Poseidon expects Silver Swan restart to deliver ‘healthy’ return

PERTH (miningweekly.com) – The Silver Swan nickel mine, in Western Australia, will require a preproduction and working capital investment of A$25-million, and a breakeven nickel price of $4.63/lb, to deliver its 8 800 t of contained nickel.

A definitive feasibility study (DFS) found that the high-grade underground nickel mine is expected to have an initial mine life of two years, ASX-listed Poseidon Nickel said on Friday.

“The DFS demonstrates Silver Swan has a robust production and nickel grade profile and the completion of the detailed engineering for Silver Swan will allow Poseidon to take early advantage of an improving nickel market, as soon as it occurs,” said Poseidon chairperson Chris Indemaur.

The study found that the project could deliver some A$120.7-million in revenue, and will have a pre-tax net present value of A$27.8-million and an internal rate of return of 204%.

Silver Swan was acquired by Poseidon in 2014 as part of the Black Swan purchase, which was made in order to access the 2.2-million-tonne-a-year processing plant, as well as supporting infrastructure and the associated high-grade underground Silver Swan and Black Swan openpit mines.

Indemaur said on Friday that it remained a core asset in a highly prospective nickel and gold location.

The DFS confirmed that restarting the high-grade underground mining operations at Silver Swan, and sale of direct shipping ore to China under an existing offtake agreement would generate a “healthy” return on investment at a nickel price above $5.50/lb

Indemaur said that the company was exploring options to fund the initial preproduction activities, which would include the refurbishment of the mine and infrastructure in preparation of a restart at the right time.

In the meantime, Poseidon will also update the Black Swan prefeasibility study capital estimate for the process plant refurbishment to a definitive feasibility study level, and will incorporate Silver Swan as a fully integrated alternative.

Outstanding regulatory approvals will also be sought.