April 28, 2007THE famous name Poseidon is about to get a new...

April 28, 2007

THE famous name Poseidon is about to get a new lease on life, courtesy of Andrew Forrest.

If shareholders approve the Perth entrepreneur's plan to take the chairman's seat at Niagara Mining - the current owner of the Windarra nickel deposit that launched the speculative and spectacular Poseidon sharemarket boom in 1969 - the company is poised to change its name to Poseidon Mines.

"It's something that Andrew Forrest has got in his mind, subject to him becoming the chairman," current Niagara chairman Doug Daws said.

Subject to a shareholder vote, Mr Forrest is poised to receive 115 million options in Niagara after it undergoes a two-for-one consolidation.

Based on a doubling of Friday's $1 closing price for the shares to $2, those 40c post-consolidation options would be $184 million in the money.

Niagara captured the rights to the name Poseidon Mines more than two years ago, after purchasing Poseidon's old Windarra deposit from WMC Resources. But it did not seriously consider a name change until Mr Forrest proposed to turn Niagara into his new nickel vehicle this month.

The name Poseidon died out when Robert Champion de Crespigny's Normandy Mines bought the legendary company in 1989.

Spurred on by a nickel price boom, Niagara plans to resurrect the old Windarra mine, which has been closed for 18 years after failing to live up to the hype of 1969.

On Friday Niagara revealed it had a maiden inferred resource of 2000 tonnes of nickel at a grade of 1.18 per cent. The resource was based on two drill holes and WMC data, and the company said it only represented a small fraction of the expected total resource.

It also outlined details of its plans to leach oxide nickel from old WMC stockpiles in the area. Its stage-one operation would recover 730 tonnes of nickel from a 150,000-tonne stockpile.

Mr Daws said it would cost $4 million to $5 million to get the project up and running. Subject to government approval, Niagara would start crushing and screening material in July.

The estimated operating cost of $13.20 a tonne is double that of other nickel mines in Western Australia. Therefore the project requires nickel prices - currently trading near record highs - to remain well above the historical average to remain economic.

"I think there's a reasonable expectation the price is going to be quite robust for the next couple of years," Mr Daws said.

Macquarie Equities expects nickel to average $US15.24 ($18.34) a pound this year, falling to $US13.25 a pound next year and $US11.50 a pound in 2009.

If the first stage of the leaching plan is successful, Niagara would proceed with a second stage that could see it extract 10,400 tonnes of nickel from a 1.6-million-tonne stockpile at an operating cost of $13.50 a pound over the project's four-year life.

However, it said there was no guarantee the 1.6 million tonnes of material could be "accurately located".