Poseidon Nickel has hailed new drilling results at its Windarra nickel project and outlined plans to resume drilling in coming months, which meant it expected to re-engage contractors who had finished up on the site.
The drilling results coincided with a media report saying the company had sacked 45 contractors and was striving to preserve cash, claims chief executive officer David Singleton rubbished as highly misleading.
Mr Singleton said Poseidon announced in November last year it would pursue a drilling program at Windarra for six months, and after seven months had ceased drilling and let go of 45 contractors.
Mr Singleton said the company had paused drilling to allow its geologists to go over the huge amount of data that had been uncovered.
"It had nothing to do with cash preservation, that is just speculation," Mr Singleton told Business News.
He added that the two underground drill rigs were still on the mine site.
Mr Singleton described the drill results at Windarra as 'spectacular and above expectations'.
The exploration at Windarra has revealed a 121 per cent increase in probable nickel reserves and a 17 per cent increase in resources.
"We expected maybe 10 or 15 per cent and we got a 50 per cent improvement in mining resources in the first three years. Now that's spectacular by anyone's imagination and much better than we expected," Mr Singleton said.
The results take Mt Windarra's total indicated and inferred resources to 80,200 tonnes of nickel.
He said the additional discovery of very wide and high-grade intersections, which would be drilled in the second stage, were encouraging.
"We are going to pause now to give our people time to reinterpret the data and get ready for the next phase of drilling," Mr Singleton said.
He added that the second drilling phase would begin in a few months and would continue with funds separate to those needed to begin production at the mine.
A similar number of contractors will be hired for the second phase of drilling when it restarts.
Mr Singleton said the process for seeking $200 million needed to start production at Windarra was under way and the company would update the market as significant news arose.
He said Poseidon Nickel had a key focus on sourcing the money from the US high-yield debt market but was also looking at other opportunities.
Poseidon Nickel's share price dipped at close of trade to 12.5 cents.