The financing for pre-production activities at the site was achieved through the placement of about 54.3 million shares at 7c per share as negotiations for an ore offtake agreement advance.

In a statement today, Poseidon said that the current cost environment would put downward pressure on Windarra’s previously estimated process plant cost of under $10 million.

The project’s definitive feasibility study indicated that gold production could be undertaken at less than $800 per ounce.

Gold was last trading at about $US1323 ($A1471) per ounce.

Gold inventory in tailings has been estimated to be able to last up to six years, yielding a total of more than 50,000oz.

Earlier this month, the company said negotiations were in progress for a tolling agreement that could deliver 350,000-700,000 tonnes of ore per annum for an initial period of two years.

The ore would be extracted from the existing mine for treatment to a third party facility.

Refurbishment work carried out at the site along with existing above-ground infrastructure is expected to allow the start-up of operations during 2014.

Development and environmental approvals covering construction and operations at Windarra are in place.

The company is expecting to update its resource and reserve model at the site while calling for improving nickel market characteristics.

“Poseidon Nickel believes that it is in a position to capitalise on what many institutions believe will be a strong market for nickel in the short and medium term,” it said.

“The recently announced Indonesian nickel ore export ban has the potential to disrupt supplies of approximately 20% of the world’s nickel ore.

“If the export ban is maintained, structural nickel supply shortages predicted for 2016 could occur much earlier.”

Nickel was last trading at about $14,326 per tonne.

Poseidon also flagged recent leadership changes as part of its effort to ready for a potential operating stage.

Christopher Indermaur was elected as chairman following Andrew Forrest’s decision to step down from the position last year to continue his focus on philanthropy.

In addition, Robert Dennis – who was underground mine manager from 1980-1986 at Windarra – will immediately join the board as a non-executive director.

Resources at Windarra total 4.8 million tonnes at 1.7% nickel for 80,200t of contained nickel metal.

Shares in Poseidon were unchanged this morning at A10.5c.