THE BOURSE WHISPERER: Poseidon Nickel (ASX: POS) has agreed to acquire the Lake Johnston nickel project from Norilsk Nickel, hot on the heels of the deal the two parties struck earlier this year over the Black Swan nickel project.
Lake Johnston includes the Maggie Hays underground mine and a 1.5 million tonne per annum concentrator plant, which have been on care and maintenance since April 2013.
The project includes an estimated Mineral Resource at the Maggie Hays deposit of 3.805 million tonnes at 1.49 per cent nickel and 334,000 tonnes at 4.18 per cent nickel at Emily Ann for a total resource of approximately 70,500 tonnes nickel (JORC 2004 compliant).
Poseidon indicated it intends to evaluate restart at Lake Johnston with a view to bringing it back into production shortly after the deal has been completed.
The Lake Johnston nickel project covers a series of 11 mining leases, 10 exploration licences and one prospecting licence, on which both the Emily Ann and Maggie Hays deposits are located.
Poseidon considers the area to have the exploration potential to support extending the Lake Johnston project’s current life.
The company said the project had been subjected to limited drilling exploration in recent years, however this has identified several prospective areas.
Poseidon plans to undertake a major new exploration program on the tenements using this previous work as a guide with the objective of further extending the projects operational life.
“Poseidon now has three nickel projects all within 270 kilometres of Kalgoorlie,” Poseidon Nickel CEO and managing director David Singleton said in the company’s announcement to the Australian Securities Exchange.
“Importantly all three projects have the mines and access to infrastructure to enable production to be brought on-line quickly and at low levels of capital investment.
“All of the projects are in well-endowed mining regions and have demonstrated resource extension potential which could lead to extended production life.
“We will be growing our output just as nickel supply is moving into deficit following strong Chinese stainless steel production, reportedly up 18.2 per cent year on year, and reduction of nickel supply from Indonesia.”
Poseidon said it expects the deal to be completed over the next few months.
Once it has been, Poseidon will assume existing and ongoing environmental obligations on the site and will fund the acquisition out of existing cash reserves.