PERTH (miningweekly.com) – ASX-listed Ardea Resources has signed a non-binding memorandum of understanding (MoU) with a consortium of Japanese companies to potentially develop the A$3.1-billion Kalgoorlie nickel project (KNP) Goongarrie Hub, in Western Australia.

A prefeasibility study (PFS) released on Wednesday estimated a capital cost of A$3.1-billion to develop, including a A$2.2-billion spend on process plant and infrastructure.

Ardea Resources told shareholders that the PFS estimated that the project could produce 30 000 t/y of nickel and 2 000 t/y of cobalt over a mine life of more than 40 years, generating nickle revenues of A$44-billion and cobalt revenues of A$7.8-billion.

The PFS estimated a net present value of A$4.98-billion and an internal rate of return of 23%, with the project’s pay-back period estimated at just over three years, based on a nickel price of $25 000/t and a cobalt price of $60 000/t.

“The ore reserve defined for the KNP Goongarrie Hub is 194.1-million tonnes at 0.70% nickel and 0.05% cobalt for 1.36-million tonnes of contained nickel and 99 000 t of contained cobalt to sustain a minimum 40-year mine life. However, the PFS did not include the adjoining mineral resources at Ghost Rocks, Siberia South and Black Range that are expected to provide the opportunity to further expand the mine life or facilitate increased production rates,” said Ardea MD and CEO Andrew Penkethman.

“Projects of the scale of the KNP Goongarrie Hub, with a mine life measured in decades, located within a premier resource development and operating jurisdiction, are rare and are therefore globally significant, strategic assets which must be developed to help provide the essential battery and critical minerals required to underpin the required energy transition, accelerate the move to electric vehicles and achieve global climate targets.

“There has never been a better time for a megaproject, such as the KNP Goongarrie Hub, to advance financing discussions, as governments around the world continue to expand their commitment to providing long tenor, low interest rate Export Credit Agency debt to accelerate the development of battery and critical minerals projects that meet the highest environmental, social and governance standards in low-risk-country jurisdictions,” said Penkethman.

“This PFS provides the ideal platform to move forthwith into the definitive feasibility study (DFS) phase to continue to advance this world-significant asset toward development and multi-decade production.”

The DFS is expected to take 12 to 15 months to complete and is targeted for the first quarter of 2025. The project execution phase is tentatively targeted for the third quarter of 2025, allowing for production by early 2028.

Ardea on Wednesday also announced the MoU with the consortium, which included Sumitomo Metal Mining, Mitsubishi Corporation, and Mitsui & Co.

The MoU provides a framework for the consortium and Ardea to negotiate a binding agreement to complete the KNP Goongarrie Hub DFS, make a final investment decision and jointly secure project development funding to develop this globally significant nickel/cobalt resource.

The consortium will look to, ultimately, earn a significant interest in a joint venture (JV) which will develop and operate the KNP Goongarrie Hub and will have certain off-take rights.The terms of a proposed JV have not been agreed and are to be negotiated between Ardea and the consortium.

The two parties have agreed certain exclusivity arrangements, which end before the end of the fourth quarter this year, subject to transaction timelines being met. Under the exclusivity provisions, Ardea may continue discussions with other interested parties that have commenced due diligence under the strategic partner process until the consortium completes its due diligence, with expected completion before the end of the third quarter of 2023.

“Australia and Japan have particularly strong geopolitical alignment, with enduring successful business relationships. Japan has been integral to the development of Australia’s iron-ore, natural gas, and coal sectors for the benefit of both nations,” said Penkethman.

“We look forward to Ardea and the KNP Goongarrie Hub joining the successful Australia and Japan project development model and welcome the contribution of the consortium in developing Ardea’s battery and critical minerals projects.”