Ardea Resources is charging towards a definitive feasibility study (DFS) for its Goongarrie Hub near Menzies in Western Australia, as it continues to finalise a big-name project consortium in its bid to become a globally-significant nickel-cobalt producer.
The consortium, which includes Sumitomo Metal Mining (SMM) and Mitsubishi Corporation (MC), is expected to complete due diligence by the end of February ahead of negotiating final binding agreements by the end of the first quarter. It will continue without Mitsui & Co., as the Japanese company has decided to exit the venture.
Ardea says an agreed timeline extension for discussion on the DFS scope has allowed important site visits and technical meetings with SMM and MC, resulting in significant progress being made on critical workstreams. It says the consortium has now distilled the DFS into six key work packages – process plant, non-process infrastructure, approvals, geology, mining and hydrogeology – with package contents being put out to tender ahead of budgeting.
Management says future work is aimed at completing the DFS, making a final investment decision (FID) and securing project development funding for the Goongarrie Hub, which it believes has the potential to become a globally significant producer of nickel-cobalt.
Commercial discussions are proceeding well, with key considerations being covered from DFS funding, through to securing project development capital to enable project construction and achieve steady state nickel-cobalt production, from within the best resources operating jurisdiction in the world. Ardea and the Consortium look forward to executing Final Agreements and keeping all stakeholders informed on their progress.
Ardea Resources managing director and chief executive officer Andrew Penkethman.
In July this year, Ardea released a prefeasibility study (PFS) on Goongarrie Hub, which is part of its wider Kalgoorlie nickel project (KNP), quoting numbers that raised eyebrows across the market. The study suggests the $3.1 billion building cost can be paid back in just 3.1 years through a bulging EBITDA of $800 million a year – a number that will be maintained for 40 years.
The cash will come from a projected production of about 30,000 tonnes of nickel and 2000 tonnes of cobalt a year from an open-cut mine accessing 194.1 million tonnes of ore averaging grades of 0.7 per cent nickel and 0.05 per cent cobalt and giving 1.36 million tonnes of contained nickel and 99,000 tonnes of contained cobalt. The ore bodies, of which there are six, are shallow and flat-lying and boast a low strip ratio of 1.5:1.
It will be fed to a 3-million-tonne per annum high-pressure acid leach (HPAL) and a 500,000-tonne per annum atmospheric leach (AL) circuit to produce a mixed hydroxide product (MHP) that will be saleable to the massive global lithium-ion battery market.
Ardea says the consortium has reaffirmed its commitment to the KNP and is working collaboratively towards the execution of final agreements ahead of formally commencing DFS work as efficiently as possible next year. The extended timeframe will allow Ardea to continue discussions with other interested parties until the end of the due diligence process.
The KNP is a nickel laterite play rather than a traditional nickel sulphide project. About 70 per cent of the world’s nickel reserves are found in the form of laterites, which are essentially mineral enriched soils, but a great portion of the reserves have remained untapped due to complexities in downstream processing.
As nickel-sulphide ore resources dwindle, processing of lateritic nickel ores is becoming more necessary, with many investors recognising them as the future of the nickel industry.
However, the processing of laterites is now much better understood than even just a few years ago and the technology front has moved ahead in leaps and bounds. That gives the market the confidence that downstream processing can keep up with the huge global demand for the metal.
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