Poseidon Nickel said its agreement with Encore Minerals to develop the Windarra tailings project is now unconditional as it satisfied all conditions.
The project is situated 720km north-east of Perth, 260km north-north-east of the major mining town of Kalgoorlie and around 18km north-west of Laverton.
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Poseidon Nickel will receive $1.25m and a 3% NSR royalty once production begins.
The company received an upfront non-refundable payment of $250,000 in August 2024 upon signing the agreement.
Encore Minerals will also pay $1.6m to Poseidon, contributing to the $3.5m environmental bond held by Poseidon for the Windarra project.
Encore Minerals is conducting feasibility studies using Draslovka’s glycine leaching technology (GLT) and other patented technologies to process the gold tailings at Windarra and Lancefield, with the outcomes set to support the project’s potential development.
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By GlobalDataThe increase in gold prices from A$2,500/oz to more than A$4,000/oz since the Windarra gold tailings DFS in July 2021 is expected to significantly enhance the project’s economics.
The project’s DFS reported an ore reserve of 5.54–5.73mt, with approximately 150,000oz of contained gold and 375,000oz of contained silver.
The project could produce 53,500–55,200oz of gold over 45 months using low-cost mining methods and a conventional 1.5mt per annum modular processing facility.
The feasibility study’s base case, assuming a gold price of $1,750/oz and an exchange rate of A$1.00 to $0.75, forecasts a net operating cash flow of $30.6m, a net present value (NPV) of $21.7m and an internal rate of return (IRR) of 50.6%.
The application of a residual value assessment increases the net operating cash flow to $36.3m, the NPV to $25.7m and the IRR to 53.9%.
The project’s all-in sustaining cost is estimated at A$1,393/oz, with a development capital cost of $25.8–29.5m and a payback period of 27–28 months from the start of construction.
