Mineral Resources is buying the Lake Johnston nickel plant from Poseidon Nickel for A$15 million to set up as a third lithium processing hub in the southern Goldfields of Western Australia, with the plan set to also somehow involve the treating of process fines from the company's Bald Hill and Mount Marion operations.
Lake Johnston is a nickel concentrator plant with a flotation circuit that has front-end capacity of 1.5 million tonnes per annum and is said to be capable of being converted to treat lithium ores, including dense media separation fines.
It is unclear whether the fines, which are typically contained within a slurry after DMS processing, would require further treatment prior to being transported to Lake Johnston, which is located 185km southwest of Kalgoorlie - with Mount Marion and Bald Hill located 40km southwest and 50km southeast of Kalgoorlie respectively.
MNN contacted MinRes for clarification on this issue as well as the timeframe and cost to get Lake Johnston ready for lithium operations.
However, the company refused to comment.
New discoveries will also have a processing home
As well as processing fines, MinRes ASX statement today said Lake Johnston would align with "new discoveries made by MinRes in the region and third-party ore in exchange for project equity".
With regards new discoveries, earlier this month MinRes signed a deal with Dynamic Metals covering lithium ground in the Widgiemooltha area and a deal with gold miner Pantoro late last year for lithium ground in the Norseman area.
Both of these areas are located between Kalgoorlie and Esperance, the latter from where MinRes exports iron ore mined in the Yilgarn region encompassing Lake Johnston.
Whether there are a backfill opportunities being considered here isn't known.
MinRes is paying Poseidon $1 million on deal execution, $6.5 million on completion, and $7.5 million 12 months after completion.
So far as Poseidon is concerned, the sale proceeds will be applied to a strategy that includes an "exploration focus targeting high-grade nickel discoveries, continuing with reduced care and maintenance activities at Black Swan (to conserve funds) and pursuing new opportunities".
As is the case at Lake Johnston, Poseidon's Black Swan project 50km northeast of Kalgoorlie includes a shuttered nickel processing plant.
Poseidon also noted the deal with MinRes would reduce its annual expenditure commitments by approximately $1.4 million and remove the rehabilitation provisions for that project from our balance sheet.
The latter may have been a factor in MinRes's previously flagged interest in BHP's Nickel West assets.
While MinRes managing director Chris Ellison didn't specify exactly which Nickel West assets were of interest in a half-year results presentation in Sydney late last month, the concentrator at Kambalda figured as an obvious target.
However, after operating for the best part of six decades, the rehabilitation cost for that site would likely be extremely onerous.
