The Windarra project, famous for creating the Poseidon bubble that popped in early 1970, has been undergoing a change in fortunes lately.  A few months ago the nickel sulphide mine recorded a 35% increase in its JORC-compliant indicated and inferred reserves, taking its contained nickel to 60,370 tonnes and sparking renewed interest into the mine's possible potential.  Now Poseidon Nickel has secured a US$50 million funding package from Harbinger in convertible notes to fund Windarra's re-development in a move that David Singleton, Managing Director of Poseidon Nickel, says will help Poseidon to become one of Australia's largest and most profitable independent nickel producers.

Harbinger is no stranger to investing in emerging Australian mining companies - its stakes in Murchison Metals (18.9%) and Mid-West Corp (15.8%) were large enough to recently land the investment fund manager in hot water with the Foreign Acquisitions and Takeovers Act which requires foreigners to obtain approval before buying more than 15% of an Australian company.  If Harbinger converted Poseidon's $50 million notes that would leave them with a direct equity interest of around 25% in the mineral exploration junior. 

This hasn't appeared to have affected the agreement with Poseidon.  David Singleton called the convertible note terms very advantageous to shareholders adding that they reflect the faith vested in the Company and its management.  Although Mr Singleton admitted that Harbinger's close relationship with Poseidon Chairman and Fortescue CEO, Andrew Twiggy Forrest, was instrumental in securing the deal.

Poseidon say it will use the extra capital to fund a feasibility study focusing on turning Windarra into a major nickel mining operation that, the company believes, will be capable of producing 20,000 tonnes of nickel per annum at a time when nickel demand is running high.  It also has a couple of other projects up its sleeve with its 80% owned Dadwen gold project in Ghana and, closer to home, a Joint Venture with Proto Resources only 180 kms away from Windarra.  Poseidon has indicated that a proportion of the funds received from Harbinger will go towards the ongoing exploration work at the Menzies JV with Proto. Previous gold drilling revealed the presence of nickel sulphides at the JV's 24km strike stretch in the North East Goldfields and Poseidon intends to drill a minimum of 2,000 metres of Air Core holes in an attempt to understand the level of mineralisation present at the site.

US$15 million worth of the convertible notes have already been issued to the exploration company with the rest waiting to be approved by shareholders at the company's next general meeting.  The unsecured notes will be interest free for the first half of the six year term before increasing to 5% per annum - with Harbinger being allowed to convert the notes into fully paid ordinary shares in Poseidon at AUD$1.00 per share.