Poseidon Nickel Ltd (ASX:POS, OTC:PSDNF) has pushed back the restart of the Black Swan Nickel Project in Western Australia despite continuing to make progress.
The deferral decision has been made due to several factors, chiefly that grid power will only be available late next year.
As well, further metallurgical test-work will be required for the project’s existing bankable feasibility study (BFS) after a detailed review by the company’s technical team showed that samples used may not have suitably represented the mine plan.
Consequently, a diamond drilling program from the bottom of the mine’s open pit will be carried out to obtain new samples for testing.
A drill rig is scheduled to be on-site next month and the test-work will take about four months to complete.
The Black Swan project, comprising the Silver Swan open pit mine, the Black Swan open pit mine and the Black Swan concentrator, has been shut since 2009.
Restart as soon as feasible
“The offtake and project debt financing work streams continue to progress well, together with obtaining all the necessary approvals for the Black Swan restart,” Poseidon managing director and chief executive officer Peter Harold said in a project update.
“While the team has made solid progress advancing the project towards the restart, we have been advised that grid power will not be available at site until late 2024.
“In addition, we have determined from the recent confirmatory drilling and updated resource model that further metallurgical test-work is required to confirm the recoveries used in the feasibility study for the disseminated open pit ore.
“These project-related factors, together with the 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 have resulted in us deferring the Black Swan restart decision.
“We expect the volatility in global markets to start to abate into 2024, providing a more favourable environment for project development.
“We will constantly monitor the project-related factors and together with external market conditions. Our primary aim remains to restart Black Swan as soon as it is feasible to do so.
“In the meantime, we will continue to add value for shareholders by completing the Black Swan Expansion Project pre-feasibility study and undertake further exploration drilling at both Black Swan and Lake Johnston targeting high-grade mineralisation.”
Expansion project continuing
Work on treating 2.2 million tonnes per annum of mill feed and producing a rougher concentrate is ongoing, including metallurgical studies to determine the optimal rougher concentrate grade and recovery and typical specifications to allow for potential offtakers to provide indicative terms.
These terms will be a key component in determining the economics of the expansion project.
Concentrate samples have been supplied to potential customers for test-work and results are expected in the next quarter.
Other updates
The recently completed reverse circulation (RC) drilling at Maggie Hays West at the Lake Johnston Project has confirmed the deposit’s nickel-copper prospectivity.
One of the RC drill holes returned magnesium oxide values averaging 37% to a maximum of 41% and nickel-to-chromium ratios averaging 4.3, which is indicative of a fertile channel.
Drilling has led to the hypothesis that Maggie Hays West could be an open-ended mineralised channel up to 400 metres wide with a discrete magnetic feature, making it a compelling high-priority target for follow-up drilling.