Redefining the Mining Frontier: Ardea Resources'(ASX:ARL) Leap into Nickel and Cobalt with CEO Andrew Penkethman
May 09, 2024Season 1Episode 4
Andrew Musgrave
Prepare to have your mind expanded as Andrew Penkethman, Ardea Resources visionary CEO, joins us to unveil the future of nickel and cobalt exploration. We're diving headfirst into the heart of Australia's resource innovation, where Andrew lays out the thrilling developments of the Kalgoorlie Nickel Project. This isn't just any mine; it's a beacon of economic potential with a staggering 40-year life expectancy and robust production figures that will undoubtedly redefine industry standards.
When giants in the industry align, you know something monumental is on the horizon. The episode shines a spotlight on the groundbreaking partnership between Ardea, Sumitomo Metal Mining, and Mitsubishi Corporation, a collaboration that spells a new era for mining and for Ardea's ascension in the critical minerals sector. With a fully funded budget and a definitive feasibility study underway, this conversation is a rare glimpse into the strategic moves shaping Ardea's trajectory to become a formidable force in global markets. Tune in and be part of a narrative that's crafting history beneath our feet.
Prepare to have your mind expanded as Andrew Penkethman, Ardea Resources visionary CEO, joins us to unveil the future of nickel and cobalt exploration. We're diving headfirst into the heart of Australia's resource innovation, where Andrew lays out the thrilling developments of the Kalgoorlie Nickel Project. This isn't just any mine; it's a beacon of economic potential with a staggering 40-year life expectancy and robust production figures that will undoubtedly redefine industry standards.
When giants in the industry align, you know something monumental is on the horizon. The episode shines a spotlight on the groundbreaking partnership between Ardea, Sumitomo Metal Mining, and Mitsubishi Corporation, a collaboration that spells a new era for mining and for Ardea's ascension in the critical minerals sector. With a fully funded budget and a definitive feasibility study underway, this conversation is a rare glimpse into the strategic moves shaping Ardea's trajectory to become a formidable force in global markets. Tune in and be part of a narrative that's crafting history beneath our feet.
Andrew Musgrave:
Welcome to another episode of ASX Briefs. I'm your host, andrew Musgrave, and today we're speaking with Andrew Penkethman, the CEO of Ardea Resources. Ardea is making waves in the mining industry with their innovative approach to nickel and cobalt exploration, particularly through their flagship Kalgoorlie nickel project. We'll explore the company's recent developments, their strategic partnerships and what the future holds for the company. Andrew, thanks for joining us today and welcome to the asx briefs podcast thanks for having me, andrew, and great to be in touch now to kick things off.
Andrew Musgrave:
Obviously there's been plenty of activity recently. If you can just give us an overview of our day and share some of the highlights from your recent operations, so Daya is an ASX listed company with the ticker code ARL.
Andrew Penkethman:
Our flagship project, as you mentioned, is the Kalgoorlie Nickel Project, which is the largest nickel cobalt resource in Australia and the seventh largest in the world. The largest nickel cobalt resource in Australia and the seventh largest in the world. Our most advanced asset within the KMP is the Goongarri Hub and we've recently announced the execution of a cooperation agreement with Sumitomo Middle Mining and Mitsubishi Corporation to form an incorporated joint venture to develop the Goongari Hub, commencing with a definitive feasibility study with a budget of $98.5 million, which will be fully funded by Sumitomo and Mitsubishi.
Andrew Musgrave:
Very good Now with the nickel project. Obviously that's the centrepiece of the company. What's the current status of the project and the key focuses of its development?
Andrew Penkethman:
So the Goongari Hub we completed a pre-feasibility study and announced that on the ASX on the 5th of July 2023, and that defined a robust, compelling project development.
Andrew Penkethman:
That defined a robust, compelling project development. So we defined an ore reserve for over 40 years 1.3 million tonnes of contained nickel and the average annual nickel cobalt production is 30,000 tonnes of nickel, 2,000 tonnes of cobalt nickel, 2,000 tonnes of cobalt and we were processing 3.5 million tonnes per annum through two 1.5 million tonne per annum autoclaves and a half a million tonne per annum atmospheric leach circuit. And because of the unique attributes of the Goongari girthite ore, it is able to support a very cost-competitive project. So, with operating costs allowing for the cobalt by-product credit the C1 OPEX, of under US$6,000 a tonne, we compare that to today's nickel price of about US$19,000 a tonne, and then if we compare that to some of the nickel production coming out of Indonesia, where benchmark minerals intelligent forecasts that their operating costs range between US$5,000 and US$15,000 a tonne for a range of nickel products, you can see that we are located in the bottom cost quartile and we'll be able to operate throughout the commodity price cycle.
Andrew Musgrave:
And with any mining development. Obviously you need strategic partnerships. So you touched on those with Sumitomo Metal Mining and Mitsubishi Corporation. Can you just tell us a little bit more about those partnerships and their impact on the project?
Andrew Penkethman:
So Sumitomo Metal Mining have a very long history in the resources sector, particularly through mining and processing, and they're very well respected throughout the industry through the high standards they set.
Andrew Penkethman:
In my opinion, they're the most successful project developer and operator of nickel ladderite operations. They are currently operating the Coral Bay and Taganito operations, both located in the Philippines. Both projects ramped up to achieve over 100% of nameplate capacity in under 12 months of being commissioned and their track record of success and level of detail is arguably second to none. Then, with Mitsubishi Corporation, a household name, they're one of the largest companies in the world Market capitalisation of in excess of 90 billion US. They have been investing and contributing to the Australian resources sector for many decades and have been an integral part in helping establish Australia's successful iron ore and natural gas sectors. And To see both companies involved in the Australian critical minerals space by partnering with Ardea on our Kalgoorlie Nickel Project Goongari Hub, it's just a massive enabler for a company like Ardea, and the Japanese bring that combination of technical experience, australian experience and nickel ladderite expertise, so we feel they are very much the perfect partners.
Andrew Musgrave:
Now, just in relation to the deal that you've got with the Japanese consortiums. Can you just go into a little bit more detail on how that will work?
Andrew Penkethman:
Absolutely so. Initially, sumitomo Metal Mining and Mitsubishi Corporation will be fully funding the definitive feasibility study with an agreed budget of $98.5 million Australian. Upon 50% of the DFS being complete, they will be issued a 17.5% interest in Kalgoorlie Nickel Pty Ltd, the wholly owned subsidiary company of Ardaya that holds the Goongari Hub. Upon completing the DFS and having expended $98.5 million, the Japanese consortium will be awarded another 17.5% interest in KMPL to hold a total of 35%. Interest in KNPL to hold a total of 35%. The Japanese consortium will be leading the project development debt discussions with various export credit agencies around the world and with their industry contacts, particularly in Japan.
Andrew Penkethman:
We anticipate having access to the cheapest project development debt in the world and upon a final investment decision being made by both Ardea and the Japanese consortium, the Japanese will then earn another 15% project interest to take their total shareholding up to 50%. But having that linked to making the final investment decision and signing off on the loan documents is absolute project enabler, because a company our day's size to look at funding and developing such a large project on its own could be considered a challenge. But by partnering with two incredibly experienced, technical and financially strong companies in Sumitomo Metal Mining and Mitsubishi Corporation. We remove that risk and we have access to, as I mentioned, the cheapest project development debt in the world and that will be the essential project enabler. And at that point the Japanese consortium will crystallise their 50% project interest.
Andrew Musgrave:
And you touched on the definitive feasibility study. So what are the main components of the DFS and what timelines have you got from a completion perspective?
Andrew Penkethman:
So the DFS has been broken into six key work areas. So we've got the non-process infrastructure, such as access, roads, offices and accommodation on site, the process infrastructure, which is the largest component, the process infrastructure, which is the largest component. And then we've got geology, mining, hydrogeology and approvals. The budget for the DFS is $98.5 million and the DFS will be completed to a very high standard and to a 30% level of engineering and will take 18 months to complete.
Andrew Musgrave:
All right. And if we look at things, I guess, from a more macro perspective, the Australian government in particular has been putting a lot of focus on the critical minerals list and given the recent addition of nickel to that list, what do you see as the market dynamics for both nickel and cobalt evolving, especially with the rise of renewables and electric vehicles?
Andrew Penkethman:
I think the outlook for nickel in particular has never been better. The fundamentals haven't changed with the energy transition and all the future forecasts see that future demand outstripping supply from about 2028 onwards and the nickel market moving into a strong deficit. So we think our timing to come into production in 2029 is outstanding, with the future projected increase increasing demand for nickel. Cobalt similarly will play an increasing role in the energy transition. But first and foremost we're a nickel project with a very handy cobalt by-product credit.
Andrew Musgrave:
Aside from the nickel project, does Ardaio have any plans for any new projects or further exploration?
Andrew Penkethman:
Look, there's a number of opportunities to add additional value. There's other known critical minerals within the laterite profile, such as scandium, and, depending on the future growth In the scandium market, that is a by-product we could look at producing. We've also identified a large number of critical mineral exploration targets, ranging from nickel sulphides through to rare earths on other projects that Adaya retains within the Kalgoorlie Nickel Project. So to put that into perspective, the Kalgoorlie Nickel Project hosts about 6 million tonnes of contained nickel. The Goongari Hub, where the Japanese consortium will be earning a 50% interest, hosts 4 million tonnes of contained nickel, and then we've got the other KMP projects hosting 2 million tonnes of contained nickel. So we've got the other KMP projects hosting two million tonnes of contained nickel. So we've got our own internal pipeline of growth opportunities and our day will retain 100% of the non-Goongari hub projects.
Andrew Musgrave:
Okay, and I think just to wrap things up, any final thoughts for the 2024 outlook for shareholders, things up Any final thoughts for the 2024 outlook for shareholders?
Andrew Penkethman:
Yeah, there'll be incredibly strong news flow with the multiple DFS work streams and then, obviously, our day has the other KMP projects. We are in a very strong position in terms of our tenement position in the eastern goldfields of Western Australia. It's very rare real estate, it's very valuable real estate and for a company of our size to have this optionality. It's an incredibly exciting year ahead and we've set the company up by partnering with the Japanese consortium to realise the full potential of the Goongari hub and then go on to realise the potential of the remaining Calgouli Nickel project tenements.
Andrew Musgrave:
All right. Well, thanks for your time today, Andrew. There's obviously plenty of positive news in the market at the moment, which is great for the company, and we look forward to further updates from Addaio Resources in the coming months.