A second acquisition deal with Norilsk Nickel will see Poseidon Nickel acquire the Lake Johnston nickel project, which has been on care and maintenance since April 2013. In July, we entered an agreement to acquire the Black Swan project, including an open cut mine and nickel sulphide plant. This latest deal is for the Lake Johnston tenements, resources and infrastructure, 440km east of Perth and 117km west of Norseman. Together with our existing Windarra project, we now have near term production potential at three mineral provinces in WA.
The new project comprises 11 mining leases, 10 exploration licences and one prospecting licence hosting the Emily Ann and Maggie Hays deposits. Maggie Hays was developed as an underground mine and produced more than 12,000 tonnes per annum of good quality smeltable nickel concentrate. The ore was processed through a 1.5 million tonne per annum concentrator plant, which is included in the acquisition.
We planned to evaluate restarting operations at Lake Johnston with a view to bringing the project back into production shortly after contract completion.
Maggie Hays has a resource estimate of 3.805 million tonnes grading 1.49 per cent nickel, while Emily Ann has resources of 334,000t grading 4.18 per cent nickel. The area has significant exploration potential that could extend the life of the current project. Only limited drilling exploration has taken place in recent years but this has led to several highly prospective areas being identified.
We plan to undertake a major new exploration program on the tenements guided by the work undertaken to date with the objective of further extending the projects operational life.
Existing infrastructure that we acquire includes boxcut, portals and decline at Maggie Hays and Emily Ann; haul and site access roads; run of mine pads and waste dumps at Maggie Hays and Emily Ann; a crushing, screening and grinding plant; a concentrate production plant, storage shed and weighbridge; dewatering and potable water bore network; 140-person Windy Hill accommodation camp, about 7km south of Emily Ann; office, workshop and support facilities; and an airstrip.
We now have three nickel projects all within 270km of Kalgoorlie. Importantly all three projects have the mines and access to infrastructure to enable production to be brought on-line quickly and at low levels of capital investment. All of the projects are in well-endowed mining regions and have demonstrated resource extension potential which could lead to extended production life. We will be growing our output just as nickel supply is moving into deficit following strong Chinese stainless steel production, reportedly up 18.2 per cent year on year, and reduction of nickel supply from Indonesia.
Over the coming weeks and months I’ll provide updates on our progress and activities at Lake Johnston - register here for updates.