Poseidon Nickel (ASX:POS) reports it is on track to become Australia’s next nickel sulphide concentrate producer following a ‘positive’ Bankable Feasibility Study (BFS) outcome for the Black Swan Project.
The company says the BFS shows that mining and processing 1.1Mtpa of feed from Black Swan could deliver free cash flows of $333 million with a pre-tax NPV of $248 million and IRR 103% at the current Australia dollar nickel price.
The reported combined Black Swan ore reserves are 3.5 million tonnes averaging 1% nickel for around 35,000 tonnes of contained nickel, and the study assumes milling 5 million tonnes of feed over four years to produce 200,000 tonnes of concentrate containing around 30,000 tonnes of nickel.
The company reports Black Swan could produce a ‘high-grade’ nickel concentrate with around 15% nickel, less than 6% magnesium oxide and an iron-magnesium oxide ratio of 5 to 1 which Poseidon says is ‘highly’ desirable for conventional nickel smelters.
Poseidon Nickel Managing Director and CEO Peter Harold says the company has achieved a significant milestone for its fill the mill strategy by completing the Black Swan 1.1Mtpa mill feed BFS.
“The Black Swan Project is highly leveraged to the improving nickel price outlook with the NPV increasing to $470 million based on the input assumptions of US $15/lb nickel price and foreign exchange AUD to USD $0.65. These positive economic outcomes are set against an environment where capital and operating costs have increased significantly since the 2018 Feasibility Study was completed.
“These positive economic outcomes are set against an environment where capital and operating costs have increased significantly since the 2018 Feasibility Study was completed”
The team at Poseidon together with our contractors and consultants have put in a huge effort throughout the study period undertaking resource drilling, resource model updates, mine studies, metallurgical testing process plant refurbishment and operating cost estimates, marketing and logistics studies and economic analysis to ensure the study numbers are robust.
When we commenced the study the main areas that required further work were the large amount of higher risk mining inventory tonnages included in the 2018 study based on the conversion of low confidence inferred mineral resources, the talc distribution within the disseminated mineral resource and the suitability of the concentrate for a traditional nickel smelter.
We have undertaken several resource definition drilling programs on each proposed ore source resulting in a far more robust mining inventory. We have also undertaken numerous QXRD readings to construct a detailed talc distribution model for the Black Swan disseminated mineral resource estimate (MRE) that will enable us to optimise the ore blends.”
Production data from 2009 when Black Swan last operated showed ‘high’ magnesium oxide levels were present in the concentrate and the company reports recent metallurgical breakthroughs with the addition of a ‘rougher’ concentrate regrind stage in the processing flowsheet and blending in a small amount of Silver Swan Tailings have confirmed we can produce a ‘high-grade’ nickel concentrate, and Poseidon has received indicative offtake terms for a number of groups which confirm the concentrate is sought after with ‘excellent’ nickel payability.
Poseidon reports it will be progressing discussions with potential offtake and financing partners towards definitive terms that will support a final investment decision, and the company is continuing to work on the 2.2Mtpa ore feed feasibility study which includes the processing of the talc carbonate ore to producing a rougher concentrate with a nickel grade and higher magnesium oxide when compared to typical conventional smelter concentrate specifications.
The company says this could unlock ‘significantly’ more material and would result in ‘higher’ annual nickel production and improved project economics, with potential customers including Pure Battery Technologies proposed Kalgoorlie pCAM refinery or local HPAL plants.
Poseidon Nickel is a nickel sulphide exploration and development company with 3 projects located within a radius of 300km from Kalgoorlie in the goldfields region of Western Australia and a resource base of around 400,000 tonnes of nickel and 180,000 ounces of gold.
Its assets include the Windarra, Black Swan and the Lake Johnston Nickel Projects, in addition to the mines and infrastructure including concentrators at Black Swan and Lake Johnston.
Images: Poseidon Nickel Ltd
