poseidon set for $39m boost

In PerthNow today

ANDREW Forrest-chaired Poseidon Nickel is poised for a $39 million boost as it enters a new chapter at the historic Mt Windarra nickel project.

The company is set to draw down a $US35 million ($A39 million) convertible note from its major shareholder, US private investment firm Harbinger Capital, in the next three to four months.

The funds will provide Poseidon with enough capital to cover the cost of exploration, with the company yesterday starting a 4000-metre drilling campaign at the Cerberus deposit, which was discovered in 2008.

The funds will also cover some of the cost of a $US30 million concentrator facility at the project, but will fall short of financing a restart of the operation which is estimated at a low $55 million due to some infrastructure left behind in the mines heyday.

Poseidon managing director David Singleton said the company was in the process of securing finance, and once it had done that, it would take about two years to bring the historic project back online.

Its an exciting time for the project, he said.

Poseidons a company thats half way between exploration and going into production.

Its been nearly 20 years since nickel was last produced at Mt Windarra, which hit notoriety in 1970 after shares in the original Poseidon company jackpotted from 80c to $280 within months after prospector Ken Shirley made the nickel discovery.

The share price surge was partly fuelled by nickel demand, however it was improper trade practices that sparked the rush, which led others to start up bogus companies as a chance to cash in on the nickel fever.

As a result of the Poseidon bubble, as it came to be known, new legislation was introduced to better regulate share market practices.

Serious mining at Mt Windarra was undertaken by Western Mining Corporation (WMC) from the 1970s to the late 1980s, and in the 1990s the mine was closed due to the falling nickel price.

The project was then sold to Kalgoorlie father and son team Doug and Chris Daws last decade for $8 million for their company Niagara Mining, which changed its name to Poseidon Nickel when Mr Forrest came on board in 2007.

Poseidon Nickel is currently dewatering the Mt Windarra underground nickel mine which goes to a depth of 550m.

Mr Singleton said it will take around 10 months to complete the dewatering process, after which the company will start drilling at the bottom of the mine to boost the current resource of 61,764 tonnes of nickel in the area.

Overall the project has about 100,000 tonnes of nickel, including the Cerberus deposit and the South Windarra area, which was also mined by WMC as an open pit.

Poseidon aims to have an initial production rate of 350,000 tonnes per annum before ramping up to 700,000tpa. The project is expected to have a 10 year life.