PERTH (miningweekly.com) – A scoping study into the refurbishment and operation of two processing plant configurations at the Black Swan nickel project, in Western Australia, has estimated a capital cost of between A$13.4-million and A$22.1-million.

ASX-listed Poseidon Nickel told shareholders that the scoping study estimated that the 150 000 t/y high-grade circuit would cost between A$13.4-million and A$15.9-million to refurbish, depending on the crushing option.

The 150 000 t/y plant was constructed in 1997.

A two-million-tonne-a-year plant was also constructed at Black Swan in 2006, and the scoping study considered derating this plant to 1.1-million tonnes a year.

The 1.1-million-tonne-a-year circuit would treat lower-grade openpit disseminated ore as well as potentially treating ore from the Windarra deposit, with the refurbishment of the larger circuit estimated to cost A$22.1-million.

Operating costs for the 150 000 t/y circuit have been estimated at between A$79.09/t and A$91.60/t, depending on the crushing option, while the operating cost for the 1.1-million-tonne-a-year circuit is estimated at A$29.39/t.

“The results from the scoping study demonstrate that both processing plants can be refurbished at a relatively low cost and in a relatively short period of time, of approximately six months,” said Poseidon MD and CEO Peter Harold.

“This creates wonderful optionality for our shareholders as it allows us to consider producing concentrate from our high-grade resources like Silver Swan and potentially Golden Swan, assuming the current resource drilling results in a maiden resource which can be converted to a reserve.

“The benefit of producing our own concentrate compared to selling ore would be the ability to obtain higher payability for the contained nickel and improve overall project economics. In addition, with a strong nickel price environment and positive outlook, it’s definitely time to review mining and processing of the lower grade Black Swan disseminated ore and potentially combining that feed with Windarra ore from Mt Windarra and/or Cerberus. These are certainly very exciting times for our shareholders.”

Poseidon on Tuesday said that given the relative low capital number for the refurbishment of both circuits and the strong nickel price and buoyant price outlook, the company will maintain its focus on the high-grade ore production options available including Silver Swan and potentially Golden Swan, subject to defining a resource and a reserve.

The company will also continue to study the sale of ore to third parties, however, given the low capital cost of the refurbishments and high payabilities for high quality nickel concentrates, processing at Black Swan looks to be the most attractive option for the company for high-grade ore, Poseidon said.

In addition, with the positive outlook for nickel prices the company will revisit the economics of mining and processing lower grade ores from the Black Swan disseminated orebody and study the economics of mining and trucking underground ore from Windarra to be processed at Black Swan through the 1.1-million-tonne-a-year circuit.