Poseidon Nickel (ASX: POS, 'the Company') is pleased to report on its activities for the March Quarter 2020.
CEO and Managing Director Peter Harold commented, 'Poseidon experienced a successful March quarter, underpinned by significant exploration success with the discovery of the Golden Swan mineralisation.
'The identification of a significant down hole electromagnetic (DHEM) anomaly provided the foundations that culminated in the discovery of high-grade massive nickel sulphides in the first hole at Golden Swan.
'The maiden intersection was 23.1m averaging 4.0% Ni, including 2.1m averaging 15.9% Ni, together with significant Cu and Co credits. Further EM surveys are planned to assist in determining whether the mineralisation extends upward towards the Gosling workings, where historically drilling is sparse.
'We also commenced key works at the Windarra Gold Tails Project, located near Laverton. With the AUD gold price trading above $2,500/oz, a Scoping Study commenced and will focus on the capex and opex for a tailing reclamation and stand-alone gold processing facility, located on site at Mt Windarra. Work is also underway to convert the portion of the overall gold tailings resource being considered for the Study to JORC 2012 compliance. The Study is well underway and scheduled for completion during the June quarter'
DRILLING - GOLDEN SWAN
Completion of the maiden diamond drill hole at the newly discovered Golden Swan massive sulphide mineralisation, returned exceptional assay results, with nickel grades of similar tenor to that of the neighbouring high-grade Silver Swan orebody.
The discovery drill hole was collared from the Gosling Access Drive as an EM platform hole to test for massive sulphides between the Gosling Deposit and the Golden Swan EM conductor. The hole included a navi cut to intersect the very top of the Golden Swan EM conductor detected earlier this year. The massive sulphides are located along the southern edge of the Black Swan channel and have been interpreted to result from the gravitational settling of nickel sulphides within the Black Swan channel. The remainder of the EM conductor, 120m below the current intersection, will be drill tested during the June 2020 quarter. The Zone of Potential above the maiden Golden Swan intersection up to Gosling will be the focus of the next EM survey, which is anticipated to provide information about the upward extent of Golden Swan.
To support these exploration objectives and ahead of further drilling, the Company is planning to install a permanent underground EM loop, which will be used to better define this new mineralisation and provide more accurate targeting options. The underground loop should significantly expand the effective search radius by up to 50%.
A priority for the June 2020 quarter, is to have the EM loop installed underground and the EM surveys completed. The drilling contractor has advised of their availability to recommence drilling in May 2020 subject to agreed COVID-19 operating protocols.
RESERVE UPGRADE - SILVER SWAN
The Silver Swan Ore Reserve estimate upgrade was prepared by Mining Consultants, Entech Pty Ltd, which updated the Mineral Resource that was previously announced to market on 5 August 2019.
The Ore Reserve economics were based on a processing recovery of 92.5% for nickel, commercial offtake terms and a nickel price of A$22,335/t. Copper and cobalt grades in concentrate did not reach minimum assumed payable levels.
Ore Reserve Estimate Statement
The Ore Reserve estimate for the Silver Swan ('SS') underground nickel mine as at February 2020 is 130,000 tonnes of ore grading 5.2% Ni for a total of 6,800 tonnes of contained Ni metal.
The Mineral Resource used as the basis for the Ore Reserve estimate was announced to market on 5 August 2019. Indicated Resources have been converted to Probable Ore Reserves subject to mine design physicals and an economic evaluation. No Measured material was contained in the Resource. Any Inferred material contained within the mine plan has been treated as host rock waste. The Ore Reserves have been defined at delivery to the Black Swan processing plant, on the assumption that Silver Swan material will be processed alongside Black Swan open pit and surface stockpile material as detailed in the 2018 Feasibility Study. The Ore Reserve estimate is based on financials and modifying factors determined as part of the 2018 Feasibility Study undertaken on the project. This statement relates to a global estimate.
BLACK SWAN SAFETY WORKS
The Silver Swan underground escapeway ladder refurbishment program progressed well during the period and without incident. Work was suspended due to the rapidly changing situation in relation to the COVID-19 pandemic. Protocols and procedures for restart are currently be assessed.
RESPONSE TO COVID-19
Poseidon understands the severity of COVID-19 and implemented a variety of protocols and measures in response to COVID19, to ensure the safety and wellbeing of all Poseidon employees and contractors and to safeguard the assets of the business. The Company suspended safety works and ongoing drilling activities at Black Swan (including the associated geophysics programs) until a variety of protocols in conjunction with various contractors is developed and agreed upon. These protocols are being designed to ensure that all activities undertaken, including travel and accommodation, can be conducted within the safe operating parameters as per the WA Government requirements.
WINDARRA GOLD TAILING SCOPING STUDY
Given the recent increase in the price of gold to over A$2,500 per ounce, Poseidon commenced a Scoping Study on the Windarra gold tailings (near Laverton WA). The Study will evaluate the economics of recovering gold from two of the tailings dams, using hydraulic mining techniques and then processing the material on site in a purpose build plant, to produce loaded carbon for final treatment off site, or the production of gold ore on site.
WINDARRA EXPLORATION UPDATE
The Company received and announced assay results from the RC program at the Crazy Diamond Prospect near Windarra, where both gold and nickel was intersected. PNRC0309 intersected 5m @ 0.75% Ni from 12m; including 1m @ 1.38% (approx. 0.8m true width), the results were released to ASX on 11 February 2020 'Upgrade of Nickel Reserves at Silver Swan'. The Crazy Diamond Prospect is the next komatiite channel to the north of Poseidon's Cerberus Discovery.
LAKE JOHNSTON UPDATE
A number of flora surveys were commissioned at Lake Johnston, in preparation for submission of approvals for drilling and geophysical work. The Company considers the area highly prospective for further nickel discoveries and is the subject of ongoing geological examination and review. Poseidon's intrusive-style nickel mineralisation model for Lake Johnston was proved 2015 with the discovery of Abi Rose. The exploration model covers the entire northern area of the Lake Johnston tenement holding and incorporates a number of nickel prospects currently under re-evaluation. The Company has also identified a number of areas which are prospective for Kambalda-style nickel mineralisation. These areas are being mapped in detail, ahead of proposals to drill test them.
FINANCIAL
As at 31 March 2020, the Company had cash and current investments totalling $48.6 million. Over the previous quarter, Poseidon's net cash outflow from operating activities totalled $3.1 million. Expenditures included $2.4 million of exploration and evaluation costs, of which $1.0 million was spent progressing the Black Swan Restart Study and safety work programs and $0.2 million on exploration activities.
There were no production or development activities conducted over the quarter and as such no production or development expenditures incurred.
Related party expenses over the quarter totalled $0.5 million: $0.35 million paid to major shareholder Black Mountain Metals (BBM) for interest incurred on the BMM held convertible note facility; $41,000 paid to BMM for consultancy services provided to Poseidon with regards to technical studies conducted on Poseidon's mining assets and $68,000 fees paid to Directors.
Poseidon has forecasted expenditure of $3.8 million over the following quarter, of which $2.6 million is to be spent on exploration and evaluation activities.
CORPORATE
The Board welcomed Peter Harold as Managing Director and Chief Executive Officer on 3 March 2020.
OTHER
There were no material changes in mineral tenement during the period (as shown in Appendix 4)
Contact:
Tel: + 61 (0)8 6167 6600.
About Poseidon Nickel Limited
Poseidon Nickel Limited (ASX Code: POS) is a nickel sulphide development and exploration company with three projects located within a radius of 300km from Kalgoorlie in the Goldfields region of Western Australia and a resource base of around 400,000 tonnes of nickel and over 180,000 ounces of gold. Poseidon's strategy is focused on the exploration and eventual restart of its established nickel operations in Western Australia where project risk capital and operating costs are low. A critical element of this strategy has been to acquire projects and operations with high levels of geological prospectivity likely to lead to potential substantial extension of the operation's life through the application of modern exploration techniques. Poseidon owns the Windarra Nickel Project, the Black Swan Nickel Operations and the Lake Johnston Nickel Operations. In addition to the mines and infrastructure including concentrators at Black Swan and Lake Johnston, the operations have significant exploration opportunities demonstrated by the discovery of the Abi Rose deposit at Lake Johnston and the recent discovery of the Golden Swan mineralisation at Black Swan. Management is also reviewing the economics of retreating the gold tailings at Windarra given the strength of that A$ gold price.
POSEIDON NICKEL LIMITED 
