Poseidon Nickel : Black Swan Restart Project Update

commence studies on dewatering the Black Swan open pit in 2022 commence environmental and mine approvals process

employ personnel for key project management roles

undertake studies on site-basedaccommodation and commence approvals process progress planning and approval for grid power allocation

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∙ further exploration down plunge of the existing Silver Swan resource to grow the high- grade mining inventory

Progress to date on the Fill the Mill strategy supports fast tracking a number of initiatives, including:

Level 1 3 Ord Street West Perth WA 6005

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only	ASX Announcement
BLACK SWAN RESTART PROJECT UPDATE
	21 December 2021
KEY POINTS
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Fill the Mill Strategy

o Growing mine inventory supports restart strategy based on feeding the 1.1Mtpa processing circuit from a combination of feed sources to maximise nickel units produced

Further exploration success at Silver Swan - very high grade intersections

o Assay results received from recent resource drilling at Silver Swan indicate potential for

personalFor	increased Reserve (up from current Silver Swan JORC Reserve of 6,800t Ni):
∙ PTMD005: 12.9m @ 10.63% Ni
	∙ PTMD007: 6m @ 11.36% Ni
	∙ PTMD014: 11m @ 13.26% Ni
	∙ PTMD015: 3.5m @ 16.30% Ni
	∙ PTMD018: 15m @ 17.92% Ni

Drilling in Black Swan Disseminated mineralisation returning positive results

o Drilling results indicating potentially greater consistency of metallurgically favourable serpentinite mineralisation in the disseminated zone below the existing pit

Preliminary Investment Decision

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Marketing and Project Funding

1. Indicative terms requested from prospective offtake parties indicate interest from market in preliminary Black Swan concentrate specification

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ASX Announcement

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

Managing Director and CEO, Peter Harold, commented, "we continue to progress the Fill the Mill strategy at Black Swan.

onlyThe resource drilling programs on the Black Swan Disseminated orebody and within the Silver Swan Channel continue to deliver positive results which show potential for an increase in the mining inventory for the restart. In addition, further knowledge of these resources builds our knowledge of the mineralogy and metallurgy and will help us refine the ore blending strategy to achieve the optimal concentrate specifications.

Progress to date on the Bankable Feasibility Study has provided the necessary outputs from our internal

Preliminary Economic Assessment to provide comfort for us to commence a number of workstreams to
support the Black Swan restart."
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For	FIGURE 1 - BLACK SWAN 2MTPA PROCESSING PLANT

Black Swan Restart Project Update

The following workstreams are ongoing:

• drilling within the Silver Swan Channel to identify potential resource growth opportunities and convert Resources from the JORC Inferred to Indicated classification;

• drilling the Black Swan Disseminated (BSD) zone to confirm the extent of serpentinite mineralisation and nickel grades;

• mining studies to convert the Resources to Reserves for Silver Swan, Golden Swan and BSD;

• metallurgical test work on blending the various ore sources to determine the optimum feed blend, expected metallurgical recoveries for each feed source and typical concentrate specifications;

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2 - REVISED BLACK SWAN RESTART INDICATIVE TIMETABLE

FIGURE

Silver Swan Tailings maiden Resource (Silver Swan Tailings - Maiden Resource Estimate ASX announcement dated 15 September 2021)

five year water access agreement signed with Norton Gold Fields Pty Ltd; and

Golden Swan maiden Resource (Golden Swan Maiden Resource ASX announcement dated 27 October 2021).

ASX Announcement

• environmental and development approvals for the mining activities, infrastructure requirements including power supply and on site accommodation;

• indicative offtake terms for the quality and quantity of nickel concentrate expected to be produced;

• indicative financing proposals for the debt component of the restart capital; and only• completing the Bankable Feasibility Study.

The following work streams have already been completed:

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useBlack Swan Restart Project Timetable

The revised Black Swan restart timetable was presented at the 2021 AGM (see ASX announcement dated 23 November 2021). The Final Investment Decision for the project is expected to be made during July 2022 with plant commissioning scheduled for the March 2023 quarter period.

personalForPreliminary Economic Assessments are internal Company milestones which provide the basis for management and the Board to make decisions to continue various workstreams and also approve selected works to progress the Fill the Mill strategy.

Following completion of the December 2021 Preliminary Economic Assessment (PEA), and based on works completed to date, the Company has approved the following workstreams:

• studies on dewatering the Black Swan pit with an aim to commence dewatering during 2022;
• identify and fill certain key management roles considered crucial to achieving the Fill the Mill strategy;
• environmental studies on the proposed mine plans including the open pit cut-back and waste dump expansion;

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ASX Announcement

• studies on site based accommodation and commencing the approvals process; and
• planning and approvals for grid power.

Following completion of the current drilling programs within the Silver Swan Channel and the BSD, receipt of assay results, completion of updated mine studies and receipt of indicative offtake terms for the anticipated concentrate specifications, a further internal Preliminary Economic Assessment will be completed (targeting mid-March completion) ahead of the Bankable Feasibility Study (BFS) which is due in June 2022. The March 2022 PEA should provide additional information to allow the Company to approve additional works ahead of the Black Swan restart including:

•	engagement with potential mining and processing contractors;
•	recruiting further key positions required ahead of commencement of plant refurbishment works;
only•	ordering long lead items to ensure development and commissioning timelines are minimised;
•	commencing pre-works required ahead of plant refurbishment and mining; and
use	progressing with all approvals required for restart.
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Resource Base and Mining Inventory

The current drilling programs have identified opportunities to increase the mining inventory to support the Fill the Mill strategy.

The current Black Swan Resources are summarised in Table 1.

personal					TABLE 1: BLACK SWAN MINERAL RESOURCES SUMMARY
				Black Swan Open		Silver Swan		Golden Swan		Silver Swan		Total
				Pit						Tailings
	Measured Tonnes (kt)			-		-		-		675		675
	Measured grade (%Ni)			-		-		-		0.92		0.92
	Measured Ni-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 Ni-metal (t)			64,900		10,130		5,200		-		80,230
	Inferred tonnes (kt)			21,100		61		48.4		-		21,209
	Inferred grade (%Ni)			0.54		9.7		2.2		-		0.57
	Inferred Ni-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
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	Total Ni-metal (t)			178,700		16,030		6,250		6,200		207,180

Silver Swan Resource Drilling

Resource drilling within the Silver Swan Channel which commenced in early August 2021 is continuing to identify extensional opportunities to the existing resource and should allow the conversion of some of the current Inferred Resources to the Indicated category.

Recent assay results from Silver Swan returned grades of up to 18% Ni over intersections ranging between 6 to 15 metres (refer ASX announcement dated 20 December 2021), which has potential to grow the JORC Reserve and high-grade mining inventory of the project.

Black Swan Disseminated Resource Drilling

To further de-risk the Black Swan restart it is important to understand the distribution of the more metallurgically favourable serpentinite mineralisation below the existing Black Swan open pit. The current

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ASX Announcement

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 Figure 3).

Ongoing drilling in the BSD resource area has indicated consistent wide intersections of serpentinite in the onlydisseminated zone. Further drilling in this area commenced mid-December with the 15 hole program

anticipated to take two months to complete.

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.

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ForFIGURE 3: BLACK SWAN DISSEMINATED LONG SECTION HIGHLIGHTING CHANGES TO SERPENTINITE AND MINERALISATION EXTENTS FROM THE 2019 RC DRILLING PROGRAM

Further Exploration at Black Swan

The Company recently completed downhole electromagnetic (DHEM) surveys on eight holes at Silver Swan (refer ASX announcement dated 20 December 2021). Interpretation of the results was carried out by Newexco with seven plates returning a conductance of >15,000 Siemens, indicating the presence of strong conductors that in the Silver Swan setting can be interpreted as being indicative of massive sulphides. The location of these plates in relation to the Tundra-Mute Resource are shown in Figure 4.

An additional EM survey will be undertaken when hole PTMD023 is completed to determine targets for the next round of drilling within the Silver Swan Channel.

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