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Japanese consortium backs Ardea Resources nickel DFS

Updated: Mar 27


Adrea Resources drilling at its Goongarrie Hub. Credit: File.

A powerful Japanese business consortium has thrown its substantial weight behind a definitive feasibility study (DFS) for Ardea Resources’ Goongarrie Hub nickel project in Western Australia after completing the due diligence process.


Binding final agreements for the deal with heavyweight duo, Sumitomo Metal Mining and Mitsubishi Corporation, are now expected to be completed by the end of next month after the consortium agreed to the third-party service provider scope of work and budget for the DFS. It will formalise the formation of a joint venture (JV) between Adrea and the Japanese giants.


Management says the formation of the JV will facilitate the completion of the DFS and pave the way for a final investment decision to be made. It will also aim to secure project development funding for the project, which it says has the potential to become a “globally significant producer of nickel-cobalt”.


Goongarrie Hub is a subset of six deposits within the company’s wider Kalgoorlie Nickel project (KNP) that features 854 million tonnes at a grade of 0.71per cent nickel and 0.045per cent cobalt, giving 6.1 million tonnes of contained nickel and 386,000 tonnes of contained cobalt.


Today’s news comes as the global nickel price is mounting a comeback, rebounding to about $26,650 per tonne today – a jump of more than $2500 a tonne from earlier this month.


It is pleasing to see nickel added to the Australian Critical Minerals list and the nickel sector receiving State and Federal government support. This initiative reiterates that Australia and key ally nations remain focussed on supply chain diversity and security. With the long-term fundamentals for nickel remaining strong, Ardea and the Consortium continue their proactive engagement and collaboration. Ardea Resources managing director and chief executive officer Andrew Penkethman.

The prefeasibility study (PFS) for the Goongarrie Hub project spat out some eye-watering numbers including earnings before interest, taxes, depreciation and amortization (EBITDA) of an extraordinary $800 million a year, which the company said could be sustained for a whopping 40 years.


That cash is projected to come from production modelled at about 30,000 tonnes of nickel and 2000 tonnes of cobalt a year from the open-cut mine that will exploit the shallow, flat-lying nickel laterite orebody with a strip ratio of just 1.5:1. The impressive PFS led to the Japanese consortium agreeing to fully fund the project’s DFS.


Despite the recent downturn in nickel prices, Ardea says the PFS defined direct cash costs after cobalt by-products of US$5763 (AU$8841) per tonne nickel in mixed hydroxide precipitate (MHP) over the life of the mine, which provides for a significant cash margin at the current nickel prices.


The Australian Government has shown its support for the struggling nickel sector by adding the metal to the list of critical minerals, giving companies access to the $4 billion worth of Federal Government funding aimed at promoting minerals considered vital to the world’s clean-energy transition.


In the past 60 years or so, mining companies have favoured magmatic sulphide nickel deposits due to simple downstream processing. But the frequency and size of those discoveries are dwindling.


In comparison, nickel laterite deposits such as those at the KNP are fast becoming recognised as major contributors to the clean-energy transition as the demand for nickel grows.


Nickel laterite downstream processing has advanced in leaps and bounds of late, with high-pressure acid leach (HPAL) facilities able to separate the nickel and cobalt from the ore using elevated temperatures of some 255℃ and pressures of about 725 pounds per square inch (psi).


Ardea says it plans to utilise HPAL technology at its KNP and will feed 3 million tonnes per year of its laterite ore to a HPAL facility and 500,000 tonnes annually to an atmospheric leach (AL) circuit to produce a saleable MHP for the massive global lithium-ion battery market.


The company is now one step closer to its final goals of producing a saleable product from KNP, with the big Japanese companies and the Australian Government in its corner.


ASX punters jumped on the Ardea buy side today on the back of the news and gave its share price a boost to hit 49.5c, up almost 24 per cent from yesterdays close of 40c.


Is your ASX-listed company doing something interesting? Contact: office@bullsnbears.com.au

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