Poseidon Nickel : High Grade Nickel Intersections at Silver Swan

Corporate Directory

ASX Code: POS

Shares on Issue: 2,643M

Market Cap: $106M

Cash and equivalents at 31 March 2019

$63.5M

Board of Directors

Non-Executive Chairman

Geoffrey Brayshaw

Non-Executive Directors

Felicity Gooding

Karl Paganin

Managing Director and CEO

Robert Dennis

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. [e-mail]

1. www.poseidon-nickel.com.au

HIGH GRADE NICKEL INTERSECTIONS AT SILVER

SWAN

27TH MAY 2019

HIGHLIGHTS

• Poseidon's drilling program at Silver Swan extends high grade sulphide nickel ore bodies
• Initial assay from the first three holes of the current program at Silver Swan has confirmed some of the highest grade sulphide nickel intersections achieved so far
• • PBSD003 - 5.9m @ 9.92% Ni (True width 2.5m)
  • PBSD005 - 7.48m @ 10.89% Ni (True width 2.9m)
  • PBSD006 - 13m @ 5.64% Ni (True width unavailable, exited footwall)
• The continuing 3,000m Silver Swan drilling program will be completed over the next 5 weeks with assays to follow thereafter
• The above drilling results, combined with the recently completed positive two-hole drilling program at Black Swan, together with historical drilling data, will enable geological modeling to be progressed in respect to the overall continuity of the Black Swan Disseminated deposit and the extent of the Silver Swan deposit
• • PBSD001A - 223.1m @ 1.02%Ni (including 74m @ 1.5%Ni)
  • PBSD002 - 289m @ 0.62% Ni (True width 75m)

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Poseidon Nickel (ASX: POS, "the Company") is pleased to provide this update on its current drilling program at the Silver Swan and Black Swan deposits. Both deposits are immediately adjacent to Poseidon's Black Swan concentrator and will form the foundation of a prospective restart of the Black Swan operations. The Black Swan operations are located approximately 50 kilometres north of Kalgoorlie.

Posiedon's managing director Rob Dennis commented:

"We are extremely excited with the Silver Swan results. By any measure the results have exceeded our expectations with the results at Silver Swan demonstrating some superior nickel grade and solid true width intersections.

The two pronged approach we have adopted has been designed to test the potential and extension of ore sources at both Black Swan and Silver Swan. Combined, these drilling programs have yielded some extremely positive outcomes by virtue of grade width and scale and have prompted us to reassess and accelerate our future drilling programs.

We will complete the drilling at the high-grade Silver Swan deposit in the next few weeks. Our focus, will then be to build on the potential of the Black Swan disseminated ore body above the Gosling deposit which will complement the Silver Swan higher grade success.

From the outset, our objective has been to develop and improve resource potential in proximity to our processing facilities at Black Swan.

We consider that the existing processing capabilities at Black Swan and extremely positive drilling results puts us in a unique position in this nickel province."

The drilling program was designed to confirm the potential for additional ore associated with the Black Swan disseminated nickel ore channel, together with extension of the higher-grade resources at Silver Swan. Silver Swan has confirmed the potential that was interpreted from the Down Hole Electromagnetic (DHEM) survey.

Silver Swan, historically, returned some of the highest-grade nickel sulphides assays in the world. The current work is part of a 3,000 metre program which is intended to extend the size of the Silver Swan deposit, as well as convert inferred ore resources to indicated resources.

The collective outcomes achieved from the Silver Swan and Black Swan drilling will be considered as part of the ongoing review and optimisation of the Company restart program. The Feasibility Study released to the ASX on 18th July 2018, anticipated ore would be sourced from each of the Black Swan Open pit, the high-grade Silver Swan deposit and from above ground legacy stockpiles. The current drilling programs are enabling the Company to reassess the potential extension of these ore sources with the opportunity to extend the Black Swan operation's minelife.

SILVER SWAN DRILL HOLE RESULTS

The latest diamond drilling at Poseidon's Silver Swan underground mine has intersected significant high- grade nickel sulphides.

PBSD003 - 5.9m @ 9.92% Ni (True Width 2.5m)

PBSD004 - Massive sulphides intersected, assays pending

PBSD005 - 7.48m @10.89% Ni (True Width 2.9m)

PBSD006 - 13m @ 5.64% Ni (True width unavailable, exited footwall)

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Figure 1: Core from PBSD005 (Tray 27 &28) showing massive sulphide mineralisation

The Silver Swan program is aimed to extend the size of the Silver Swan deposit and, in addition, confirm the veracity of inferred resources for later conversion to the indicated category prior to mining.

PBSD003, PBSD004 and PBSD005 were drilled to confirm mineralisation within the interpreted Tundra- Mute extension (shown in Figure 2). These three holes intersected massive sulphide mineralisation on par or thicker than had been modelled previously; which is a positive feature for reserve conversion. Additionally, assays show that any dilution of the massive sulphide during mining is likely to still carry a significant grade greater than 1% nickel in sulphides which are recoverable in the nickel flotation process.

Prior to the Norilsk shut down of the Black Swan operations in 2009, a geophysical Down-Hole Electromagnetic (DHEM) survey was completed at Silver Swan which has provided strong indications of additional ore adjacent to the known extensions of the Silver Swan deposit.

Holes PBSD006 and PBSD006A were the first holes of the program drilled outside the current resource area to intersect potentially mineralized areas highlighted by the DHEM surveys. The intercepted grade and location is an indication that the Silver Swan resource will likely increase as the drilling progresses. Whilst PBSD006 only glanced the massive sulphide due to the orientation of mineralisation, a wedge hole PBSD006A has intersected significant visible nickel sulphides and widths, as it progressed through the mineralisation. Assays for PBSD006A are pending.

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Assays results received to date are as follows:

Hole	m From	m To	Interval	Ni%	Cu%	Co%	As%	True Width
PBSD003	99	104.9	5.9m	9.92	0.24	0.18	0.15	2.5m
including	99.8	103.98	4.18m	12.28	0.23	0.21	0.008
PBSD005	131.52	139	7.48m	10.89	0.25	0.17	0.20	2.9m
including	132.58	137.1	4.52m	15.04	0.21	0.22	0.089
PBSD006	180	193	13m	5.64	0.35	0.12	0.19	n/a
including	187.05	191	3.95m	12.10	0.34	0.24	0.25
			Table 1: Assays received to date

Figure 2: Silver Swan longsection - DHEM Plates and Drill Hole locations

BLACK SWAN DRILL HOLE RESULTS

As announced on 6th May 2019*, two Diamond drill holes have been drilled from the Silver Swan underground magazine chamber (920 metres below the surface) into the Black Swan disseminated deposit, which extends at depth from below the Black Swan open pit. The second of these holes PBSD002, targeting the footwall intersected 289m @ 0.62% Ni (true width of 75m) which complements PBSD001A which intersected 223m @ 1.02%Ni. These positive results, combined with historical drilling data will enable geological modeling in respect to the overall continuity of the Black Swan Disseminated deposit, to be progressed, and has potential to extend the Black Swan operation's life.

(*see ASX release "Successful Phase 1 Drilling Under Black Swan Open Pit" dated 6th May 2019)

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Figure 3: Longsection showing 2018 Resources and Black Swan Disseminated drill hole intercept location

To progress this potential, an underground and surface RC drilling program is being developed to intersect the Black Swan mineralisation between the floor of the Open Pit and the high grade Gosling workings. The Gosling deposit, now mined out, is located between 200 and 300 metres below the surface and adjacent to the Black Swan disseminated deposit. It was previously mined by LionOre and produced 121,000t @ 4.1%*.

(*Historical data by MPI LionOre and Norilsk -Poseidon has inspected the historical data in question and is satisfied that both Norilsk and MPI have maintained the digital data integrity. Poseidon considers the data trustworthy.")