting late 2022 plant commissioning”

Poseidon managing director and CEO Peter Harold said: “Since announcing our ‘Fill the Mill’ strategy in July 2021 the company has made considerable progress on workstreams progressing our Black Swan project towards a restart, targeting late 2022 plant commissioning.

“Of particular importance, we have released our maiden Golden Swan resource, commenced resource drilling at Silver Swan to convert inferred resources to indicated and begun drilling of the Black Swan disseminated orebody to increase confidence on the grade and the amount of serpentinite ore in this resource.

“We have also released a maiden resource on the Silver Swan tailings and commenced metallurgical test-work on blending the various feed sources through the Black Swan 2.2 million tonnes per annum (tpa) concentrator, derated to 1.1 million tpa.”

‘Fill the Mill’ strategy

Poseidon completed a scoping study in July 2021 which suggested a small high-grade underground mining operation with ore sourced from Golden Swan and Silver Swan and processed through the refurbished 150,000 tpa Silver Swan processing circuit.

In addition, the company considered refurbishing the 2.2 million tpa Black Swan circuit (derated to 1.1 million tpa) and processing several ore sources (low and high-grade) to fill that circuit.

Outcomes from the scoping study indicated that whilst both production options are attractive, maximising nickel tonnes produced will have the best economic outcome.

Resource base and mining inventory

During 2021, Poseidon has undertaken activities to grow the indicated resource at Black Swan and build a mining inventory supporting a project life longer than proposed in the 2018 Black Swan study.

The new high-grade Golden Swan discovery adds 6,300 tonnes contained nickel to Black Swan resources.

Silver Swan drilling is underway aiming to increase high-grade mining inventory.

Furthermore, Black Swan disseminated resource drilling is also underway aiming to increase the quantity of serpentinite ore.

Golden Swan drill drive.

Metallurgical test-work

Poseidon’s test work program incorporates the blending of several feed sources with the main source being lower grade disseminated ore from the Black Swan open pit.

The historical Silver Swan tailings are only 300 metres from the Black Swan concentrator, which will form a small but important proportion of the proposed feed blend.

Notably, the previous test-work confirms Silver Swan tailings improves the Fe:MgO ratio of the concentrate.

The current program is designed to determine the most suitable blend of feed sources, average metallurgical recovery and typical concentrate specifications for marketing purposes.

De-risking progress

Poseidon has made considerable progress since the 2018 Black Swan study with work focused on de-risking the project by:

• Increasing high-grade and low-grade mining inventory to support a longer life project;
• Developing Golden Swan access drive for the resource drilling program;
• Improved concentrate marketability;
• Significant pre-production works already completed including underground escapeway refurbishment/replacement, underground infrastructure refurbishment and concentrator safety upgrade;
• Process water secured under five-year water access agreement; and
• Negotiating to access grid power which, if secured, will reduce the July 2021 scoping study overall plant operating cost estimate by greater than 10%.

Marketing and project funding

Poseidon continues to engage with parties who have expressed interest in concentrating offtake and/or funding arrangements to support the Black Swan restart.

These discussions are expected to progress further once the company has defined the mining inventory, concentrated typical specifications and the production schedule, which are expected to be completed toward the end of this quarter.

Harold adds: “These workstreams are aiming to create a longer life project, produce a marketable concentrate and optimise the project economics compared to the 2018 Black Swan study which only treated ore for 25 months and produced a low Fe:MgO concentrate that would be more challenging to sell in the current market.

“We will also revisit the Direct Shipped Ore option once we have preliminary mining schedules for both Silver Swan and Golden Swan which could provide interim cash flow ahead of the recommissioning of the 1.1 million tpa processing plant.”

Story by ProactiveInvestors