Poseidon Nickel has announced that it has reviewed its care and maintenance model at the Black Swan project, following the identification of two near surface exploration targets.
The company engaged Muller Geological Services Consultancy (MGSC) to complete a data integrity audit against the geological interpretations at Black Swan. Work streams included lithogeochemical correlation and verification of all logged geological units with the geological felsic footwall 3D model then updated.
A comparison to the 2023 Newexco exploration targets and felsic footwall models was also completed.
Poseidon Nickel said that both reviews independently validated two highly prospective high-grade targets closer to surface at Cygnet South and Upper Southern Terrace.
The targets are expected to present lower cost exploration targets compared to those deep underground, such as extensions to Silver Swan and Golden Swan which typically require expensive underground drilling programs to discover and then convert to a JORC Resource.
Further assessment is planned at the Upper Northern Terrace to identify any prospective targets.
Poseidon Nickel said that the next steps include completing the data integrity review for the upper Northern Terrace and the remainder of the greater Black Swan project area, including extending the detailed section-based footwall model across the entire project area focusing on near-surface opportunities.
The company said that it has commenced planning exploration programs for the Cygnet South and Upper Southern Terrace high-grade targets.
The Black Swan Project is located approximately 50km northeast of Kalgoorlie, Western Australia. The project commenced operations in 1997 and operated continuously until 2008, with Poseidon Nickel acquiring the project in 2015.
Poseiden Nickel has revised its care and maintenance model at Black Swan, which includes ceasing dewatering of the Silver Swan mine. Following the recent exploration review, lower cost, near surface exploration targets have been identified which do not require drilling from underground positions.
The company said that the optimised care and maintenance removes up to $1 million of annualised costs from the business – in addition to already achieved cost reductions of $4.8 million, this decreases total annualised expenditure by $5.8 million.
Ceasing dewatering of the Silver Swan mine potentially adds further development costs to the project restart cost assumptions presented in the Bankable Feasibility Study released during November 2022. The costs to prepare the mine for a future restart have not yet been estimated, however Poseidon Nickel said that it considers it to be unlikely that any additional capital expenditure would prohibit a future restart of the project.
Poseidon Nickel said that it has identified equipment onsite which is surplus to current care and maintenance requirements. A total of $0.4 million worth of equipment has been sold during 2024 with further equipment sales expected to release additional cash of over $0.2 million.
Poseidon Nickel’s said that restarting Black Swan as soon as it is feasible to do so remains one of the strategic pillars of the business. Any new near surface, high-grade discoveries that can be converted to a reserve are expected to enhance the overall project economics.
The company said that its processing plants at Black Swan and Lake Johnston could be reconfigured to treat gold and/or lithium ore.
Poseidon Nickel has previously assessed opportunities to process gold at Black Swan during 2017 and lithium at Lake Johnston during 2016. The company said that existing infrastructure combined with the potential to shorten regulatory approvals for any future operations makes the value proposition of these assets significant.
Poseidon Nickel’s CEO, Brendan Shalders, said that there is a strong desire to test the targets in the short term as a high-grade discovery can potentially add to reserves for any future Black Swan restart with the potential to decrease the unit costs and further improve the project economics.
“Poseidon Nickel plans to undertake low-cost surface drilling programs to test these targets in the near term.
“The company is pleased to see the strong increase in the nickel price, while acknowledging that nickel prices are likely to remain volatile for the foreseeable future.
“With this in mind, Poseidon Nickel has reviewed its care and maintenance at Black Swan and has implemented initiatives to further remove up to $1 million of annualised costs. On top of the expenditure reductions already implemented, Poseidon Nickel has now reduced total annualised costs by $5.8 million. In addition, the company is divesting surplus equipment which is expected to release up to $0.6 million cash in the coming months.”
Mr Shalders said that the proposed changes to care and maintenance and the proposed sale of surplus equipment is not expected to impact any future restart plans for the project.
“The estimated 12-month plant refurbishment period assumed in the Bankable Feasibility Study released in November 2022 should provide more than sufficient time to prepare the Silver Swan mine and infrastructure for any future operations. There would be additional capital expenditure required to undertake these works, however the cost would unlikely be prohibitive to restarting the project.”
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