Timing is everything for Japanese-backed nickel developer Ardea

The RIU Explorers Conference in Fremantle last week was dominated by gold stories, with only Centaurus Metals, Chalice Mining and Ardea Resources left to fly the flag for the nickel developers.

Ardea is advancing the Goongarrie Hub at the Kalgoorlie nickel project, a large-scale laterite project.

In mid-2023, Ardea released a prefeasibility study and last year, officially welcomed Japanese giants Sumitomo Metal Mining and Mitsubishi Corporation as project partners.

“Working with industry giants like Sumitomo and Mitsubishi, you can see there’s a pathway to project development funding on very competitive terms on a global basis,” Ardea managing director Andrew Penkethman told the conference last week.

Earlier this month, Ardea hosted a site visit for the Japanese Ministry of Economy, Trade and Industry (METI) and the Japan Organization for Metals and Energy Security (JOGMEC).

“METI is helping the consortium fund the DFS so we’ve already got direct input from the Japanese government,” Penkethman said.

“The Goongarrie Hub has been recognised as a globally significant critical minerals collaboration between Australia and Japan and we look forward to continuing to grow that relationship and advance this project.”

DFS advancing

Mitsubishi and Sumitomo are fully funding the A$98.5 million definitive feasibility study, which is due to be completed later this year.

“The key behind the DFS is quality. We could do a pump-up-the-tyres DFS for A$20 million or A$30 million but this is a globally significant project and it has to be done to a high standard,” Penkethman said.

“It has to reflect the quality and scale of the project.”

The Japanese partners can earn 35% of the project by funding the DFS and can move to 50% when a final investment decision is made.

Ardea and its partners have assembled an in-house team of 40 people to work on the DFS.

The 2023 PFS looked at throughput of 3.5 million tonnes per annum to produce around 30,000tpa nickel and 2000tpa cobalt at C1 costs of US$5763 per tonne including cobalt by-product credits.

“If we look at it ultra conservatively, on a nickel-only basis, it’s about US$10,000/t,” Penkethman said.

“If we look at the existing operating costs for the producers out of Indonesia, it shows their opex between about US$5000/t and US$15,000/t, so you can see we compare very competitively with our global peers and we must see supply chain diversity and security and that’s demonstrated by the collaboration between Australia and Japan.”

The PFS was based on a reserve of 194.1Mt at 0.7% nickel and 0.05% cobalt for 1.36Mt of contained nickel and 99,000t of cobalt, equating to a mine life of at least 40 years.

The reserve covers six of the project’s nine known deposits, all of which sit on granted mining leases.

The DFS is looking at increasing throughput to 4Mtpa.

The base case flow sheet is two high-pressure acid leach autoclaves and an atmospheric leach circuit.

“It’s all known, well-established proven technology but most importantly, we’ve got the input from Sumitomo Metal Mining and their expertise in developing two nickel laterite operations in the Philippines,” Penkethman said.

The project is expected to have a low strip ratio, with mining accounting for just 12% of operating costs.

The Goongarrie ore is 69% premium goethite, which is soft, has good leach characteristics and low acid consumption.

“Every mineral deposit is different, whether it be gold, nickel or iron ore, and it’s the unique attributes to Goongarrie that enable us to be cost competitive on a global basis,” Penkethman said.

“So that gives us a head start among most of our peers.”

The company also made a technological breakthrough, with the magnesium-rich material in the orebody to be used as a mineralised neutraliser of the acid discharge, eliminating the need to import lime.

“That’s unique to our project,” Penkethman said. “We’ve got an international patent pending on that technology.”

The project also benefits from its location, being close to roads, rail and power.

“It’s everything we need to rapidly advance the project.”

Nickel market to improve

Last year marked a wipeout of Australia’s nickel sector, with Glencore’s Murrin Murrin now the only remaining operation.

The nickel price is trading at cyclical lows of around US$15,000/t.

Demand is still rising but it’s being outpaced by an influx of new lower-cost supply from Indonesia.

“The nickel market is expected to move back into deficit later this decade,” Penkethman said. “That timing is perfect with our expected run into production in 2029.

“Our Goongarrie Hub is cost competitive throughout the commodity price cycle and when the market inevitably turns, we will be advancing this project at a rapid rate to take advantage of that increased nickel demand.”