Nickel

Kalgoorlie-based pCAM refinery hub to unlock major value for Poseidon Nickel

Thu 17 Mar 22, 3:44pm (AEST)
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Key Points

  • Poseidon Nickel up around 9% heading into the close today
  • Partnership with Pure Battery Technologies receives $119.6m in government funding
  • Kalgoorlie refinery to produce up to 50,000 tonnes per annum of precursor cathode active material pCAM

Poseidon Nickel (ASX: POS) managed to hold onto early morning gains, with the share price up around 9% at noon on the back of revelations that the nickel sulphide explorer has - in partnership with Pure Battery Technologies (PBT) - received hefty federal government booty to help fast-track future developments.

Within what’s called a Modern Manufacturing Initiative (MMI) grant, the federal government is stumping up with $119.6m to help the partnership develop a Kalgoorlie battery cathode active material refinery hub.

Major leg up

Today’s announcement follows a Memorandum of Understanding (MoU) established buy both parties in October 2021 to fund and develop a regional supply chain from mine to concentrate.

Management’s note that government support is a “major step forward” could be seen as a huge understatement, given that it equates to over a third of the company’s current market cap ($291m).

Right from the get go, unlisted entity PBT – which has an international nickel and cobalt refining operation in Germany (owned via a subsidiary) – expects the proposed Kalgoorlie refinery to produce up to 50,000 tonnes per annum of precursor cathode active material (pCAM).

Value-add

Poseidon’s CEO, Peter Harold expects this project to be a significant boost to the battery minerals the company processes, by unlocking significant additional value from Poseidon’s large nickel sulphide resource base near Kalgoorlie.

There’s also the potential to be able to treat a broader range of nickel concentrate specifications.

Harold claims Poseidon is well placed to be a major beneficiary, especially given the company has the potential to be a significant supplier of feed to PBT’s proposed pCAM Hub from the company’s existing 400,000 tonne nickel resource base and nickel concentrators at Black Swan and Lake Johnston.

“Given the nature of the processing route, being direct to pCAM, and the proximal location of the proposed pCAM Hub to our mines, there is an opportunity to enhance the margins on our concentrates,” Harold noted.

Recent upgrade

While broker coverage on Poseidon is light, Morgans upgraded the company to Add from Hold late last year (23/12/21) with the $0.13 target offering 30% upside to the current price.

In August 2021, the company raised $22m (before costs) through a private placement of ordinary shares and in September 2021 raised a further $6m under a share purchase plan.

For the six months ended 31 December 2021, Poseidon incurred a loss of $5.8m (2020: loss $6m) and had a net working capital surplus of $17.1m. No dividend was paid.

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Poseidon share price: A six month snapshot.

Written By

Mark Story

Editor

Mark is an investigative financial journalist and editor who started his career working for Marathon Oil in London. He has a degree in politics/economics and a diploma in journalism. Mark has worked on 70-plus newspapers and financial publications across Australia, NZ, the US, and Asia including: The Australian Financial Review, Money Magazine, Australian Property Investor and Finance Asia. Mark is passionate about improving the financial literacy of all Australians through the highest quality content. Email Mark at [email protected].

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