MinRes terminates Poseidon nickel plant plan

A Mineral Resources plan to purchase Poseidon Nickel’s Lake Johnston nickel plant and convert it to treat lithium mined in the area will not go ahead.

A brief ASX release from Poseidon this morning revealed MinRes had terminated a binding heads of agreement between the pair, announced in March, over a deal for Lake Johnston.

That was later confirmed by MinRes, which made the call following a period of due dilligence. 

That deal proposed Chris Ellison-led MinRes would purchase the Goldfields site for $15 million, with a view to creating a lithium processing hub fed by MinRes’ nearby Bald Hill and Mt Marion mines.

Doubt was cast over the deal late last month, when Poseidon revealed MinRes had flagged a renegotiation of the terms set out in the initial agreement in a move it labelled “disappointing”.

Poseidon said it was considering its legal position and options.

At the time, MinRes said it continued to conduct legal due diligence over the Lake Johnston transaction.

“We look forward to working with Poseidon Nickel on the finalisation of terms acceptable to both companies,” a spokesperson told Business News.

But today’s announcement revealed MinRes had subsequently issued a notice of termination over the agreement entered by the parties in March.

“The company is considering the notice and will provide further updates as necessary,” Poseidon said today.

A spokesperson for MinRes said the company remained committed to a lithium processing hub in the region - but not at Lake Johnston. 

“Upon completion of legal due diligence, MinRes gave notice of termination of the heads of agreement," they said. 

“The company remains committed to a strategy to develop a lithium processing hub in the Goldfields region.”

Its move for Lake Johnston came at a challenging time for Poseidon, with chief executive Craig Jones stepping down from his role a day after the deal was announced in March.

Chief financial officer Brendan Shalders, who was previously managing director at FTI Consulting, was appointed in his place.

On Mr Shalders’ appointment, Poseidon said it would undertake a range of cost cutting measures – including a scale back of exploration – in a bid to preserve its cash position.

The company had $2.9 million in the bank at the end of March.

Poseidon’s Black Swan nickel project was one among a slew of WA nickel operations to be shifted to care and maintenance amid a major downturn in the market for the commodity as a result of a flood of cheap supply out of Chinese-backed mines in Indonesia.

Poseidon shares were trading flat at 0.6c, while Mineral Resources shares were down 1.1 per cent in early trade at $76.31.