Base metals firm Poseidon Nickel has found two potential sources of third-party feed for its Black Swan concentrator, which the company is touting as an alternative processing facility for stranded nickel miners following the closure of BHP Billiton’s Nickel West Kambalda concentrator.

Private exploration company SulphideX and listed junior Estrella Resources have signed memorandums of understanding with Poseidon to process ore from their respective projects under ore tolling and concentrate purchasing agreements (OTCPA).

SulphideX owns exploration tenements near Mt Venn, Western Australia, and is within trucking distance from the Black Swan operations, located 50 km from Kalgoorlie.

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

Under the OTCPAs, SulphideX and Estrella would mine the nickel ore and Black Swan would toll treat the ore producing concentrate, which would be purchased as concentrate from the third-parties, Poseidon explained on Friday. The company would manage the sale and marketing of the concentrate.

Poseidon has been actively looking for third-party supplies for the Black Swan concentrator, as its capacity will only be about 50% used when its own Black Swan openpit and Silver Swan underground mines reopen.

The Black Swan concentrator, which would be refurbished, previously had a capacity to treat 2.2-million tonnes a year.

Poseidon said that it believed the closure of the Kambalda concentrator provided an opportunity to fully use its concentrator capacity, noting that BHP offered the OTCPA arrangement for many years.

A feasibility study has confirmed that the Black Swan openpit mine, the Silver Swan underground mine and the Black Swan sulphide concentrator and supporting infrastructure can be brought back into operation at a low level of capital investment and that no regulatory or technical barriers exist.

The study envisages production of about 8 000 t/y of nickel in a smeltable grade concentrate from the Black Swan process plant and direct shipping ore from the Silver Swan underground mine. Ore previously mined and currently stockpiled at Black Swan will be processed at Black Swan. Combined mill feed will average 1.1-million tonnes a year, compared with process plant capacity of 2.2-million tonnes a year, which will be able to process third-party feed on a toll treatment basis or buy at the gate under contract terms.