Poseidon Nickel (ASX:POS) is taking steps to enable its Mt Windarra Nickel Mine in Western Australia to begin production later this year by restarting mine refurbishment activities and employing new personnel.
Given the rise in the nickel price and the interest from investors and from likely offtakers - the timing is auspicious.
The company is confident that negotiations with one or more third parties on ore processing and offtake agreements would be successful.
Poseidon had last month completed a $3.7 million capital raising through the placement of approximately 46,708,000 shares priced at $0.08 each.
To assist in the completion of Poseidon's current ore offtake contracts and negotiate the major mining contracts to assist mine recommencement, it has retained the services of Robert Boston.
Boston is a corporate executive with experience in projects, project finance, and resource development in the energy and resource sectors.
Poseidon is now preparing to recommence underground operations and is completing necessary maintenance work on the water extraction system.
It recently purchased additional underground Mono pumps and will be commencing installation.
Refurbishment activities were suspended in mid-2013 at the completion of the underground drilling program.
The company has also contracted Cathy Cruikshank as the general manager of operations.
Cruikshank has been the deputy underground mine manager at the Perseverance Underground Nickel Mine, an operation similar to the Mt Windarra sub level cave mine.
She is proficient in mine design, scheduling and planning as well as underground operations and will be responsible for the completion of the underground refurbishment at Mt Windarra and prepare the mine for operations late in the year.
Poseidon had in 2013 completed a Definitive Feasibility Study into commencing production at Mt Windarra and processing the ore through a concentrator to be built at the site.
Approximately 61%, or 440,000tpa, of the annual nickel ore production for the project is planned to be mined from the existing underground mine at Mt Windarra.
The balance of the ore feed will come from the Cerberus underground mine that was discovered by Poseidon in 2008.
Cerberus has a total Indicated and Inferred resource of 4.55Mt at 1.51% for 68,600 tonnes of nickel including a Probable reserve of 1.22Mt at 1.3% for 15,880 tonnes of nickel. The mining cost has been estimated at A$76/t in the DFS.
Nickel is a hot commodity at the moment and the move to prepare the Mt Windarra nickel mine for potential production this year will give Poseidon Nickel the inside track on benefitting from this.
That the company is confident of securing ore processing and offtake agreements is also a positive and represent clear share price catalysts.
Its market cap. of circa $36 million could look decidedly light in that event.
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