Poseidon Nickel (ASX: POS, 'the Company') is pleased to provide a report on its activities and progress achieved for the June quarter 2023.
Managing Director and CEO, Peter Harold, commented: 'We made solid progress towards the restart of the Black Swan project over the quarter. The offtake and project debt financing work streams are well advanced as we continue to progress documentation drafting with the two shortlisted parties.
We delivered the Black Swan Resource update with an additional 48% of contained nickel included in the Measured and Indicated categories. In addition, we have received all necessary regulatory approvals for the Black Swan restart. The drilling completed earlier this year and the updated resource model have indicated that further metallurgical testwork is required to confirm the recoveries used in the feasibility study for the disseminated open pit ore. We have also recently been advised that grid power availability, which is a lower cost option that diesel fired power, has been delayed from mid-2024 to late 2024 due to longer lead times for Western Power to upgrade the existing transmission infrastructure. This delay combined with the additional metallurgical testwork, continuing tightness in the WA labour market, the lack of the availability of Kalgoorlie FIFO accommodation and the increased volatility in global commodity and equity markets has led to the decision to delay the Black Swan restart.
The primary aim of the Company remains restarting Black Swan when all the above items have been resolved and the nickel price outlook and equity markets are more favourable. In the meantime, we will complete the Black Swan Expansion Project prefeasibility study and undertake further exploration drilling at both Black Swan and Lake Johnston targeting high-grade mineralisation. Given the strategic importance of our nickel resources, mining inventories and our installed concentrator capacity, that can be recommissioned at a relatively low capital cost, our assets are well positioned within a region that has limited options for treating third party feeds.'
BLACK SWAN Black Swan Restart Project The status of the main workstreams progressed over the quarter are as follows: Pre-works at Black Swan o Mineral Resource update - completed and reported in early June 2023 o Processing plant - contract for plant refurbishment being drafted with GR Engineering Services Limited (GRES) o Approvals - all regulatory approvals are now in place for a project restart o Accommodation - continuing to progress securing an option over 150 rooms in Kalgoorlie o Power - Western Power have confirmed grid power would be available late 2024 o Offtake and project debt financing well advanced Offtake and Debt Financing The Company is negotiating offtake and project debt financing with two large international groups.
The process progressed significantly over the quarter with both groups providing draft offtake and financing agreements. The Company has reviewed these documents and continues to negotiate with assistance from our concentrate marketing consultant and lawyers.
Metallurgical Testwork
The results from locked-cycle flotation testwork on the open pit disseminated serpentinite ore that underpinned the November 2022 Black Swan Bankable Feasibility Study (Black Swan BFS) predicted a nickel recovery that also aligned with the recovery reported in the production data from when the project last operated in 2008/09. A detailed review of the non-sulphide nickel (NSNi) and sulphur to nickel (S:Ni) ratio has been undertaken based on the recent disseminated open pit drilling results and the most recent Disseminated Mineral Resource Block Model (updated in June 2023). The new assay results suggest that the serpentinite samples that were utilised for the Black Swan BFS testwork program may have a lower NSNi content and a higher S:Ni ratio than what Norilsk Nickel Australia (NNA) reported in historical resource mine grade control data. The implications of this are that the composite samples from the disseminated resource utilised for the Black Swan BFS, while representative of the ore mined and processed in 2008/09, may not accurately represent the current Black Swan BFS open pit mine plan. The disseminated open pit drilling results recently obtained by Poseidon and the historical NNA resource mine grade control data set both utilised RC drilling to obtain the samples for NSNi assays. It is possible that the RC drilling process, which pulverises a large proportion of the drill core into ultra fine particles, may result in reporting elevated NSNi assays because of the considerable particle surface area that is generated from the RC drilling mechanism. The extremely large particle surface area generated, which is exposed to the elements for many weeks prior to the NSNi assays being completed at the laboratory, may lead to some oxidation of the nickel sulphides, thereby potentially reporting elevated NSNi results. This aspect will be assessed by using diamond drill core for the upcoming metallurgical sampling program. Additional samples are required to be taken and tested to ensure there is appropriate representation of the life of mine plan. These samples will assess areas of the mine plan not represented by the previous metallurgical samples. These additional samples will be obtained from diamond drill core (to eliminate any potential for nickel sulphide oxidation) and subject to locked-cycle flotation tests. Three distinct ore zones 4 ASX Announcement have been identified being the Main zone, Footwall zone and Hanging wall zone, and these will be sampled and tested separately, to optimise nickel recoveries and to confirm concentrate specifications reported in the BFS. A drill rig is scheduled to be on site during August 2023 with the diamond drilling program to be conducted from the bottom of the open pit. The metallurgical testwork program will be completed in two stages. The first stage will accelerate an understanding of the NSNi content (and identify any potential variation between ore zones) by utilising existing diamond drill core that was obtained from the 2021/2022 Gosling drilling program. This diamond drilling program accesses each ore zone (at depth) and will provide sample spatial representation of the second half on the mine plan. The existing core will be tested as soon as possible at the metallurgical lab between August and October 2023 with the results anticipated by late October 2023. The results will provide information on the NSNi content and the nickel recovery for each ore zone. The second stage of the metallurgical testwork program will again utilise diamond core samples, this time obtained from the new drilling and sampling program. These samples will also intersect each ore zone separately and will provide spatial representation of the first half of the mine plan. The second stage of the testwork will have sufficient mass of sample allocated to each ore zone to complete the required ore blending and Lockedcycle flotation tests, required to confirm the final concentrate quality reported in the 2022 BFS. The Updated Mineral Resource Model identifies one of the ore zones (the Hanging Wall ore zone) having a lower S:Ni ratio (0.80) and as such, may require a higher proportion of the Silver Swan Tailings (SST) blended in, when processing this ore zone in isolation. The new samples required for the second stage of the testwork program are anticipated to arrive at the metallurgical laboratory during the first week of October 2023. Based on this milestone, the results from the second stage of the testwork program are anticipated to be reported in February 2024.
Updated Mineral Resource
An updated Mineral Resource Estimate (MRE) was release during the quarter that incorporated 10,845 metres of new drilling from 112 reverse circulation (RC) drill holes completed between December 2022 and February 2023 from within the confines of the Black Swan open pit. This drill program was specifically undertaken to increase the confidence in the Black Swan MRE, by infilling the area extending approximately 125 metres immediately below the existing open pit with the objectives to better delineate the metallurgically important serpentinite and talc-carbonate hosted resources and to lift most of these resources into the Measured and Indicated categories. The MRE update was prepared for Poseidon by independent resource consultants WSP Australia Pty Limited (WSP), using all available assay data as of May 2023. The updated MRE now totals 26.3Mt at 0.72% Ni for 189,000 tonnes of nickel contained. The MRE replaces the previous Black Swan MRE 5 ASX Announcement completed by WSP in July 2022 (refer to Company announcement 'Black Swan Mineral Resource' dated 4 July 2022) which reported 28.9 Mt at 0.63% Ni for 181,000 tonnes of nickel contained. The updated MRE compared to the 2022 estimate resulted in a: 48% increase in the contained Ni in the Measured and Indicated JORC Resource Categories; 14% increase in the average Ni grade and 8,000t increase in total contained Ni
The Expansion Project is based on treating 2.2
Mtpa of mill feed and producing a rougher concentrate. This project is expected to produce a concentrate more attractive as a feed for either pressure oxidation (POX) or high-pressure acid leach (HPAL) plants rather than a conventional nickel smelter. The June 2023 Black Swan Resource Update (refer ASX announcement 'Updated Resource provides more nickel at Black Swan', dated 7 June 2023) resulted in a 48% increase in Measured and Indicated Resources and a 14% increase in the average nickel grade. Preliminary mine design reviews indicate that an increase in nickel contained in the mining inventory for the Expansion Project is possible given the higher average grades reported in talc carbonate zones. Metallurgical studies continued during the quarter to determine the optimal rougher concentrate grade, metallurgical recovery and typical specifications to allow for potential offtakers to provide indicative terms. Concentrate samples have been supplied to potential customers to confirm suitability as a feed source for their hydrometallurgical processes. Over the period GRES continued to progress the engineering study to determine the capital and operating costs associated with refurbishing and operating the plant at its 2.2Mtpa nameplate capacity
Exploration - May 2023 Drill Program Over the quarter, an initial program of shallow air core (AC) and reverse circulation (RC) drilling to delineate 14km of the interpreted overturned basal contact of the Western Ultramafic Unit (WUU) was completed (Refer ASX release Exciting Greenfields Nickel Intersections at Lake Johnston, dated 3 July 2023). Assay results from the drilling along the WUU returned coincident nickel sulphide pathfinder (Ni:Co:Cu) anomalous zones within the weathering profile at seven separate prospects, including Round Top, Raggedy Ann, Johnny Turk, Maggie Hays North, Maggie Hays West, Windy Hill and Jaymee Ruth. As announced previously, the existing Lake Johnston deposits are hosted within the Central Ultramafic Unit (CUU), which has been the focus of extensive exploration by previous owners. In contrast the WUU is relatively underexplored and regional geologies indicate there is potential for economic nickel sulphide mineralisation. Furthermore this drill program has enhanced the prospectivity at Maggie Hays West by confirming the Ni:Cu regolith anomalism up dip from isolated historic nickel sulphide drill intersections. The drilling has also confirmed the thickening of the WUU to 300 metres on drill line 82700N (local grid) and the development of an embayed contact due to a possible channel feature. One of the RC drillholes (PLJA171) was drilled through the basal contact at Maggie Hays West returning MgO values averaging 37% (max. 41 % MgO) and Ni:Cr ratios averaging 4.3 which is indicative of fertile channel facies ultramafic cumulate rocks at the base of the thickened WUU
Contact:
Tel: + 61 (0)8 6167 6600.
About Poseidon Nickel Limited
Poseidon Nickel Limited (ASX Code: POS) is a nickel sulphide exploration and development 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 180,000 ounces of gold. Poseidon's strategy is focused on the exploration and eventual restart of its established nickel operations in Western Australia with the aim of being a +15,000tpa nickel producer. A critical element of this strategy has been to acquire projects and operations with significant existing infrastructure, large nickel resources and geological prospectivity likely to lead to resource growth through the application of modern exploration techniques. Poseidon owns 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, these projects have significant exploration opportunities demonstrated by the discovery of the Golden Swan Resource at Black Swan, the Abi Rose and more recently the Maggies Hays West mineralisation at Lake Johnston. The Company completed a Bankable Feasibility Study on Black Swan in November 2022 which will be the first project to restart. This could be followed by Lake Johnston and then Windarra, subject to favourable Feasibility Studies, appropriate project financing structures being achieved, the outlook for the nickel price remaining positive and all necessary approvals being obtained. A Definitive Feasibility Study on retreating the gold tailings at Windarra and Lancefield was completed in mid-2022. A planned collaboration with Green Gold Projects has recently been terminated. A new potential partner is currently conducting due diligence on the Lancefield gold tailings and accessing the water in the South Windarra pit
POSEIDON NICKEL LIMITED 
