Poseidon Nickel Completes Feasibility Study for Windarra Mine Restart

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Researched by Industrial Info Resources (Perth, Australia)--Poseidon Nickel (ASX:POS) recently reported favorable results from a definitive feasibility study (DFS) for its Windarra Nickel Mine restart project in Western Australia, and the company plans to begin construction in late 2013. The project is located about 22 kilometres northwest of mining town Laverton.

The recently completed DFS confirms the commercial viability of the Windarra project, with an initial capital expenditure of $240 million. The study proposes the construction of a new nickel concentrator with a capacity to process 70,000 tonnes per year (T/yr) of nickel ore, which will produce about 9,600 T/yr of contained nickel in concentrate.

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

The project would require an accommodation camp for about 160 operational staff and a 10-megawatt (MW) diesel power station. The mine will have a mine-life of about 10 years, with the potential for expansion through near mine and regional exploration.

All necessary environmental approvals to commence production have been received, and the company is in the final stage of negotiating debt financing with international investment banks. Poseidon claims to have received several offers for concentrate offtake from smelters and commodity traders.

Poseidon is also in the process of selecting an engineering, procurement and construction (EPC) contractor and will confirm the appointment before the closing of the final financing decision.

The plant and major infrastructure construction will be carried out under a lump-sum turnkey arrangement by a major contractor. The mining would begin six months ahead of processing plant completion, and Poseidon expects an estimated construction period of 56 weeks, which will see the plant begin its first production by early 2015.

Poseidon's Chairman, Andrew Forrest said: "The DFS confirms a strong future for Poseidon as a low-cost producer of nickel in Australia, with a mine life potentially well beyond a decade."

The project was developed by Western Mining Corporation in 1974. Production at Windarra Mine continued until 1990, producing almost 80,000 tonnes of nickel metal. The mine was mothballed in 1990, due to historically low global nickel prices. Poseidon Nickel acquired Windarra Mine in 2005 and some of the early infrastructure redevelopment and exploration drilling was carried out in 2007.

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