Poseidon Nickel Limited

The Nickel Investment Ideal

How does a 25 to 30 per cent growth in investment sound to you?

Poseidon Nickel Limited, an exploration miner focused and hailing from Western Australia, shows just how this plays out, with their 100 per cent-owned Windarra Nickel project.

IRJ speaks with David Singleton, CEO at Poseidon, to hear about the exciting discover­ies, potential for further discoveries, and unique shareholder opportunity the company’s principle project has to offer.

Unearthing more at Windarra

Singleton says that Poseidon acquired the core of its current tenements package from BHP in 2007.

“At that time the tenement package had on it an open pit mine in the south and an under­ground mine in the north. Both of these had been mined between 1970 and the mid-1980’s then was closed during a period of low nickel prices,” he says.

“When Poseidon acquired the tenements there was no JORC compliant resource on the mine at all.”

Later on that same year, Singleton joined as CEO and Andrew Forrest, of Murrin Murrin fame, joined as chairman. They set about establishing a resource base at Windarra.

“In the period that we’ve been involved, we now have a resource base of approximately 100,000 tonnes of nickel metal in the ground. That makes it by far the biggest explorer/develop­er not in production in Australia,” Singleton says.

“We probably have about 10 or 12 peer companies and none of them have a high-grade resource base even close to that of Windarra’s. That resource was developed in two ways.”

The first of these ways was the existing underground mine site. Singleton says that they believed that there was more resource under­neath this mine.

“We started a very heavy drilling programme in early 2008, which defined a resource of about 65,000 tonnes of nickel below the old mine, and we believe that it could be significantly larger than that,” he says.

“The problem is that it’s at depth and be­yond the end of our economic drilling, but as far as we can see, that resource is continuing below the old mine.”

Poseidon plan to refurbish and then reopen the underground mine then commence explora­tion in this area. The second way focuses

on the area between the existing mines on these tenements.

“We believe that there was a lot of prospectiv­ity for additional ore bodies between the northern underground mine and the southern open pit mine, because the geological sequence which hosts those mines is continuous between the two,” Singleton says.

“We’ve carried out a lot of surface and near surface geochemical-type work and a lot of elec­tromagnetic-type work and we identified six zones between the north and the south which look as if they could host an ore body.”

It wasn’t long before Poseidon was proved correct.

A 100 per cent success record

In late 2009, Poseidon drilled one of these six anomalies and in doing so revealed a brand new ore body. It is the first new ore body to be discov­ered on these tenements in 30 years.

“That was really a result of using new tech­nology and a new understanding of how nickel ore bodies are laid down in the west of Australia. Since we had a success rate of 100 per cent. We drilled the first anomaly and have already discov­ered a high grade ore body of 2.45 per cent and 25,000 tonnes of nickel,” Singleton says.

“We now have five ore zones to drill and we are just about to announce that we’re going to start some additional surface test work to decide which of the five areas we’re going to drill next, to see if we can find another ore body.”

Singleton says that the modern geological test work which Poseidon can now bring to the area is showing that there are additional resourc­es on the site.

“In 2008, we carried out our Pre-Feasibility Study for a 250,000 tonnes per annum concen­trator plant on the site which was primarily fo­cused on the underground mine and the resourc­es below the underground mine,” he says.

“This year we intend to upgrade that Pre-Feasibility Study now that we have new ore bodies on the tenements, to look at the potential of a 700,000 or 800,000 tonne concentrator plant which would take our ore from both the underground mine and the new discovery.”

Singleton says that based on the grades Po­seidon has seen so far, this should yield, “some­thing in the region of 10,000 to 11,000 tonnes of nickel per annum when we go into production.”

“When funding is in place, we expect to complete the work that we have identified neces­sary to get ready for production in the next 12 months,” he continues.

“Then it would probably take another 12 months after that to build the concentrator plant.”

This brings us neatly to the climbing value of Poseidon. Consider that producing companies in Australia are currently valued at around an average of A$2,900 per in-ground tonne, and Poseidon is currently valued at around A$440 per in-ground tonne.

“What we would expect to see is that over the next two to three years, the valuation of Posei­don will increase from A$440 in-ground tonne to $2,900; a compound growth of 25 to 30 per cent,” Singleton says.

“That’s the investor’s opportunity.”

With five more zones for potential exploration, plans to reopen the underground mine and a deafening industry buzz about the exciting Win­darra project, Poseidon is certainly an opportunity that any investor would look at very closely.

www.poseidon-nickel.com.au

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