(MENAFN- ProactiveInvestors)
() has revised the Indicated and Inferred Resource at the Mt Windarra Project in Western Australia to the JORC 2012 standard.
This is now estimated at 4.36 million tonnes at 1.64% for 71500 tonnes of contained metal using 0.9% cut-off grade.
Shares in the company should trade higher today on the news.
In October Poseidon signed a off take deal with mining major () for the Mt Windarra project with first ore deliveries due no later than February 2015.
The resource update for Mt Windarra follows on the company delivering a maiden Probable Ore Reserve of 3.37 million tonnes at 0.63% for 21500 tonnes contained for its recently acquired Black Swan project.
The revised estimate for Mt Windarra was carried out by Optiro Pty Ltd which had completed the majority of the prior resource estimates.
Mt Windarra Resource Assumptions and Methodology
The new JORC 2012 estimate used a 166 hole database and mineralisation envelopes constructed by Poseidon.
Optiro ensured that all the mineralisation wireframes were snapped to the drillholes and that all of the mineralisation was captured. It also used information used in previous studies.
Recent drilling undertaken by Poseidon has been analysed for a full suite of multielements providing Optiro with more data for estimation.
Mt Windarra Offtake
Under the off take deal with ore from Mt Windarra will be toll treated at BHP's West Leinster concentrator.
West will purchase all concentrate from the concentrator at an agreed rate for an initial 2 years and renewable for a further 2 years.
The Ore Tolling and Concentrate Agreement is for an initial period of 2 years ending in February 2017 with first ore deliveries due no later than February 2015 subject to satisfaction of conditions precedent including the parties obtaining necessary regulatory approvals.
West has the option to extend the contract term by 1 or 2 contract years. The contract is for a minimum quantity of 350000 tonnes of ore per annum and a maximum of 500000 tonnes which can be extended to 700000 tonnes by mutual agreement.
Poseidon will pay a treatment charge to West for every tonne of ore processed to be offset against payments by West for the concentrate produced.
The processing of ore at Leinster reduces the costs of commencing operations at Windarra to approximately $11 million plus working capital from the previously reported figure of $290 million.
The company is well progressed on funding options to support the commencement of ore deliveries in the timescales envisaged.
Analysis
The updated JORC 2012 Resource for Mt Windarra provides greater certainty for as it prepares to begin ore deliveries in February 2015.
The company is already funded for the estimated $11 million required to commence operations having recently raised $30 million through an oversubscribed placement priced at $0.18 per share.
Proactive Investors maintains its 12 month price target for of $0.40 - $0.52.
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