Nickel sulphide exploration and development company Poseidon Nickel has secured firm commitments of A$6m ($3.94m) via placement from institutional and sophisticated investors.

The placement, which has a price of A$0.02 per share, represents a discount of 23.1% to Poseidon’s last closing price and a 23.2% discount to its five-day volume weighted average trading price to 2 August 2023.

For the placement, Petra Capital and Morgans served as joint lead managers and joint bookrunners.

The placement is due to settle on 10 August 2023 with 297.5 million shares to be allotted on or around 11 August 2023 under Poseidon’s placement capacity.

Poseidon will use the funds from the placement for exploration drilling work at the Black Swan and Lake Johnston projects in Western Australia, as well as for further confirmatory metallurgical test work on the open pit disseminated ore for the restart of the Black Swan project.

The funds will also be used by the company for other activities pertaining to the restart of the Black Swan project.

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These activities include offtake and debt financing negotiations, completion of the pre-feasibility study on the Black Swan expansion project, and care and maintenance costs, among others.

Poseidon Nickel managing director and CEO Peter Harold said: “We are pleased with the support for the Placement and welcome a number of new institutional investors to the register.

“We look forward to drill-testing the EM target near the Silver Swan decline and the Western Ultramafic at Lake Johnston and continuing the workstreams relating to the restart of Black Swan.”

The Black Swan project was initially commissioned in 1997 and was operated until 2008. During this period, the mine produced 179 kilotonnes of nickel concentrate.

According to the feasibility study completed last year, the Black Swan restart would require a pre-production capital investment of A$50m.