Poseidon Nickel Limited (ASX:POS) is pleased to announce that it has agreed to acquire the Black Swan nickel operation from OJSC MMC Norilsk Nickel (“Norilsk”).

The acquisition of the project brings with it the Black Swan nickel sulphide plant which is capable of processing ores from Windarra. The plant was upgraded in 2006 and was put on care and maintenance in February 2009 during the financial crisis. The plant has a proven throughput capacity of 2,150,000 tpa compared with the 700,000 tpa plant previously contemplated for Windarra.

The previously announced negotiations for the sale of ore from Windarra to another processing plant are continuing to be fruitful and Poseidon anticipates sales to it late in this calendar year. Use of the Black Swan processing plant will complement these sales.

Poseidon will have the option to either recommission the plant in its current location to take ore shipped from Windarra, or the plant can be removed and relocated at Windarra creating a considerable cost saving. The current location has the benefit of being connected to the power grid and a nearby workforce in Kalgoorlie. This significant benefit must be weighed against the cost of trucking ore from Windarra to the current Black Swan plant.

The Black Swan project also includes sulphide nickel mineralisation which may be used to supplement Windarra ore when processing in the current location. The Black Swan deposit has a Mineral Resource of approximately 26.3 million tonnes at 0.70% for 185,800 contained metal tonnes (at 0.4% nickel cut-off grade). In 2012, Norilsk commissioned Golder Associates to carry out an independent review of an internally produced feasibility study into reopening Black Swan which resulted in positive conclusions. The results of this study as well as the Mineral Resources will be reviewed by Poseidon and reported under JORC 2012 guidelines following the completion of the acquisition.

Norilsk purchased Black Swan in 2007 and operated it until 2009, when it was placed on care and maintenance. In recent years, Norilsk has commissioned a series of studies into the feasibility of restarting operations at the site including conceptual mine designs and evaluations of the remaining resources at Black Swan. The acquired assets also include the Silver Swan underground mine which, when in operation, produced high grade nickel sulphide.

The MD & CEO, David Singleton said, “The acquisition of Black Swan represents a strong opportunity in-line with our strategy and complements our objective of quickly getting the Mt Page 3

Windarra project back into production at a much lower capital cost than previously announced and more than doubles our nickel resource base. We anticipate making further announcements which will complement this acquisition in the next few weeks.”

The acquisition price to be paid to Norilsk for the project is subject to confidentiality. However, Poseidon will not need to raise additional money for the acquisition which it can fund from current resources. Poseidon has paid a 10% deposit to Norilsk and the remainder will be due when the conditions precedent are satisfied. The parties anticipate completion to occur within the next 6 months. 

• [Editor:Phillip.Feng]