Photo by: Bloombeg
PERTH (miningweekly.com) – Nickel miner Poseidon Nickel has signed an offtake agreement with China’s Tsingshan over the Silver Swan project, in Western Australia.
Poseidon reported on Tuesday that the offtake agreement covered the first two-and-a-half years of mine output from Silver Swan. The company would deliver broken ore to Tsingshan, which would process the material through its integrated nickel pig iron and stainless steel facilities in Fujian, China.
MD and CEO David Singleton pointed out that the offtake agreement avoided the need for capital investment to restart the Black Swan concentrator, which would have initially been used to process the Silver Swan ore.
“Our studies to date indicate that Silver Swan could have one of the lowest operating and start-up capital costs in Australia. This novel style of contract for export ore, coupled with Tsingshan’s low-cost production route is a key enabler to starting production at the mine,” Singleton said.
He added that the contract with Tsingshan delivered superior net economics to Poseidon over more conventional process routes available locally or through a concentrator plant, and avoided the investment in the start-up of processing facilities.
“While nickel prices remain low, we believe that when the recovery gets under way, Silver Swan can get into production very quickly.”
Singleton added that Poseidon’s focus remained ensuring that its Lake Johnston and Silver Swan projects were ready for production once prices improved.
Poseidon recently reported an initial mineral resource of 13 000 t of contained nickel for the Silver Swan deposit, based on 106 600 t of ore, grading 12.2% nickel.
The average grades at the Silver Swan deposit were believed to be twice as high as the next-highest-grade mine in the world, with the company saying that the orebody could be economic even at low commodity prices.