Poseidon Nickel Ltd (ASX:POS, OTC:PSDNF) has entered an agreement with Encore Minerals to develop the gold and nickel tailings at the Windarra Tailings Project in Western Australia using Draslovka’s proprietary glycine leaching technology (GLT).
Metallurgical test-work undertaken earlier this year to assess the potential of Draslovka's GlyCat Technology developed to extract minerals such as gold, copper, cobalt and nickel using amino acids to leach tailings and ores, confirmed a potential improvement in gold recoveries from the Lancefield gold tailings samples and the potential to also extract nickel from the Windarra nickel tailings.
Agreement details
Under this agreement, Encore Minerals is responsible for the funding, development, operation, closure and rehabilitation of the Windarra Tailings Project, subject to various conditions precedent and milestones being met.
In consideration, Poseidon will receive A$250,000 non-refundable cash payment once the agreement is executed, plus $1 million cash to be paid upon commencement of development and the production period. It will also receive a 3% net smelter return royalty, once the project is in production.
Poseidon released a definitive feasibility study (DFS) for the Windarra Tailings Project in July 2021 that detailed a standalone gold tailings reprocessing plant at Windarra to process gold tailings from Windarra and Lancefield.
The base case DFS economic outcomes were a net operating cashflow of $30.6 million, a net present value (NPV8) of $21.7 million and an IRR of 50.6%, assuming a gold price of A$2,500 per ounce. Since the release of the DFS the gold price has increased to circa A$3,500 per ounce.
There is also potential for Draslovka’s patented technologies to process the nickel tailings at Windarra, which could add further value to the project.
GLT used successfully
Poseidon CEO Brendan Shalders said: “Once unconditional, this agreement will provide the basis for a mutually beneficial relationship for the company and Encore Minerals to develop and monetise the Windarra Tailings Project using Draslovka’s proprietary and revolutionary GLT and other technology, which has been developed to extract minerals such as gold, copper, cobalt and nickel by using amino acids such as glycine to leach tailings and ores.
“We are pleased to see that Draslovka has applied and expanded the use of Glycine Leaching Technology successfully at a number of operations worldwide.
"The agreement outlines the proposed staged framework agreement with Encore Minerals for the processing of the Windarra Tailings, with a final agreement to be entered into upon the completion of their test work.
“Pursuant to the agreement, Poseidon will receive a total of $1.25 million in cash, an NSR royalty of 3% on production and $1.6 million towards the existing rehabilitation bond. The funding, development, operation, closure and rehabilitation of the project will be the responsibility of Encore Minerals.
"The agreement is conditional on Encore Minerals being satisfied during the initial due diligence period, FIRB and other regulatory and third-party approvals (if required).
“This framework agreement is a great outcome for Poseidon and we look forward to working with Encore Minerals and Draslovka to progress this project to production.”