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Poseidon Nickel makes first sale of nickel concentrate from Lake Johnston

Published: 08:00 19 May 2015 BST

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Poseidon Nickel makes first sale of nickel concentrate from Lake Johnston

Poseidon Nickel (ASX:POS) has received early cash flow of about A$2.3 million from the sale of 4,000 tonnes of nickel concentrate from its Lake Johnston project in Western Australia to China’s Tsingshan Iron and Steel.
   
The concentrate was stored on the site and has been recovered and used to recommission the filtration circuit at Lake Johnston.

Shipment overseas is expected before the end of July 2015.   

Tsingshan is the largest stainless steel producer in the world and remains a potential offtake party for concentrates from Poseidon’s facilities at Lake Johnston, Windarra and Black Swan.


Lake Johnston


Poseidon has just completed the Bankable Feasibility Study at Lake Johnston – confirming that it can be brought back into operation in a few months at a low pre-start capital of around A$14 million with no regulatory or technical barriers.

Key BFS outcomes include production of 8,000 tonnes of nickel per annum in a smeltable grade concentrate, with all in sustaining cost of production of US$5.39/lb payable equivalent to a C1 cash cost of US$3.43/lb.

The prestart capital cost is US$10.6 million (A$14 million) including plant and mine refurbishment, general restart costs, plus working capital of circa A$14 million.

The initial mine life is 30 months with a number of promising resource extensions to be developed.

In addition, ore previously mined and currently stockpiled at Black Swan can be trucked to Lake Johnston for processing for a period of up to four years.

The combined mill feed will average 1.13 million tonnes per annum compared to process plant capacity of 1.5 million tonnes per annum.

With the completion of the BFS, the company is now positioned to further advance offtake discussions.


Analysis

The sale of $2.3 million worth of nickel concentrate from Lake Johnston to the world’s largest stainless steel producer provides not just early cash flow for Poseidon Nickel, it also demonstrates the rising market demand for the industrial metal.

In addition, it could be a first step towards securing an offtake contract with Tsingshan Iron and Steel.

That this concentrate will be used to recommission the filtration circuit at Lake Johnston as operations are restarted is another drawcard.

The project implementation plan had previously estimated that start-up would take about 120 days.

Upcoming catalysts


- Reserves.
- Further concentrate sales.
- Securing financing to move Lake Johnston into production.
- Offtake agreements. Discussions are already underway.
- Resource extensions. This is currently a priority for Poseidon.



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