Australian nickel sulphide development company Poseidon has announced the signing of a nickel offtake agreement with Tsingshan in China which covers the first 2.5 years of mine output at Silver Swan – the world’s highest grade nickel mine.
Under the terms of the agreement, Poseidon will deliver unprocessed nickel ore to Tsingshan, which will process the material through their integrated Nickel Pig Iron (NPI) and stainless steel facility in Fujian.
“This contract delivers superior net economics to Poseidon over more conventional process routes available locally or through a concentrator plant (such as that owned by Poseidon on the Black Swan/Silver Swan site) and avoids investment in the start-up of these processing facilities,” the company said in an ASX release.
Poseidon Managing Director and CEO, Mr David Singleton said Silver Swan will have one of the lowest production costs in Australia.
“Our studies to date indicate that Silver Swan could have one of the lowest operating and start-up capital costs in Australia this novel style of contract for export ore coupled with Tsingshan’s low cost production route is a key enabler to starting production at the mine,” Mr Singleton said.
“While nickel prices remain low, we believe that when the recovery gets underway, Silver Swan can get into production very quickly. Our current business focus is ensuring that both Lake Johnson and Silver Swan are ready for production as prices improve.”
The Silver Swan underground mine is part of the Black Swan Nickel operation which Poseidon acquired from Norilsk Nickel in 2014. The project was placed under care and maintenance in February 2009 following a sustained period of low nickel prices.