Poseidon Nickel (ASX:POS) has marked a significant milestone in its strategy to monetise the Windarra Gold Tailings Project, securing a binding heads of agreement with Green Gold Projects.
The company reports a binding agreement regarding Green Gold is for the processing of the Windarra Gold Tailings Project, which consists of the Windarra and Lancefield Tailings with a combined Mineral Resources of 5.96Mt at 0.84g/t gold and 2.10g/t silver, containing 180,000oz of gold.
This process began earlier in the year and significant interest was received from various parties. Green Gold Projects was selected as the preferred partner given its experience as a developer and operator of similar projects.
Poseidon reports that its patented technology has the potential to improve the economics of the project.
The binding HoA entered into with GGP will ensure that Poseidon’s primary focus remains on the restart of the Black Swan Project while realising some economic benefit from the Windarra Tailing Project, if the Project is developed by GGP.
Argonaut PCF acted as financial advisor and Steinepreis Paganin as legal advisor to the company in relation to this transaction.
A Definitive Feasibility Study (DFS) was completed by Poseidon and released in mid-2021 and investigated using 2 different mining methods on the Windarra tailings, amphibious dredging or hydraulic mining, and the construction of a modular 1.5Mtpa processing plant to recover up to 55,000oz of gold over a 45-month period.
While the outcome of the DFS was positive the company is focused on the restart of the Black Swan Project and decided that finding a partner to develop and operate the Windarra Gold Tailings Project was the best outcome for shareholders.
“This agreement is a significant milestone in the company’s strategy to monetise the Windarra Gold Tailings Project”
Addressing the agreement, Poseidon Managing Director and CEO Peter Harold commented: “This agreement is a significant milestone in the company’s strategy to monetise the Windarra Gold Tailings Project.
Green Gold Projects is an experienced developer and operator and is currently active in 30 projects globally.
The binding Heads of Agreement outlines the proposed partnership with Green Gold for the processing of the Windarra Gold Tailings Project, with a final agreement subject to Green Gold being satisfied with the outcome of metallurgical test work and a bankable feasibility study being completed at their expense.
Upon achieving these milestones, Green Gold will earn a farm-in interest in the Project. In return, Poseidon will receive consideration in the form of cash payments – upfront and upon project financing and a free carried profit interest of 8%.
The funding, development and operation of the project will be the responsibility of Green Gold. The proposed partnership with Green Gold is an ideal outcome for Poseidon given our focus on the development of our nickel projects.”
The binding HoA outlines certain conditions to be met to reach a final agreement to
develop the Project. These include metallurgical test work performed by GGP on the Windarra and Lancefield Tailings to determine if its patented technology can improve gold recovery; the rights and obligations of the Lancefield tailings Right-To-Treat Agreement are assigned to GGP; and GGP receiving Foreign Investment Review Board and any other anticipated approval if required.
Poseidon notes that the economic analysis of the tailings project indicated a robust project with an NPV of circa $20 million and IRR of 45-50% depending on the mining method assuming a gold price of US$1,750/oz and an exchange rate of A$1.00 = US$0.75.
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