✦ This particular Brilliant Investment is packed with triple the insights as we listen to three thought leaders from Poseidon Nickel Limited (ASX: POS) share their knowledge and experience. The Poseidon Trilogy begins with Peter Harold, Managing Director and CEO. Exciting news awaits as their path to production gathers pace.
Poseidon Nickel Limited (ASX:POS)
The Poseidon story began back in the 1960s and the legendary nickel boom that spiked the stock from a few cents up to over $280 before plummeting back to earth again by early 1970.
It hasn't always been smooth sailing for Poseidon - it has experienced quite a few storms on the journey to production, and it is gearing up towards a restart at a time of strong nickel price outlook due to EV revolution.
This is all set to change dramatically as the company reaches a key inflection point - making a Final Investment Decision and signing Project Funding and Offtake Agreements.
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 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 Abi Rose deposit at Lake Johnston and the Golden Swan high-grade resource discovered at Black Swan in 2020.
Poseidon's Mission
Poseidon is committed to becoming a sustainable nickel producer, delivering value through performance and growth. The commencement of mining and processing at Black Swan is viewed as a first step in the Company's "Fill the Mill" strategy with the stated goal of growing the business to a 15ktpa plus nickel producer over the next 5-10 years.
Poseidon owns three significant nickel assets with a combined resource of over 400kt of nickel and processing capacity of up to 3.7Mtpa of ore to produce nickel concentrate. The Company’s business strategy remains focused on leveraging its existing asset base to grow Poseidon into a significant nickel producer over a period of expected significant growth in nickel demand, largely driven by growth in the electric vehicle market.
Poseidon’s strategic pillars are:
developing a pathway to production
targeted exploration across its nickel asset portfolio
considering proximal business development opportunities.
Poseidon's Projects
• Open pit and underground mineral resources
• Significant established mining and processing infrastructure
• Bankable Feasibility Study completed in November 2022
• Planning to make FID mid 2023 and production by mid 2024
• Strong exploration potential, exploration drilling about to commence
• Significant established mining and processing infrastructure
• Previous mining studies being reviewed
• Significant nickel mineral resource
• Potential to mine nickel ore and process at Black Swan
• Gold tailings resource with BFS, partner found, due diligence underway
What is Black Swan
Features
• 2.2Mtpa processing plant
• Silver Swan underground 12.9kt Ni (grade - 9.5%)
• Golden Swan underground 6.3kt Ni (grade - 3.9%)
• Silver Swan Tailings - 6.2kt Ni (grade - 0.92%)
• Black Swan Disseminated 181kt Ni (grade - 0.63%)
• Southern Terrace remains prospective for additional high grade discoveries
History
The Black Swan Project is located approximately 600km east of Perth and 50km northeast of Kalgoorlie, Western Australia and 300kms south of Poseidon’s Windarra Nickel Project.
The project commenced operations in 1997 and operated continuously until 2008. The following production was achieved:
• Black Swan Open Pit - 5.9Mt @ 0.7% Ni for 41kt Ni in concentrate
• Silver Swan Underground - 2.7Mt @ 5.1% Ni for 138kt Ni in concentrate
• Total production 179kt Ni concentrate
Poseidon's Business Strategy
The Company’s pathway to production got a boost in FY22 with two metallurgical breakthroughs which has greatly improve the economics of the Black Swan project.
1. The first involves incorporating a rougher concentrate regrind into its process flowsheet to significantly improve the quality of the smelter grade concentrate, which has resulted in improved nickel payability.
2. The second was testwork on a combined serpentinite and talc carbonate ore blend to produce a rougher concentrate which is amenable to both pressure oxidation and high-pressure acid leach to produce a mixed hydroxide precipitate.
This culminated with the delivery of the Feasibility Study on the 1.1Mtpa project to produce high grade nickel concentrate suitable for conventional nickel smelters. Refer to ASX Release dated 21 November 2022 "Positive Black Swan Feasibility Study". The Company is now working with a short list of potential offtakers and project financiers with the aim of reaching a Financial Investment Decision during the second quarter of 2023.
With the assistance of Poseidon’s geological consultants, Newexco, the Company completed an exploration targeting report for Black Swan with three high priority targets identified. Newexco is now preparing a drilling program and budget to test these targets.
Other Projects
There is significant infrastructure at Lake Johnston, including a 1.5Mtpa concentrator and the Maggie Hays orebody which contains 52,000 tonnes of nickel.
A comprehensive geological review of the Lake Johnston tenements has confirmed there are numerous targets that could generate more komatiite style orebodies and there is even the possibility of finding an intrusive orebody like Nova-Bollinger. A 15,000 metre RC drilling program is due to commence in April to test the Western Ultramatic unit.
At Windarra, 25 kilometres west of Laverton, there is a significant resource base of approximately 150,000 tonnes of nickel. The economics of mining ore from Mt Windarra and trucking it to Black Swan for processing is being studied. In addition, Windarra is highly rated in terms of exploration potential and it is intended to do more exploration there in the future. Newexco are preparing an exploration target report for the Company.
Poseidon’s ultimate goal is to be mining ore from Black Swan, Lake Johnston and Windarra and processing these ores through mills at Black Swan and Lake Johnston to produce nickel in concentrate. The Black Swan BFS confirmed the economic viability of achieving that goal -:
The highlights from the BFS include -:
NPV of $248M, free cashflow of $333M and an IRR of 103% at spot Ni and FX.
Low pre-production capital – inc ~ $38M for the refurbishment (46 weeks construction).
High grade nickel concentrate (15%) – good Fe Mg ratio – highly desirable smelter feed.
Poseidon's 3 Year Share Price
Transitioning from explorer, to having resources defined, to developer is not an easy path, especially for the share price. This graph charts that course but it looks like better times are ahead for shareholders and all associated with this attractive nickel development company.
Poseidon's Points of Difference
Samso’s Conclusions
We believe POS is about to embark on that final, exciting phase of a mining company’s journey – commencing production. The long term outlook for nickel is excellent and Poseidon is virtually unique, globally, amongst all those prospective and near term producers. It has multiple existing nickel assets from average to high to super high grade ores and strong drilling exploration targets - and it has infrastructure valued conservatively at over $600 million replacement value.
The share price on the other hand, has waxed and waned at a relatively low level for more than a decade of trading, suffering from historical nickel price setbacks and this has induced a level of scepticism that, frankly, is unwarranted. Mr. Market values their shares at a paltry 3.6 cents, with a market cap of circa $120 million.
The experienced management team in place led by Peter Harold has been diligently working through all the necessary precursors to production and during that process they have unlocked enormous economic potential. It is our firm belief that Poseidon will be substantially re-rated this year and, therefore, there is a great opportunity to get in early ahead of key announcements regarding the FID and Project Funding and Offtake Agreements.
Listen to Peter Harold here:
00:00 Introduction
01:17 Recap of March 6 Announcement; Black Swan Project progress leading to Final Invest Decision (FID) and Project Funding/Offtake Agreement.
05:12 Market perception and assay results implications.
07:50 The Expansion Project: investigating and modelling increasing the existing plant throughput from 1.1 mt/pa to 2.2 mt/pa. The production of two different grades and forms of nickel concentrate.
14:48 Cost implications of production expansion (per unit and capex).
16:03 Life of Mine comments.
19:05 Holistic mining scenarios, incorporating Lake Johnston with Black Swan and Windarra assets (all geographically separated sites).
25:23 Cascading effect of multiple assets becoming mined over time.
26:39 Refurbishment of Black Swan processing plant – time to complete and get into production.
27:26 Confidence in achieving the milestone of FID and Project Funding/Offtake Agreement.
32:15 Concluding comments from Tony.
✦ Karyn Parker, Senior Exploration Geologist of Poseidon Nickel Limited (ASX: POS). tells us about the prospectivity of the Lake Johnston project. Ms. Parker describes in detail the process in which exploration will be conducted to reveal the prospectivity of the project. This is an insight into what the team at Poseidon is doing in shaping up the project for a long life mine.
Karyn had considerable responsibility for submitting a highly contested Government Grant application for funding a drilling program at their Lake Johnston site. The Exploration Incentive Scheme (EIS) Grant of up to $180,000 was successfully awarded to Poseidon and will be used for subsidising the cost of the proposed 15,000m drilling program.
The drilling is expected to get underway in early April and will test the highly prospective and under-explored Western Ultramafic Unit for new nickel sulphides. The proposed program aims to delineate and vector towards channel features along the basal contact of the Western Ultramafic Unit, the prime geological setting where nickel sulphides can accumulate.
Karyn is very excited about commencing drilling at Lake Johnston where she will also be looking at opportunities to explore for lithium. Additionally, Ms. Parker will be planning further investigative testing at both the Black Swan and the Windarra sites.
Listen to Karyn Parker here:
00:00 Introduction and review of Ms. Parker's career.
01:50 Comments on the Announcement in respect to the Lake Johnston drilling program kicking off in early April.
03:30 The fertility of the Lake Johnston target area, inclusion of historical data indicating follow up drilling in overlooked areas.
04:55 Discussion of nickel grades around Lake Johnston site.
05:10 The anticipated nature of material mined from Lake Johnston versus ore from Black Swan site.
06:55 The Government drilling grant for Lake Johnston; Ms. Parker's role in preparing a successful submission.
08:45 Recalling her handling of super high grade core assays from Silver Swan/Golden Swan. Exploration potential for hitting more bonanza grade veins.
10:45 Tony’s comment on drilling targets.
✦ Craig Jones, General Manager - Mining of Poseidon Nickel Limited (ASX: POS) gives us some thoughts on how the Lake Johnston project will begin its journey to becoming the next nickel mine in Western Australia.
Craig has a strong focus on preparing all operations in advance of starting up production at Black Swan as well as supporting the multiple exploration programs. He is making sure that all necessary works are in train and in accordance with the blueprint laid out in the BFS prior to the FID. During this preliminary period, he is working on a range of activities associated with launching into the intense phase of works around refurbishing the Black Swan processing facility.
The plant has been in care and maintenance for quite a long time, but Mr. Jones has ensured that it has been carefully investigated and has mapped out a program attending to a number of practical matters such as building ventilation rises, having electrical and plumbing infrastructure ready, continuing dewatering of the open pit, getting fuel supplies in place, setting up administrative offices etc.
The ordering of key refurbishment components has also been examined and a process is in place so that orders can be enacted quickly after the FID is announced.
Listen to Craig Jones here:
00:00 The role of the General Manager Mining.
00:59 Comments on the BFS and then asking about placement of POS to move into refurbishing the Black Swan processing plant, post FID and Project Funding/Offtake Agreements.
02:37 From now to June, what is POS undertaking prior to the restart decision?
03:28 Once the Black Swan restart commences, what is an outline of the main steps involved in completing the refurbishment?
04:19 What level of confidence is there in the process of starting up an idle plant?
04:45 After the drilling program at Lake Johnston, a description of the activities and approach to exploration.
05:42 Summary and final comments.
Want more insights and news about Poseidon? Check out our other Brilliant Investment stories here:
About Peter Harold
Managing Director and CEO
Peter Harold (B.AppSc (Chem) AFAICD) is a process engineer with over 30 years corporate experience in the minerals industry, specialising in financing, marketing, business development and general corporate activities.
He was the Managing Director of Panoramic Resources from 2001 to 2019, a company he co-founded as a $3 million IPO in 2001. Peter steered Panoramic through the financing and development of the Savannah Nickel Project in the East Kimberley and the acquisition and re-start of the Lanfranchi Nickel Project near Kambalda with the company reaching a market capitalisation of $1.2 billion in 2007. He was more recently involved in bringing the Savannah Project out of care and maintenance and back into production.
Peter has extensive experience in base metal mining project feasibility studies, financings, developments, operations and marketing.
About Karyn Parker
Senior Exploration Geologist
Karyn Parker is a geologist with over 15 yrs experience in nickel sulphide exploration within Western Australia. Her career includes working in near mine exploration at Forrestania and Black Swan for Outokumpu Mining Australia, before joining Jubilee Mines.
Karyn has also worked for several juniors in the southern Goldfields, conducting and running exploration programs in Norseman and Lake Johnston. In 2007 she was appointed Exploration Manager for Hannans. Karyn joined Poseidon Nickel in January 2022 and is a member of the Australian Institute of Geoscientists (AIG).
About Craig Jones
General Manager - Mining
Craig Jones is a highly experienced mining executive and qualified mining engineer with more than 28 years’ experience in West Australian underground hard-rock mining within the resource industry. Prior to his appointment in February 2022, he was the Chief Operating Officer for Bellevue Gold where he was instrumental in establishing the restart of the historical operation, leading the feasibility study and an integral team member involved in the financing of the project.
Prior to his most recent role, he held senior roles in operations, mine management and business development for various mining companies including Northern Star Resources. Craig has been instrumental in optimising, integrating and operating underground mines as well as upgrading mill infrastructure and installation of major capital projects at various operations.
Craig has a Bachelor of Engineering (Mining) from the University of Ballarat and holds a WA First Class Mine Manager’s Certificate.
About Poseidon Nickel Limited (ASX: POS)
Poseidon owns three significant nickel assets with a combined resource of over 400kt of nickel and processing capacity of up to 3.7Mtpa of ore to produce nickel concentrate. The Company’s business strategy is focussed on leveraging its existing asset base to grow Poseidon into a significant nickel producer over a period of expected significant growth in nickel demand largely driven by growth in the electric vehicle market.
Poseidon’s strategic pillars are developing a pathway to production, targeted exploration across its nickel asset portfolio and considering proximal business development opportunities. The key enablers for the Company’s strategy to be successfully executed are ensuring key capabilities are resourced and the business is sufficiently funded for growth underpinned by a strong ESG framework.
Contact Poseidon Nickel Limited
Principal & Registered office
Level 1 3 Ord Street West Perth WA 6005
Postal address
PO Box 190 West Perth WA 6872 Poseidon Nickel Limited
w/ https://poseidon-nickel.com.au/
Disclaimer
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About the Author
Noel Ong, CEO of Samso tells compelling stories by engaging business leaders to reveal insights beneficial to the investment community.
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