Poseidon Nickel (ASX: POS) has revealed that positive outcomes to a new Scoping Study has boosted the company’s confidence in bringing the Black Swan mine back into production.
The Scoping Study into the estimated capital cost for the refurbishment and operation of two processing plant configurations at Black Swan recently completed by GR Engineering Services Limited (GRES), found that the large (and growing) resource base at Black Swan, improved payabilities of nickel in concentrates globally and the positive outlook for the nickel price the company has determined the most economically attractive production scenario is to refurbish the 1.1Mtpa processing circuit and fill that plant to maximise nickel concentrate production.
The results from the GRES Scoping Study demonstrating that while both processing plants can be refurbished at a relatively low cost and in a relatively short time frame (i.e. six months) the large resource base at Black Swan together with the positive outlook for the nickel price and improved payabilities of nickel in concentrates makes the 1.1Mtpa plant, fed by a combination of ore sources, including the underground high-grade, the most attractive project for Poseidon,” Managing Director and CEO, Peter Harold, said.
GRES undertook the Scoping Study based on three possible plant configurations as follows:
- 150ktpa plant (the original Silver Swan high-grade circuit) with contract crushing;
- 150ktpa plant with the secondary and tertiary crusher refurbished; and
- 1.1Mtpa plant (the original 2Mtpa Black Swan plant for treating low grade disseminated open pit ore) derated to process 1.1Mtpa of ore.
Based on these three possible plant configurations GRES advised that each plant configuration refurbishment would take approximately six months to complete based on their current forward order book.
A number of workstreams are now underway:
- updating the Black Swan open pit study including determining the optimal pit shell and production rate and estimated capital and operating costs;
- delivering a maiden Resource from Golden Swan and converting that to a Reserve;
- undertake further drilling at Silver Swan to convert additional Resource to Reserve;
- deliver a maiden Resource on the Silver Swan Tailings;
- metallurgical test work on blending all the various ore sources to determine the optimum feed blend and typical concentrate specifications;
- seek indicative offtake terms for the quality and quantity of nickel concentrate expected to be produced;
- seek financing proposals for the debt component of the restart capital; and
- complete a full Bankable Feasibility Study.
Poseidon said that assuming the company can deliver the above outcomes then restarting the 1.1Mtpa concentrator will become a very attractive option based on the GRES Scoping Study results and assuming acceptable mining costs, metallurgical recoveries, concentrate payabilities, A$ nickel price and attractive overall project economics.