Poseidon Nickel : Quarterly Report to 30 September 2018

QUARTERLY REPORT

30 SEPTEMBER 2018

COMPANY OVERVIEW

Poseidon Nickel Limited is an ASX listed company focussed on developing its nickel assets in Western Australia. The Company has two nickel sulphide concentrators and six independent mines, all located within a 300km radius from Kalgoorlie in the Goldfields region of Western Australia.

HIGHLIGHTS

•  Successful Completion of Share Placement and Renounceable Entitlement Issue raising $75m

•  Black Mountain Metals Pty Ltd (BMM) acquires shares and Convertible Note from Jefferies LLC

•  Felicity Gooding and Karl Paganin appointed as Non-Executive Directors effective 1 October 2018

•  Continued Success with drilling at Abi Rose, PLJD0004 intersects Nickel-Copper bearing sulphides

ASX Code: POS

POSEIDON NICKEL LIMITED • Unit 8 • Churchill Court • 331-335 Hay Street • Subiaco • WA 6008

PO Box 190 • West Perth WA 6872 • T [phone] • F [phone] •www.poseidon-nickel.com.au • ABN 60 060 525 206

SUCCESSFUL COMPLETION OF RIGHTS ISSUE AND PLACEMENTS

During the quarter ended 30 September 2018 the Company raised $5.73 million (net of costs) by the issue of 116,777,000 shares at $0.05 per share to professional and sophisticated investors utilising the Company's placement capacity under the ASX Listing Rules. Additionally, the fully underwritten renounceable entitlement issue was completed on 17 September 2018 raising a further $65.27 million (net of costs) and the Company subsequently issued 1,379,506,382 shares at $0.05 per share on 20 September 2018. The success of this raising has put Poseidon in a strong position in a rising nickel market, to implement its strategy to bring operations back to commercial production, commencing with the Black Swan operations. The Company also commenced the drilling program at Abi Rose at the Lake Johnston operation.

BMM ACQUIRES SHARES AND CONVERTIBLE NOTE HELD BY JEFFERIES LLC

On 17 August Black Mountain Metals Pty Ltd (BMM) announced it had acquired a substantial shareholding in the Company by virtue of the acquisition of the shares and the US$17.5million Convertible Note previously held by Jefferies LLC (Jefferies). Through the share sale Agreement with Jefferies, BMM acquired 84,986,534 shares representing a then interest of 7.62% shareholding in the Company.

MAJOR SHAREHOLDERS

Consequent upon the placements, rights issue and the acquisition of shares by BMM, Poseidon has welcomed two major shareholders to its share register. BMM is the Company's largest shareholder, holding 522,925,412 shares, or 20% of the Company's shares on issue, and Squadron Resources Pty Ltd (Squadron) (encompassing Forrest Family Investments and Minderoo) owns 18% of the Company capital.

CHANGES TO THE BOARD

Changes to the Board composition were announced with Felicity Gooding and Karl Paganin being appointed as Non-Executive Directors following the resignation of David Singleton and Chris Indermaur, effective 1 October 2018. Karl Paganin represents as a Nominee of BMM and Felicity Gooding represents as a Nominee of Squadron.

OTHER CORPORATE

The Company issued 7,188,448 shares to Jefferies LLC on 6 July 2018 having elected to settle interest payable on the US$17.5 million Convertible Note in shares for the June quarter.

Unlisted Performance Rights totalling 3,629,700 were issued on 6 July 2018 in lieu of Directors fees for the March and June quarters under the terms of the Director Fees Performance Rights Plan. A further 2,849,243 Unlisted Performance Rights were also issued to the Chairman in relation to additional part time duties undertaken in the absence of a CEO for the March and June quarters. The payment was approved by shareholders at the Annual General Meeting held on 9 November 2017.

During the quarter, existing Unlisted Performance Rights held by Directors were converted to shares with the issue of 22,759,223 shares on 24 August 2018, 4,216,012 shares on 6 September 2018 and 4,881,546 shares on 25 September 2018.

FINANCIAL

As at 30 September 2018, the Company had cash on hand of $69.9 million.

During the September quarter the Company raised $5.73 million (net of costs), through the placement of shares to sophisticated and professional investors and a fully underwritten renounceable entitlement issue was successfully completed to raise approximately $65.27 million (net of costs).

For the September quarter, Directors fees have been paid in cash and the interest now due to Black Mountain Metals Pty Ltd following the change in ownership of the US$17.5 million Convertible Note will also be paid in cash.

BLACK SWAN - LAKE JOHNSTON UPDATE

With the Company focus in the last quarter primarily directed at the successful fund raising referred to above, operations at Black Swan and Lake Johnston remained on care and maintenance. Following completion of the fund raising, focus in the next quarter will be directed at progressing preliminary early works to support a return of Black Swan to an operational state.

LAKE JOHNSTON NICKEL EXPLORATION - ABI ROSE

PLJD0004, the first of three planned holes, commenced in late September (refer ASX: Drilling Recommenced at Abi Rose Nickel Deposit of 26 September 2018) targeted the down plunge extension of mineralisation identified during drilling in 2015-2016. PLJD0004 intersected a 2.9m wide zone of ultramafic rocks comprising pyroxenitic gabbros within a package of felsic volcanics, 56m down plunge from the previous intersections. All four holes drilled at Abi Rose have intersected nickel mineralisation.

Nickel-copper bearing sulphides comprising disseminated and massive sulphide accumulations occur over a 1.54m wide zone in Tables 1 and Figures 1. Within this zone was a massive and highly disseminated zone of 0.47m grading 4.36% nickel and 0.46% copper from 466.02m down hole. A full list of assays are presented in Table 3.

PLJD0004	m From	m To	Width	% Ni	% Cu	ppm Co
465.73	468.63	2.90	1.08	0.1	422
including	466.02	467.56	1.54	1.82	0.18	707
with	466.02	466.49	0.47	4.36	0.46	1814

Table 1: PLJD0004 Significant Intersection Summary

Figure 1: Drill hole PLJD0004 showing massive sulphide zone and lower remobilised sulphide blebs (Left Image: 466.02-466.18m) as well as disseminated sulphides below the massive sulphide zone (Right Image: 466.18-466.47m). Pyroxenitic gabbro can be seen in the lower core run.

The next hole to be drilled by the Company PLJD0005 (refer collar details at Table 2) has commenced and is targeting the confluence of the new and previous DHEM plates ~25m down plunge from PLJD0002.

Collar

MGA East MGA North

Target DepthEOH DepthDipAzimuth (MGA)

PLJD0004

PLJD0005

262743.9 262744.2

6434835.0 6434835.5

1357 1357

466 461

531.5 ~510

-69.1 -68.0

235.8 231.7

Table 2: Drill Hole Collar Details

Hole ID	Sample #	From	To	Width	SG	Ni %	Cu %	Co %	As ppm
PLJD0004	EX176201	465	465.73	0.73	2.70	0.002	0	0	0
EX176202	465.73	466.02	0.29	2.98	0.21	0.004	65	0
EX176203	466.02	466.18	0.16	4.27	7.78	0.136	2800	0
EX176204	466.18	466.49	0.31	3.37	2.12	0.669	1170	0
EX176206	466.49	467	0.51	3.03	0.502	0.0265	120	0
EX176207	467	467.36	0.36	3.01	0.272	0.0135	75	0
EX176208	467.36	467.56	0.2	2.99	0.735	0.038	170	0
EX176209	467.56	468.63	1.07	2.98	0.166	0.007	75	0
EX176211	468.63	469.65	1.02	2.72	0.048	0.0145	0.0015	0
EX176212	469.65	470	0.35	2.76	0.14	0.024	0.005	0
EX176213	470	470.36	0.36	2.78	0.0815	0.0055	0.002	0
EX176214	470.36	471	0.64	2.69	0.001	0	0	0

Table 3: PLJD0004 Assay Details

WINDARRA NICKEL PROJECT

The Windarra mine and infrastructure remains on care and maintenance. The ore resources at Windarra and Cerberus totaling 148,500 tonnes of nickel remains significant to the longer term planning for Poseidon.

Poseidon remains in active discussion with the Government in respect to the State Act over the Windarra tenements.

Robert Dennis

Managing Director & CEO

29 October 2018

CORPORATE DIRECTORY

Director / Senior Management Geoff Brayshaw Robert Dennis Karl Paganin Felicity Gooding Eryn Kestel Non-Executive Chairman Managing Director & CEO Non-Executive Director Non-Executive Director Company Secretary Corporate & Media Enquiries T: [phone] F: [phone]

Principal & Registered Office Unit 8, Churchill Court331-335 Hay Street SUBIACO WA 6008 T: [phone] F: [phone] Shareholder Enquiries Personal shareholding queries should be addressed to:Computershare Investor Services E:[e-mail] GPO Box D182, Perth WA 6840 T: [phone] Home Exchange The Company's shares are listed on the Australian Securities Exchange and the home exchange is Perth. ASX code : POS