PERTH (miningweekly.com) – A feasibility study into the Black Swan nickel project, in Western Australia, has shown that the 1.1-million-tonne-a-year operation could deliver some A$333-million in cash flows.

ASX-listed Poseidon Nickel on Monday said that the feasibility study estimated that the project would require a capital investment of A$50-million, which included A$38-million to refurbish the existing Black Swan concentrator.

Based on an ore reserve of 3.5-million tonnes, averaging 1% nickel for some 35 000 t of contained nickel, the project is expected to produce 200 000 t of concentrate containing around 30 000 t of nickel over its four-year mine life.

The study estimated that the project would have a pre-tax net present value of A$248-million and an internal rate of return of 103%, based on the current nickel price.

“The Black Swan project is highly leveraged to the improving nickel price outlook with the net present value increasing to A$470-million based on an input assumption of $15/lb nickel price and foreign exchange AUD:USD of $0.65. These positive economic outcomes are set against an environment where capital and operating costs have increased significantly since the 2018 feasibility study was completed,” said Poseidon MD and CEO Peter Harold.

“The team at Poseidon together with our contractors and consultants have put in a huge effort throughout the study period undertaking resource drilling, resource model updates, mine studies, metallurgical testing, process plant refurbishment and operating cost estimates, marketing and logistics studies and economic analysis to ensure the study numbers are robust.”

“Moving forward we will progress discussions with potential offtake and financing partners toward definitive terms that will support a final investment decision (FID). Concurrently we continue to work on the 2.2-million-tonne-a-year ore feed feasibility study which includes the processing of the talc carbonate ore to produce a rougher concentrate, with a lower nickel grade and higher magnesium oxide when compared to typical conventional smelter concentrate specifications. This could unlock significantly more material and would result in higher annual nickel production and improved project economics, with potential customers including Pure Battery Technologies proposed Kalgoorlie precursor cathode active materials refinery or local high pressure acid leach plants,” said Harold.

The feasibility study on the 2.2-million-tonne-a-year operation is due for completion in the first half of 2023. Assuming a FID is made in the first half of 2023, concentrate production could start as early as 2024.