POS (ASX) our little company Poseidon not for so long

Originally posted by Fredy: ↑

Black Swan Site Visit
Investment Highlights
We took the opportunity while in Kalgoorlie for Diggers & Dealers to visit the Black Swan nickel mine with Poseidon Nickel Limited (POS).The mine was placed into care and maintenance in 2009 although drilling and resource definition is ongoing as are minor capital works in preparation for a final investment decision to restart the operation.
A genuine high grade story.When we talk about high grade underground mines we think about Flying Fox 3.5% Ni and Spotted Quoll 4.0% Ni. The ore body below Silver Swan has a resource grade of 9.5% with intersections in the Canard ore body hitting 19% Ni. The down side of course is the resource is small at 168kt although it does remain open and under explored.
The disseminated resource remains an interesting opportunity.The current resource of 30mt at 0.6% Ni sits below the existing open pit which was abandoned without reaching design depth so there are benches with ore ready to mine. Exploration drilling has just commenced using a specialised underground RC rig from the Gosling mining area which is a now depleted massive sulphide ore body directly below the open pit and in the middle of the potential disseminated resource. The RC rig is being used to obtain a larger and better sample more suited to the irregular (by nature) disseminated mineralisation. While low grade, the potential exists for a high tonnage operation using a sub level mining operation which could become economically viable at nickel prices in excess of US$7/lb.
Infrastructure ready to go.The project contains all infrastructure on site required for a restart including a 2.2mtpa process plant (which would be operated at half capacity based on the current mine plan), tails storage capacity, underground infrastructure, power and workshop/office facilities. A restart capex is estimated at $57m in order to refurbish the process plant and the decline which is expected take less than 12 months to complete.
Difficulty with depth. The silver swan ore body is 1.2km deep and with no shaft in place (and too late in the game to install one) the cost of mining will be high. AISC of US$5.10/lb have been flagged so the project needs a period of a sustained nickel price and confidence in a nickel forecast in excess of US$6.50-7.00/lb before we see any restart plans.
Lake Johnston and Windarra provide alternatives to Black Swan. At Lake Johnson, an intersection at 10.48m at 3.2% Ni suggests there exists exploration potential beyond the previously mined Emily Ann ore body. At Windarra, there is a resource of underground remnants of 4.36mt grading 1.64% Ni along with the Cerberus deposit which contains 4.55mt at 1.51% Ni. The Windarra project is located within trucking distance to the Black Swan plant so could provide valuable feed for the large, hungry plant.
A bit of corporate uncertainty.The Managing Director Rob Dennis will leave his position at the end of August with a replacement MD still to be announced. Black Mountain Metals (recent buyers of the Lanfranchi nickel mine) remain the largest shareholder with c.20% of the register after a failed takeover bid late 2018.
Like POS, we sit on the sidelines watching the Ni price.Still, we like high grade stories, particularly in a rising nickel market and we will be sure to watch POS with interest.

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Interesting assessment, @Fredy. Who is the author?

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