A cluster of professional and sophisticated investors has ploughed $16 million into Ardea Resources to help fast-track a definitive feasibility study (DFS) into the company’s Goongarrie Hub nickel-cobalt play near Menzies in Western Australia.
In a timely reacquaintance with previously-established dance partner and lead manager Petra Capital, Ardea tapped into the stockbroking firm’s coveted investor client list to raise the funds, which will also be used to advance critical mineral exploration and finalise strategic partner agreements.
Under the placement, Ardea issued just over 22,767,000 new shares at 70 cents each, representing just a 6.7 per cent discount to the last traded price and a mere 2.2 per cent discount to the 15-day volume-weighted average price.
Ardea’s cornerstone investor, Singapore-based Golden Energy and Resources, will bump up its holding to 9.4 per cent following the completion of the placement.
As equity has recently dried up amid a backdrop of persistent interest rate hikes, global inflation and murmurings of a recession, the company’s latest capital raising was no easy feat, but provides a clear vote of confidence in its biblical-scale project.
The budding miner tabled an array of impressive figures early last month from a prefeasibility study (PFS) on its Goongarrie Hub that is part of its Kalgoorlie nickel project (KNP). It raised more than a few pundits’ eyebrows and hurtled its share price up to 68c from 44c.
Ardea says its project will cost a touch more than $3.1 billion to build, but remarkably, it says the project can pay that number down in just 3.1 years. Its PFS predicts a whopping $800 million a year in EBITDA for at least 40 years.
Management has projected production of about 30,000 tonnes of nickel and 2000 tonnes of cobalt a year from an ore reserve of 194.1 million tonnes averaging 0.7 per cent nickel and 0.05 per cent cobalt for 1.36 million tonnes of contained nickel and 99,000 tonnes of contained cobalt.
The company’s nickel-rich laterite will feed into 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) to meet the ever-growing demands of the lithium-ion battery market.
The study’s preliminary estimate suggests direct cash costs after cobalt by-products of US$3763 (AU$5652) per tonne nickel in MHP during the first five years of operation and US$5763 (AU$8657) per tonne nickel in MHP over the life of the mine.
Ardea’s striking numbers have garnered the attention of a first-class Japanese consortium – consisting of Sumitomo Metal Mining (SMM), Mitsubishi and Mitsui & Co. Collectively, the trio has signed a non-binding memorandum of understanding to partner with Ardea to fully fund a definitive feasibility study (DFS), with a scope of work to be agreed on by the end of this quarter.
Dependent upon the findings of the DFS, Ardea and the consortium will work towards making a final investment decision and securing project development funding, with a focus on Australian and foreign government-backed Export Credit Agency long-tenor, low-interest rate loans.
The consortium will ultimately position for a sizable interest in a future joint venture that will develop and operate the KNP Goongarrie Hub, in addition to nailing down offtake agreements for the final in-demand battery metals.
With the till topped up to the tune of $16 million, Ardea has positioned itself to neatly ride out the skittish equity markets and focus on delivering on its much-anticipated DFS. Laying claim to Australia’s biggest nickel-cobalt resource is no doubt an added bonus.
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