Ardea Resources has released the results of an expansion study on its flagship Goongarrie nickel-cobalt project, significantly improving the value of the project.
Ardea Resources (ASX:ARL) has released the results of an expansion study on its flagship Goongarrie nickel-cobalt project that significantly improves the value of the development-stage project in Western Australia.
Billed by Ardea as “the largest cobalt resource in the developed world,” Goongarrie is being positioned by the company to be a supplier of high-grade cobalt and nickel sulfate to the lithium ion battery market.
The study was an expansion on the previously released pre-feasibility study that showed Goongarrie would be an economically viable multi-decade producer of nickel and cobalt with a 25-year mine life and an annual ore production of 1 million tonnes per annum.
The expansion study blew that capacity out to 2.25 million tonnes per year, improving value of the project, the rate of return, and the payback period compared to the initial pre-feasibility study.
“The purpose of the 2.25 million tonnes per year Goongarrie expansion study was to investigate the optimal throughput that could be achieved using one autoclave processing train. The positive results reflect the favorable metallurgical characteristics of the Goongarrie orebody, which enables extremely short residence time in the autoclave, with no significant loss in metal recovery,” said Ardea in its press release.
“These outstanding metallurgical characteristics and rheology have resulted in an extremely robust unleveraged pre-tax net present value (NPV) of approximately AU$3.1 billion, with a pre-tax internal rate of return (IRR) of approximately 31 percent and a rapid payback period of 5.1 years for a 2.25 million tonne per annum operation.”
The company added that the 2.25 million tonne per annum startup option “can easily be expanded by adding modular processing trains to take advantage of the full scale of Goongarrie’s world-class resource base.”
Executive chair of Ardea, Katina Law, said that the company was pleased with the results of the study.
“The primary goal of the company is to determine a cost-effective startup scenario and also provide an upside case more suited to a financier or partner seeking a long life, lower cost, sustainable production base in a stable jurisdiction.
“The results have shown the benefits of scale, demonstrating Goongarrie as a unique battery metals project that can become a significant global producer over a long life.”
According to Ardea, the project would require an initial capital cost of AU$1.165 billion including a 20 percent contingency.
The project would have a C1 cash cost of US$4.63 per pound of nickel metal, and a C1 cash cost of US$0.34 after cobalt credits.
The company said that was a definitive feasibility study underway including a 7.5 tonne pilot run.
The Goongarrie nickel-cobalt project area includes five resources that add up to 215.6 million tonnes grading on average 0.06 percent cobalt for 130,700 tonnes of contained cobalt, and grading 0.71 percent nickel for 1,522,700 tonnes of contained nickel.
On the Australian Securities Exchange, Ardea Resources was trading down 6.98 percent at AU$0.8.
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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.