Why is the Poseidon Nickel (ASX:POS) share price having such a great day?

Investors are chasing a spot in Poseidon Nickel after a key update today.

| More on:
a miner wearing a hard hat smiles as he stands in front of heavy earth moving equipment on a barren mine site.

Image source: Getty Images

Shares in nickel producer Poseidon Nickel Ltd (ASX: POS) are charging higher to trade 4.44% in the green at 9.4 cents.

Poseidon shares have been moving since a company announcement advising of updates at its Black Swan project and “Fill the Mill” strategy.

The company outlined progress at the site plus the favoured outcomes from a July 2021 scoping study undertaken for the project.

From the results, Poseidon reckons that growing its high and low grade indicated resource base at Black Swan will have the best economic outcome for the project moving forwards.

As such, its Fill the Mill strategy is “focused on growing [its] mine inventory at Black Swan with an aim to supporting a project life of more than five years”.

Here are the details.

What did Poseidon Nickel announce?

Poseidon also detailed a number of other progress updates for its Black Swan site.

The nickel miner advised that new high-grade discoveries at its Golden Swan prospect now add another 6,300 tonnes of contained nickel to its Black Swan resources.

In addition, drilling at its Silver Swan site is now underway with the aim of increasing “high-grade mining inventory”. Previous test work “confirms Silver Swan tailings improves the Fe:MgO ratio of concentrate” at this location.

With regards to its Fill the Mill strategy, outcomes from the July 2021 scoping study indicated Poseidon has two attractive production options for mining at Black Swan.

To maximise the production of total nickel tonnes at the site, Poseidon reckons growing the high and low grade indicated resource base at Black Swan is the most attractive option economically.

This includes the resource at Golden Swan, Silver Swan, Silver Swan tailings, and Black Swan disseminated open pit ore feeds, according to the announcement.

It also came up with “relatively low capital and operating expenditure estimates for the larger 1.1Mt plan” and notes recent improvements in the payability of nickel in concentrates due to a “tightening market”.

And with the spot price of nickel fetching near recent 5-year highs at US$20,134/tonne, Poseidon believes the outlook remains positive for the future.

The company also identified the possibility to have a long-life project that could also treat ore from its 100% owned Windarra project.

In addition, for its Black Swan site, the company has signed a 5-year water access agreement with Norton Gold Fields Pty Ltd to help “de-risk” the project.

In fact, since 2018, the company has made several advancements in ‘de-risking’ the project. It says it has done this by growing the mineral resource at Black Swan, looking at ways to remove impurities from the ore and gaining access to grid power to reduce operating costs.

What did management say?

Speaking on the announcement, Poseidon Nickel CEO Peter Harold said:

Since announcing our “Fill the Mill” strategy in July 2021 the Company has made considerable progress on workstreams progressing our Black Swan project towards a restart, targeting late 2022 plant commissioning.

He continued:

Of particular importance, we have released our maiden Golden Swan Resource, commenced resource drilling at Silver Swan to convert Inferred Resources to Indicated and begun drilling of the Black Swan disseminated orebody to increase confidence on the grade and the amount of serpentinite ore in this Resource. We have also released a maiden Resource on the Silver Swan tailings and commenced metallurgical test work on blending the various feed sources through the Black Swan 2.2Mtpa concentrator, derated to 1.1Mtpa.

Poseidon Nickel share price snapshot

It’s been a year of green for the Poseidon Nickel share price, having climbed 32% in that time after rallying 45% this year to date.

These returns have both outpaced the benchmark S&P/ASX 200 Index (ASX: XJO)’s performance. It’s risen almost 17% in the past 12 months.

Should you invest $1,000 in Poseidon Nickel right now?

Before you consider Poseidon Nickel, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Poseidon Nickel wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Top 10 - asx shares today
Share Market News

Here are the top 10 ASX shares today

Today, the S&P/ASX 200 Index (ASX: XJO) fought back against the selling pressure throughout the day to finish in the green. …

Read more »

The word inflation written with a ticking time bomb.
Share Market News

Why is it when Jerome Powell sneezes, the ASX 200 catches a cold?

Key points The ASX 200 took a hit following comments from the United States Federal Reserve chair Jerome Powell Expectations …

Read more »

blue arrows representing a rising share price ASX 200
Share Market News

These 3 ASX 200 shares are topping the volume charts this Friday

Finally, a day of green for ASX shares! The S&P/ASX 200 Index (ASX: XJO) is bouncing back strongly today, after a …

Read more »

Young boy wearing suit and glasses adds up on calculator with coins on table
Share Market News

This world-famous fund manager is ‘buying the dip’. Here’s why

Key points Bill Ackman is one of the most famous fund managers in the world He runs Pershing Square Capital …

Read more »

Two male ASX 200 analysts stand in an office looking at various computer screens showing share prices
Share Market News

ASX 200 (ASX:XJO) midday update: ResMed and PointsBet disappoint

At lunch on Friday, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a much-needed positive …

Read more »

A man activates an arrow shooting up into a cloud sign on his phone, indicating share price movement in ASX tech shares
Share Market News

Is the Betashares Nasdaq 100 ETF (ASX:NDQ) an opportunity in this market correction?

Could the Betashares Nasdaq 100 ETF (ASX: NDQ) be a good opportunity during this correction for both the global share …

Read more »

A woman shouts through a megaphone.
Share Market News

2 ASX growth shares to buy in February with 40% upside

If you’re looking to make some additions to your portfolio in February, then the two ASX shares listed below could …

Read more »

Business woman watching stocks and trends while thinking
Share Market News

5 things to watch on the ASX 200 on Friday

On Thursday, the S&P/ASX 200 Index (ASX: XJO) fought hard and was able to record a small gain. The benchmark index rose …

Read more »