Poseidon has agreed to pay A$450,000 (US$312,000), as well as a 1.5% net smelter royalty and other fees, for an exclusive option for the 35-hectare site.

Lancefield can add value to the company's existing Windarra gold tailings project, which is located just 17km away.

The Lancefield tailings would be trucked to Windarra and processed in the proposed facility with minimal modifications to the currently envisaged plant configuration, noted Poseidon.

"This transaction is an exciting opportunity for Poseidon to add considerable value to the Windarra gold tailings project," said Poseidon managing director and chief executive Peter Harold.

"There is a considerable environmental benefit to Western Australia should Poseidon proceed with treating the Lancefield gold tailings, as these tailings will be removed, and the site rehabilitated which will be a positive environmental outcome," added Harold.

The company will conduct resource definition programs at the Lancefield tailings with the aim of establishing a JORC 2012 Mineral Resource.

Poseidon released an updated resource assessment in June which estimates that the north and south dams in Windarra collectively contain 4.55 Mt at a gold grade of 0.72 g/t for 105,000 oz gold. A central dam is estimated to contain 6.20 Mt at a gold grade of 0.37 g/t for 74,000 oz gold.

The north and south dams largely contain tailings from the gold operations historically conducted at Beasley Creek and Lancefield by Western Mining Corporation.

The company plans to use low-cost hydraulic mining, combined with a straightforward cyanidation-leaching processing flowsheet to produce gold dore on site.