Poseidon Nickel (ASX:POS) has signed a MOU with Northern Star Resources (ASX:NST) which could allow Northern Star to use the Black Swan mill to process gold ore up to a rate of 2 million tonnes of ore per year. That’s an interesting value proposition for Poseidon Nickel as it would now be able to make some money at Black Swan rather than incurring the care & maintenance expenses to keep the facility in good standing whilst it’s waiting for the nickel price to (continue to) increase (as Black Swan is a nickel project).
In fact, processing gold ore and nickel ore aren’t mutually exclusive, as Poseidon Nickel will still be able to process high-grade nickel ore from the Black Swan mine using a parallel and independent circuit. As such, trying to treat gold ore could be a good move as it would make the property at least cash flow neutral, reducing the total cash outflow for Poseidon Nickel. POS is in discussions with other companies which might also be able to deliver ore to the mill, so we might see some more agreements being signed shortly.
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The author has no position in Poseidon Nickel. Please read the disclaimer
