Poseidon looks to process nickel for SulphideX and Estrella

Poseidon Nickel ASX POS SulphideX Estrella Resources ESR
Poseidon Nickel will process ore from SulphideX's Mt Venn project and Estrella Resources' Carr Boyd nickel project.

Poseidon Nickel (ASX: POS) has inked contracts with private explorer SulphideX and Estrella Resources (ASX: ESR) to look at toll treating each company’s respective nickel ore through its Black Swan concentrator in Western Australia.

Under the memorandum of understanding contracts, Poseidon will evaluate the feasibility of toll treating nickel ore from SulphideX’s Mt Venn project and Estrella’s Carr Boyd asset through tolling and purchasing agreements (OTCPAs).

According to Poseidon, this will offer SulphideX and Estrella a faster and lower cost pathway to market than constructing their own plants.

As part of the agreement, Poseidon is looking to toll treat the ore from SulphideX and Estrella’s assets to produce a nickel concentrate. Poseidon would then purchase the concentrate from SulphideX and Estrella “at agreed pricing arrangements”.

Poseidon said it will “exclusively” take on the sales and marketing of the concentrate that’s produced.

BHP Billiton (ASX: BHP) had similar ore tolling and purchasing agreements (OTCPAs) in place for nickel miners in proximity to its recently closed Nickel West Kambalda concentrator.

Black Swan nickel plant

Poseidon’s Black Swan plant is 55 Kilometres from Kalgoorlie in WA. The company has begun underground refurbishment works after a feasibility study indicated a $56.7 million capital expenditure was required to dust off the Silver Swan and Black Swan mines and the 2.2 million tonne per annum Black Swan concentrator and bring them online.

To fund the restart, Poseidon launched an $68.8 million entitlement offer and a $5.8 million placement in August.

Poseidon anticipates toll treating ore from nearby nickel operations will boost the plant’s utilisation and reduce operating costs.

The company also hopes to offer an alternative processing options for nickel operators in the region after the recent closure of BHP’s Kambalda concentrator.

SulphideX eyes ASX listing

Private entity SulphideX owns the nearby Mt Venn nickel project and plans to list on the ASX in the coming months.

Mt Venn is within trucking distance from the Black Swan operations. However, SulphideX is yet to publish JORC compliant resources and reserves for the project.

Further exploration is required at the project to meet the proposed terms under the agreement with Poseidon.

Estrella advances Carr Boyd

Estrella owns the historical Carr Boyd nickel project 38km north of Black Swan.

The is currently preparing a JORC-compliant ore resource estimate for the Carr Boyd and said it will provide a significant update in the current quarter.

Black Mountain Metals ups stake in Poseidon

In parallel to today’s reported agreements, Poseidon received a further boost with news  Black Mountain Metals increased its stake in Poseidon to 19.82%.

Black Mountain made an informal takeover bid for Poseidon last month, which valued the company at $0.06 per share.

The bid was withdrawn within a week after many Poseidon shareholders reported they felt it undervalued the company.

Lorna has more than 10 years' experience as a finance journalist and editor. She has written for numerous industry publications reporting on various sectors, including: resources, energy, construction, biotech, pharma, science and technology, agriculture, and chemicals. Specialising in resources, Lorna has also covered a myriad of small and large cap ASX and dual-listed stocks.