This follows a geological review of the Maggie Hays deposit and excludes the high grade Emily Ann North deposit that could add over 25% to the contained nickel and lift average grades.
The upgrade is a key step in the definition of the likely project life by increasing confidence in the shape, grade and position of the mineralisation to be mined.
The results will be used to develop the mine schedule which is the last outstanding step in the engineering development process prior to Reserve Estimation.
Poseidon has contracted engineering consultants to commence a detailed mine planning and scheduling programme ahead of the Ore Reserve Estimation process.
The engineers will look at maximising the ore extraction and redeveloping the mine infrastructure to better access the ore zones.
This work is several months ahead of the company's original schedule.
Poseidon has also defined a drilling program to increase Indicated Resources at Maggie Hays and develop the newly identified Western zone.
Maggie Hays has been maintained in good operational condition with near immediate access to the nickel mineralisation.
The geological review of the Maggie Hays deposit was carried out after the company recognised additional drilling data was available and that there were survey issues with the North Shoot mineralisation wireframes.
Golder Associates were contracted to update the resource block-model and re-estimate the
Maggie Hays JORC resource.
This has resulted in about 80% of the drilled resource now in the Indicated category.
The update has been undertaken only for the Maggie Hays deposit as this is where mining is expected to restart initially.
The smaller but higher grade Emily Ann North is an unmined deposit adjacent to the Emily Ann mine that the company believes could be mined in the future.
However, access to this mineralised zone is through the Emily Ann mine which is currently flooded.
Additional work and development is required to assess the Emily Ann mines suitability for operations.
The existing Lake Johnston concentrator has a capacity of approximately 1.5 million tonnes per annum and has a demonstrated capacity to process nickel sulphide ores from Maggie Hays and Emily Ann.
It was shutdown in April 2013 by Norilsk before being placed into care and maintenance.
Poseidon plans to operate the concentrator at about 1Mtpa throughput rates with ore supplied initially from Maggie Hays underground operations, the disseminated caved ore, North zone and potentially the suture zone.
The plant will be refurbished and minor modifications to the flowsheet and reagents will be made to allow for the reduced throughput.
A scope and cost for this refurbishment has been generated as part of the Study.
The site has a large number of approvals issued under the Mining Act and Environmental Protection Act.
Approvals remain current for the project and can be transferred to Poseidon as part of the change in ownership.
Environmental impacts were assessed as part of obtaining the above approvals. No significant impacts are considered to result from the project.
Geochemical characterisation studies have been conducted on Lake Johnston waste rock and tailings.
Lake Johnston waste rock and tailings were both determined to be Potentially Acid Forming (NYSEARCA:PAF) similar to Windarra.
Project land disturbance appears to be within approved amounts. No additional land disturbance beyond approved amounts will be required for waste rock and tailings management.
The company has resubmitted the Works Approval authorising construction of the 4 metre tailings embankment raise to the regulator as previous work was not completed prior to the project being placed on care and maintenance.
The 50% boost to Lake Johnston Indicated Resource to 3.5 million tonnes grading 1.49%, or 52,000 tonnes of contained nickel will be key towards determining project life and developing a mine schedule.
This is encouraging given that Lake Johnston is considered to be a near-term production project, with relatively straight forward restart requirements given that it was operating up to April 2013 and has been actively cared for and maintained since closure.
Lake Johnston is planned as the company's second production project in 2015 after initial ore sales are achieved from the Windarra Project.
Its relatively low costs of $8.3 million will be financed from a combination of existing cash, sales revenue from Windarra and potentially with some debt for working capital purposes.
Poseidon plans to move these projects and Black Swan into production which will give the company the second largest sulphide nickel processing capacity in Australia.
The company has $15.36 million in cash at hand and term deposits as at 31st December 2014.
Proactive Investors maintains its 12 month price target for Poseidon Nickel of $0.40 - $0.52.
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