Poseidon Nickel (ASX: POS) has entered into an an earn-in agreement with Magma Metals (ASX:MMW) for the nickel, copper and PGE rights to a large tenement package adjoining its Windarra Nickel Project in the West Australian Goldfields.
The Windarra tenements have already yielded a 110,000 tonne nickel resource for Poseidon.
The new tenement rights will nearly double Poseidon's exploration area and include areas which may cover potential extensions to the Cerberus and South Windarra ore zones.
Poseidon now has access to the the tenure immediately south and east of the Cerberus deposit as well as to the east of the South Windarra mine.
This addition of 203km2 tenements to the Windarra Nickel Project gives Poseidon access to a strike length of 63km (previously 24km) of nickel prospective ultramafic rocks.
The combined tenements cover 443km2 of ground, giving Poseidon access to almost the entire lengths of the prospective Windarra Ultramafic belt and the parallel Red Flag Ultramafic belt. The Red Flag ultramafic has had limited nickel exploration to date.
The new tenements adjoin Poseidon's Cerberus high grade nickel deposit which could include potential extensions to currently known mineralisation. As well, the new tenements to the south east, could be host at shallow depth to the South Windarra mine channel extension.
Intriguingly, Poseidon has previously advised that is has evidence from soil sampling and seismic work completed recently of the channel position and intends to commence exploration in this area.
Poseidon geologists "are confident that Cerberus has the potential to deliver parallel mineralisation which may extend into, or be contained within, the tenenemnts surrounding Cerberus that Poseidon is proposing to earn into."
Most importantly, 3D modelling of the South Windarra mineralisation by the company’s geologists indicates the system trends eastwards towards this newly aquired tenure.
Poseidon will now explore the known mineralised trends more efficiently and not be limited by tenement boundaries.
An extensive LANDTEM geophysical survey which was previously completed over the Red
Flag Ultramafic unit has generated numerous electro-magnetic conductors, potentially
reflecting nickel sulphide mineralisation.
Limited testing of the targets leaves a significant opportunity for Poseidon to apply its experience in nickel exploration to unlock the potential of the largely unexplored Red Flag Ultramafics.
The nickel, copper and PGE rights on the tenements are currently held by Magma under a concurrent rights agreement with Crescent Gold ASX:CRE), the tenement holder.
The outline terms of the earn-in agreement are as follows:
- the Agreement is subject to a number of conditions, including Poseidon completing satisfactory due diligence and execution of a formal farmin and joint venture agreement.
- From completion, Poseidon has an exclusive right to earn a 60% interest in the nickel, copper and PGE rights to the tenements during the 3 year earn in period for an expenditure of $3,000,000.
Magma will, following Poseidon earning a 60% interest and issuing a technical report, have the right to make an election to either contribute its share to further exploration expenditure or assign a further 20% interest (80% in total) to Poseidon.
Other conditions also provide for Magma to exchange its remaining 20% stake for a net smelter royalty of 2.5%.