Poseidon Nickel : Black Swan Restart Project Update

Level 1 3 Ord Street West Perth WA 6005

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only		ASX Announcement
BLACK SWAN RESTART PROJECT UPDATE
		15 November 2021
KEY POINTS
use
Fill the Mill Strategy

o Restart based on feeding the 1.1Mtpa processing circuit with a combination of feed sources to maximise nickel units produced

Growing Mining Inventory to support filling the mill for longer

o New high-grade Golden Swan discovery adds 6,300t contained Ni to Black Swan Resources

o Silver Swan drilling underway, aiming to increase high-grade mining inventory

o Black Swan Disseminated resource drilling underway, aim is to increase quantity of serpentinite ore

Metallurgical test work underway

o Previous test work confirms Silver Swan tailings improves Fe:MgO ratio of concentrate

o Current program designed to determine most suitable blend of feed sources, average metallurgical recovery and typical concentrate specifications for marketing purposes

Considerable progress made on Black Swan Restart since the 2018 Black Swan Study

o Work is focused on de-risking the 2018 Black Swan Study by:

personal	∙ 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
For	∙ 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
∙ negotiating accessing grid power which, if secured, will reduce the July 2021 Scoping
Study overall plant operating cost estimate by >10%

Marketing and Project Funding

1. The Company continues to engage with parties who have expressed interest in offtake and funding arrangements

Poseidon Nickel (ASX: POS) ("Poseidon", "the Company") is pleased to provide its first update on the Black Swan 1.1Mtpa "Fill the Mill" project and the Bankable Feasibility Study process.

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ASX Announcement

Managing Director and CEO, Peter Harold, commented, "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 onlydrilling 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 2.2Mtpa concentrator, derated to 1.1Mtpa. 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 useSilver Swan and Golden Swan which could provide interim cashflow ahead of the recommissioning of the

1.1Mtpa processing plant."

Fill the Mill Strategy

The July 2021 Scoping Study undertaken by GR Engineering Services (GRES) considered two options:

• a small high-grade underground mining operation with ore sourced from Golden Swan and Silver Swan and processed through the refurbished 150ktpa Silver Swan processing circuit; or
• refurbishing the 2.2Mtpa Black Swan circuit (derated to 1.1Mtpa) and processing a number of ore sources (low and high-grade) to fill that circuit.

Outcomes from the Scoping Study indicated that whilst both production options are attractive, maximising ickel tonnes produced will have the best economic outcome given:

personal	• growing high and low grade Indicated Resource base at Black Swan including Golden Swan, Silver
and potentially third-party feed (subject to plant capacity availability and other factors).
	Swan, Silver Swan tailings and Black Swan Disseminated open pit ore feeds;
	• the relatively low capital and operating expenditure estimates for the larger 1.1Mtpa plant;
	• recent improvements in payability of nickel in concentrates globally due to a tightening market;
	• strong spot nickel price (averaging close to US$9/lb) and the positive outlook for the nickel price; and
	• the potential to have a long-life project that could treat ore from Windarra (100% Poseidon owned)

Our Fill the Mill strategy is focussed on growing our mine inventory at Black Swan with an aim to supporting a project life of more than five years.

Black Swan Restart Project Update

The following workstreams are underway:

For	• updating the existing Black Swan open pit mining study including determining the optimal pit shell
and production rate and estimated capital and operating costs;
	• detailed mine planning to potentially convert the maiden Golden Swan Resource to a Reserve;
	• drilling at Silver Swan to identify potential resource growth opportunities and potentially convert more
	Resource to Reserve;
	• metallurgical test work on blending the various ore sources to determine the optimum feed blend,
	excepted metallurgical recoveries for each feed source and typical concentrate specifications;
	• indicative offtake terms for the quality and quantity of nickel concentrate expected to be produced;
	• financing proposals for the debt component of the restart capital; and
	• completing the Bankable Feasibility Study.
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1 - BLACK SWAN 2MTPA PROCESSING PLANT

FIGURE

ASX Announcement

onlyuse The following work streams have already been completed:

• Silver Swan Tailings maiden Resource (Silver Swan Tailings - Maiden Resource Estimate ASX announcement dated 15.09.2021)
• 5-yearwater access agreement signed with Norton Gold Fields Pty Ltd; and
• Golden Swan maiden Resource (Golden Swan Maiden Resource ASX announcement dated 27.10.2021 and 12.11.2021).

personalResource Base and Mining Inventory

During 2021 the Company 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. Over the September 2021 quarter we released our maiden resources for Golden Swan (Golden Swan Maiden Resource ASX announcement dated 27.10.2021 and 12.11.2021) and the Silver Swan tailings (Silver Swan Tailings - Maiden Resource Estimate ASX announcement dated 15.09.2021). In addition, we commenced resource drilling on both the high-grade Silver Swan and low-grade Black Swan Disseminated orebodies to convert Inferred Resources to Indicated and grow our mining inventory (More High-Grade

Intersections at Silver Swan ASX announcement dated 9.11.2021).

For

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ASX Announcement

The current Black Swan Resources are summarised in Table 1.

					Black Swan Open		Silver Swan		Golden Swan		Silver Swan		Total
only					Pit						Tailings
	Measured Tonnes (kt)			-		-		-		675		675
	Measured grade (%Ni)			-		-		-		0.92		0.92
		Measured metal (t)			-		-		-		6,200		6,200
		Indicated Tonnes (kt)			9,600		108		111.6		-		9,820
		Indicated grade (%Ni)			0.68		9.4		4.7		-		0.82
		Indicated metal (t)			64,900		10,130		5,200		-		80,230
use		Inferred tonnes (kt)			21,100		61		48.4		-		21,209
	Inferred grade (%Ni)			0.54		9.7		2.2		-		0.57
	Inferred metal (t)			113,800		5,900		1,050		-		120,750
		Total tonnes (kt)			30,700		169		160		675		31,704
		Grade (%Ni)			0.58		9.5		3.9		0.92		0.65
		Total metal (t)			178,700		16,030		6,250		6,200		207,180

TABLE 1: BLACK SWAN MINERAL RESOURCES SUMMARY

personal* Note stockpiles have not been considered for mine inventory given the relatively lower grade and higher MgO nature of this material

Despite the large, disseminated resource at Black Swan, a significant portion is currently in the Inferred category which cannot be directly converted into an Ore Reserve. In addition, a portion of this resource is hosted in talc carbonate ultramafics which do not produce a marketable concentrate product for nickel smelters. Exploration and Resource definition programs undertaken in 2019 and the one currently underway are aimed at increasing the mineralised serpentinite inventory.

Golden Swan Maiden Resource

The Golden Swan Resource Definition drilling program commenced in late April 2021 and was designed to increase confidence in the continuity of the Golden Swan mineralisation to allow a Resource to be determined in accordance with JORC 2012 Inferred and Indicated categories. The drill program was completed ahead of schedule at the end of July 2021 with 60 holes drilled for a total of 15,968 metres.

The maiden Resource was released in late October (Golden Swan Maiden Resource ASX announcement dated 27.10.2021 and 12.11.2021):

• Indicated Resource of 111,600 tonnes grading 4.7% Ni for 5,200 tonnes contained Ni
• Total Indicated and Inferred Resource of 160,000 tonnes grading 3.9% Ni for 6,250 tonnes contained Ni

ForSilver Swan Tailings Maiden Resource

The Company announced the maiden Resource estimate for the Silver Swan Tailings, located at the Black Swan project, of 675,000 tonnes grading 0.92% Ni and 683ppm Co containing 6,200 tonnes of nickel and 460 tonnes of cobalt. Refer Silver Swan Tailings - Maiden Resource Estimate ASX announcement dated 15.09.2021.

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FIGURE

2: GOLDEN SWAN DRILL DRIVE

ASX Announcement

onlyuse

personalSilver Swan Resource Drilling

Resource drilling at Silver Swan which commenced in early August 2021 is continuing with an aim to identify extensional opportunities to the existing resource and convert inferred resources to indicated. This program has focused on the Peking Duck, Fledgling Canard and Tundra Mute Resources, which collectively already contain 168,000 tonnes averaging 9.5% Ni for 16,030 tonnes Ni contained in Indicated and Inferred Mineral Resources. Drilling is ongoing.

Black Swan Disseminated Resource Drilling

To further de-risk the Black Swan restart project it is important to understand the distribution of the more metallurgically favourable mineralised serpentinite ore below the existing Black Swan open pit. The current Serpentinite Model was developed by a previous owner of Black Swan over 10 years ago, on limited

information, and is not well constrained, as shown by the RC drilling program undertaken in 2019 (refer ForFigure 3).

One of the underground rigs has recently moved from Silver Swan into the Gosling Drill Drive to initially drill six holes to test the down plunge and north-south striking continuity of the Black Swan serpentinite mineralisation below the current pit model. Building a better understanding of the distribution of various serpentinite lodes is important, especially in the area where current pit optimisations are driving the pit deeper into areas of Inferred Resource.

Most of the Black Swan disseminated mineralisation beneath the pit is in the Inferred Resource category. While these resources can be used in preliminary pit optimisation designs, they are not able to be converted to an Ore Reserve. As the current drilling program progresses results will dictate whether further drilling will be undertaken to lift more of the Resource to Indicated category and then potentially into Ore Reserves.

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