Australian Nickel Discoveries Enhance Already-Positive Outlook for Poseidon

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Researched by Industrial Info Resources Australia (Perth, Australia)--Despite the current volatility in the industrial market, Poseidon Nickel (ASX:POS) has been making headlines recently with positive information about the development of its Windarra nickel project.

The company initially reported results from a definitive feasibility study (DFS) for the brownfield, underground Windarra Nickel Mine restart project and nearby greenfield projects in an April 2013 announcement.

The project, which is located in Western Australia, approximately 700 kilometres northeast of Perth, is currently planned for construction in late 2013. Drilling that commenced in November 2012 has resulted in more positive information on the already economically viable Windarra project for Poseidon. The drilling results have unearthed new zones of nickel deposits and, given the proximity to the proposed mining infrastructure, could be significantly beneficial for the company, as it will increase production at minimal capital cost.

David Singleton, the managing director of Poseidon, detailed the advantages of the latest announcement. "I'm particularly pleased with the uncovering of the new, apparently minable mineralised zone," he said. Singleton went on to say that "with these additional high grade zones, we will now move to upgrade both the mineral resources and ore reserves at Mt. Windarra, and incorporate these upgrades into our finance model."

The DFS was completed in collaboration with Arccon Pty Limited (Perth), a wholly owned subsidiary of Allmine Group Limited (ASX: AZG). After reviewing the DFS and in light of the recent drilling results, Poseidon has entered into an evaluation of the tenders for the engineering, procurement and construction (EPC) contract and is expected to make a decision in the near future. Inclusive to Poseidon plans is the construction of a new nickel concentrator with a capacity to process 70,000 tonnes per year of nickel ore, which will produce about 9,600 tonnes per year of contained nickel in concentrate.

In addition to the nickel processing, the study also detailed a cyanide treatment for the gold tailings, which would be carried out with the nickel flotation. The final smelting of gold will be performed through toll treatment at Kalgoorlie. Poseidon expects an approximate 15,000 ounces per year of gold production.

State and federal environmental approvals have been acquired, and the company is in the final stage of negotiating debt financing with international investment banks.

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