Poseidon mulls restarting Silver Swan

Poseidon Nickel says it is considering a potential restart of operations at its mothballed Silver Swan mine, after plans to sell the asset to Tony Sage’s Caeneus Minerals for $2.7 million fell through.

Poseidon said it was reviewing the Silver Swan nickel mine and believed the project may be able to produce enough cash flow to at least fund the care and maintenance costs of all of its operations through the current period of market weakness.

“Poseidon’s primary strategy remains the commencement of operations initially at Lake Johnston however, the opportunity to undertake limited operations at Silver Swan in the interim may provide a step to this whilst nickel prices remain subdued,” the company said in a statement.

“The potentially very high grades at Silver Swan mean that the mine may be economic even at current prices and therefore provide some operating income.”

Poseidon plans to produce a restart feasibility to determine the operating and capital costs, as well as potential production levels of the mine within two months, and apply for operating permits for the mine, in anticipation of a possible decision to begin small-scale operations.

The decision comes on the same day that an option for Caeneus to buy the mine expired.

Caeneus told Poseidon it was unable to source project financing during the current challenging market, and would not be able to meet the commercial terms of the agreement.

Poseidon also said it had received about $1.7 million relating to the sale of concentrate to Tsingshan in China and the recovery of an outstanding sum from its last capital raising.

The company put its Lake Johnston operation near Norseman on care and maintenance in July, in response to a depressed nickel market.

Poseidon shares were 3.5 per cent higher to 5.9 cents at the close of trade.