RESOURCE STOCKS

Ardea set for 40 years plus of nickel, cobalt production

ARDEA Resources will be attracting attention at this year’s Diggers and Dealers Forum in the City of Kalgoorlie-Boulder, given the recent release of an extremely robust prefeasibility study (PFS) for its Kalgoorlie Nickel Project Goongarrie Hub.

Ardea Resources
 Diamond drilling to collect metallurgical samples for Goongarrie Hub testwork

Diamond drilling to collect metallurgical samples for Goongarrie Hub testwork

Presenting at the internationally renowned mining conference will be Ardea managing director and CEO, Andrew Penkethman, who loves the jurisdiction as all of the company's key nickel and cobalt tenements are within 150km radius of this legendary mining city.

"The KNP is the largest nickel-cobalt resource in Australia and also the developed world. The huge advantage we have is the project's location so we can leverage off the existing infrastructure," said Penkethman, noting that the Goldfields Highway and rail line run directly through the granted mining leases where the nickel-cobalt resources are located, at its Goongarrie Hub.

Apart from the infrastructure and the supportive community of Kalgoorlie-Boulder and the Shire of Menzies, the mining centre also gives Ardea access to highly skilled resources professionals.

Early in July, Ardea announced a summary of its Goongarrie Hub PFS, the result of more than 12 months of work, culminating in an enhanced flowsheet of the project's increased scale through treating 3.5 million tonnes per annum, 3Mt through two 1.5Mtpa autoclaves and 0.5Mt through an atmospheric leach circuit, where the main ore feed is mineralised neutraliser. 

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Nickel-cobalt core drilling at Goongarrie South

All the results of this PFS appear on the Ardea website and ASX announcement 5 July 2023, but the nuts and bolts of it include:

• An ore reserve of 194.1 million tonnes at 0.70% nickel and 0.05% cobalt for 1.36Mt of contained nickel and 99,000t of contained cobalt.

• Mining optimisation studies have projected production of about 30,000t of nickel and 2000t of cobalt per year for more than 40 years.

• Conventional low-cost open pit mining methods result in mining costs comprising less than 12% of total operating cost with a very low strip ratio at an average of 1.5 for the first 35 years of mine life.

• The project generates pre-tax NPV of $A7,625 million and IRR of 30%, post-tax NPV of $4,980 million and IRR of 23%; average annual EBITDA of $800M and project pay back within 3.1 years.

These impressive numbers could get even better.

Penkethman again: "While we have defined a 40-year-plus ore reserve at the Goongarrie Hub, three of the deposits - Ghost Rocks, Siberia South and Black Range - were not even included in the PFS. So, in reality, this is an operation that will be going well beyond 50 years. Projects like this one are incredibly strategic and rare."

He explains that the premium ore at Goongarrie is referred to as goethite, which is best in class because it requires very low resonance time in the autoclaves and has very low acid consumption.

"It requires about 260kg of acid consumed per tonne of ore, whereas if you compare it to Glencore's Murrin Murrin operation, they use more like 500kg acid per tonne of ore processed."

Because of the quality of the goethite and the mineralised neutraliser, which is sourced from the base of the laterite deposits, means the company does not need to import limestone as a neutraliser.

"So we save on consumable purchases, save on carbon dioxide emissions by not having to transport that material to site and we also generate additional nickel and cobalt production units for free. We get those credits through the neutralisation process because the acid discharged from the autoclaves must be neutralised with that neutraliser to ensure that it is benign and can be safely disposed of in the environment.

"It is a winner in every respect, in terms of both ESG and our operating cost by not having to buy and transport limestone to site."

Penkethman says that that KNP and Goongarrie Hub don't have the challenges which ASX-listed nickel sulphide miners have. 

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Drilling at Highway as part of the Goongarrie Hub metallurgical testwork program

"Ours is not a deep, narrow resource that must be accessed by specialist underground mining contractors. All of ours is near surface, shallow, predominantly free-dig, low-cost, open pit mining, which makes it an incredibly valuable resource."

Most importantly, Ardea has struck a non-binding agreement with Sumitomo, Mitsubishi Corporation and Mitsui, the subject of discussions of more than 12 months which has led to the formation of a Japanese Consortium arrangement.

"Through Sumitomo Metal Mining we have access to the most successful nickel laterite project developer and operator in the world. And through the long-term exposure to the Australian resources sector, particularly through Mitsubishi and Mitsui, we have incredible experience and access to some of the cheapest export credit agency debt in the world.

"We are incredibly excited to partner with three industry giants to help us ultimately complete the DFS, then work with us to make a final investment decision to develop Goongarrie. They are so good to deal with.

Penkethman says that for the upcoming DFS, Ardea has identified several project enhancements while completing the PFS, one of which is the resonance time in the autoclaves.

"In the PFS we selected an incredibly conservative 70 minutes. We've got testwork supporting that it could be as low as 40 minutes. We think 60 minutes is defendable. For the DFS, we also have the opportunity to look at including the critical mineral scandium as a by-product credit. This will be evaluated in more detail as part of that study."

Penkethman says Ardea expects to have concluded executing binding agreements with the Japanese Consortium before the end of 2023 and also start the DFS, which will take 12 to 18 months to conclude. Thereafter, Ardea would be looking at the final investment decision, which could be mid-2025.

"As part of completing the DFS we will engage with export credit agencies around the world. We have already got a really good relationship with ECAs and having the backing of the Japanese consortium puts us in an even stronger position.

"I expect we will be able to reach final investment decision quickly because we will be having those financing discussions concurrently with the DFS. We won't be waiting to complete the DFS, we hope to advance both in tandem."

If there's a single takeaway from Diggers and Dealers that Penkethman would like to convey, it is this: "The KNP is a globally significant asset and will be developed to be a significant source of nickel and cobalt that meets the highest ESG standards. Our product is going to be very much in demand and that will be the launching pad for the company.

"We could be the next Fortescue Metals Group, starting with the Goongarrie Hub joint venture with the Japanese, while still retaining 100% of the other KNP projects and will continue to develop those and grow the company. The company's growth could be phenomenal as the PFS has shown that we will be producing $800 million in EBITDA. Projects like that are rare - and that is for a minimum of 40 years."

ABOUT THIS COMPANY
Ardea Resources

Ardea Resources Ltd ASX: ARL

 

Head office address:

Suite 2, 45 Ord Street, West Perth, Western Australia 6005

 

Tel: +61 (0) 8 6244 5136

Email: ardea@ardearesources.com.au

Web: www.ardearesources.com.au

 

Directors and senior management:

 

Mathew Longworth (non-executive chair)

Andrew Penkethman (managing director and CEO)

Ian Buchhorn (executive director)

Maree Arnason (non-executive director)

Sam Middlemas (company secretary)

Rebecca Moylan (chief financial officer)

Matthew Read (project director)

 

Market capitalisation: $134.08 million

 

Quoted shares on issue: 172 million

 

Major shareholders:

 

Ian Buchhorn 7.8 %

Brian O'Shannassy 5.4%

 

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