Poseidon Nickel : Black Swan Underground RC Drilling First Assay Results

Corporate Directory

ASX Code: POS

Shares on Issue: 2,638M

Market Cap: ≈$140M

Cash & equivalents at 30 June 2019

$60.1M

Board of Directors

Non‐Executive Chairman

Geoffrey Brayshaw

Non‐Executive Directors

Felicity Gooding

Karl Paganin

Interim CEO

David Riekie

CFO & Joint Company Secretary

Brendan Shalders

Joint Company Secretary

Eryn Kestel

Key Shareholders

Black Mountain Metals: 19.8%

Squadron Resources: 17.1%

Key Operating Nickel Assets (100%)

Black Swan/Silver Swan

Lake Johnston

Windarra

Principal & Registered Office

Unit 8 Churchill Court

331‐335 Hay Street

Subiaco 6008

Western Australia

1. 1. [phone]
   1. [phone]
2. admin@poseidon‐nickel.com.au

1. www.poseidon‐nickel.com.au

BLACK SWAN UNDERGROUND RC DRILLING

FIRST ASSAY RESULTS

14 OCTOBER 2019

HIGHLIGHTS

• Successful completion of first eight holes of 2,500m underground RC drilling program complete (1,326m)
• Disseminated mineralisation encountered in all eight RC drill holes, confirms continuity at depth in both grade and scale
• Significant true widths intersected include:

1. 45m @ 0.77% Ni, True width = 37m including 12m @ 1.16% Ni (PBSC004)

1. 52.5m @ 0.75% Ni, True width = 52m

including 27m @ 0.97% Ni (PBSC005)

• 1. 36m @ 0.75% Ni, True width = 36m including 18m @ 1.02% Ni (PBSC007)
• Drill and sampling technique reduces "nugget effect" in assay results with novel "up‐hole" survey technique also successful
• Second round of underground RC drilling commenced further supporting the restart plan for mining operations at Black Swan

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Poseidon Nickel (ASX: POS, "the Company") is pleased to announce the successful completion of the first eight holes of the underground RC drilling program on section 11260 North. The 1,236m of drilling, which is part of a broader 2,500m underground drilling program at Black Swan, has been undertaken from the Gosling Access Drive, 200m below the Project's open pit (which is currently being dewatered).

Importantly, all holes have intersected the Black Swan disseminated mineralisation confirming continuity at depth, in both grade and scale. Holes PBSC001 and PBSC002 were targeting the Footwall Lode observed in the open pit, while holes PBSC003 to PBSC008 were targeted to intersect the continuation of the main Central Lode (see Figure 1).

The Central Lode mineralisation on section 11260 North indicates that it is consistent and continuous from beneath the open pit down through to the hangingwall of the Gosling Massive Sulphide Lode some 250 metres below (see Figure 1). It is anticipated that mineralisation will continue down to the two diamond holes drilled by Poseidon 1km below surface earlier this year (see announcement "Successful Phase 1 Drilling under Black Swan Open Pit" released 6 May 2019).

Poseidon Interim CEO David Riekie said, "It is great to see the successful application of our novel exploration technique compared to conventional drilling. Coupled with some clever engineering and perseverance from our geological and drilling team, we have been able to evaluate mineralisation that historically has been very difficult to assess. All holes have intersected mineralisation over broad zones of solid nickel grades and where they were expected. Consequently, we have confirmed the continuity and scale of the main Central Lode and are now developing a robust level of confidence required for potential underground mining at the Black Swan deposit; further supporting a restart of mining operations at the project."

Poseidon has commenced a second round of underground RC drilling which is expected to complete the 2,500m drilling program by the end of October 2019.

Drilling Results

Assays for seven of the eight holes have now been received and have undergone rigorous QAQC checks including duplicate sampling produced from the purpose‐built rotary splitter.

The Company is very pleased with the quality of samples and assay results obtained to date. The significant intersections are summarised below in Table 1 (all collar and assay results are shown in Tables 2 and 3).

		Hole ID	From	To	Interval	Ni%	Cu%	Co%	MgO%	S%	True Width		Lode
		PBSC001	94.5	109.5	15	0.76	0.02	0.01	33.39	0.93	10		Footwall Lode
		PBSC002											Assays pending
		PBSC003	67.5	87	19.5	0.75	0.02	0.02	35.04	1.14	17		Footwall Lode
		PBSC003	118.5	138	19.5	0.69	0.03	0.01	33.10	0.98	17		Central Lode
		PBSC004	84	129	45	0.77	0.04	0.02	33.43	0.98	37		Central Lode
		including	117	129	12	1.16	0.07	0.02	33.64	0.90	12
		PBSC005	90	142.5	52.5	0.75	0.03	0.01	34.79	0.83	52		Central Lode
		including	115.5	142.5	27	0.97	0.03	0.01	36.30	0.69	27
		PBSC006	88.5	141	52.5	0.67	0.02	0.02	32.62	0.80	31		Central Lode
		including	115.5	132	16.5	0.97	0.04	0.02	33.42	0.85	16
		PBSC007	118.5	154.5	36	0.75	0.03	0.01	33.28	0.61	36		Central Lode
		including	136.5	154.5	18	1.02	0.03	0.01	33.96	0.64	18
		PBSC008	126	162	36	0.89	0.04	0.02	33.47	1.25	23		Central Lode
		including	145.5	162	16.5	1.02	0.05	0.02	33.25	1.03	11

Table 1 ‐ Significant intersections from RC drilling program 11260 North

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Figure 1 ‐ Results and drill hole locations of first trial section showing continuity of grade and mineralisation for at least another 250 metres below the open pit

Technical Interpretation

All RC holes from PBSC003 to PBSC008 intersected the Central Lode. Grades from the intersections reveal that mineralisation in this lode increases from the footwall to the hangingwall. There is a consistently high grade zone on the hangingwall that is of significant width and continuity. This zone was not always apparent from the historical diamond drilling due to the size difference between the core (50mm) and the current RC holes (140mm). This is direct evidence that the increase in hole size gained by the RC drill technique has had a major influence on controlling the Black Swan nugget effect previously identified and highlights the suitability of this drilling technique in successfully exploring the deposit further.

Quality Assurance/Quality Control ("QA/QC") Assessments

The purpose‐built rotary splitter gives the Company the ability to collect three simultaneous samples through which sample representivity can be evaluated. Each sample averages 6‐7kg and 20kg of sample (about 50%) is collected per 1.5m drill rod. The duplicate for one sample in every ten is sent for assay to check the "nugget effect" between the samples collected from the splitter. Duplicate analysis is presented in Figure 2 below and shows that repeatability between samples is very high. This confirms that a 6‐7kg sample is adequate for this drilling method and that the nugget effect consequence from the sample collection in the splitter is negligible. This is an important aspect to the success of the program. The outliers in the graph below come from PBSC003 and PBSC007 which were the first holes to be drilled. Refinement of sample flushing during drilling of the ultramafic has subsequently yielded vastly improved repeatability.

Assessment of the increase in hole size on assays received compared to historical drilling will be ongoing.

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Figure 2‐ Duplicate Sample Results

Figure 3 ‐ The rotary splitter and sample bags

The RC drill rig has undergone some minor modifications and has commenced drilling at the second location of the RC drilling program at 11340 North (see Figure 4), where mineralisation is expected to be stronger based upon historical intersections. Drilling on this section will push the rig beyond 200m which will be a first for this style of drilling. The modifications implemented should enable these depths to be achieved easily while maintaining sample integrity.

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Figure 4 ‐ Second trial ring located at 11340 North

David Riekie

Interim CEO

For further information contact David Riekie : + 61 (0)8 6167 6600.