PERTH (miningweekly.com) – ASX-listed nickel miner Poseidon Nickel has sold the rights to mine the Silver Swan underground operation, on the Black Swan tenements in Western Australia, in a deal valued at A$1.5-million, in cash and shares.

The Black Swan operations were acquired from major Norilsk Nickel earlier this year, and included a nickel sulphide concentrator plant, the Black Swan sulphide ore openpit mine, and the Silver Swan underground mine.

Poseidon noted on Wednesday that it did not propose to develop Silver Swan under the current plans for the Black Swan tenement, owing to its depth and complexity.

Under a binding agreement now inked with Caeneus Minerals, Caeneus would acquire a beneficial interest in the tenement holding the Silver Swan underground mine, and has been granted the right to mine, remove, and sell nickel ore above a grade of 2%, as well as to undertake exploration for nickel from the existing underground decline to below a depth of 100 m.

Caeneus would also be granted a licence to enter the tenements and the right to use specific existing infrastructure to facilitate underground mining operations.

Poseidon said the agreement provided the company with a cash and scrip income, and reduced its overhead costs by up to A$300 000 a month.

In addition, Poseidon and Caeneus would enter into an offtake agreement for the ore that Poseidon would process either though its Lake Johnston or Black Swan concentrator plants, after they have been recommissioned.

Poseidon recently announced plans to transport stockpiled ore from the Black Swan tenements to be processed at the Lake Johnston project, until the Black Swan concentrator had restarted.

Poseidon initially planned to use the 2.2-million-tonne Black Swan processing plant to treat the ore from its Windarra operation, but following a deal with major BHP Billiton last year, the Windarra ore would now be treated at BHP’s Nickel West division, leaving Black Swan to be developed as a standalone operation.