Ardea strikes deal for $3.18bn nickel project

Ardea Resources has signed a memorandum of understanding with a Japanese consortium to develop a sub-set of its Kalgoorlie nickel project after tabling a price tag of $3.18 billion.

The West Perth-based company struck the deal with a consortium of three Japanese companies – Sumitomo Metal Mining, Mitsubishi Corporation and Mitsui & Co – to develop a division of its Kalgoorlie nickel project in the eastern Goldfields.

Sumitomo Metal Mining is a nickel and cobalt development and production company, while Mitsubishi Corporation and Mitsui & Co are two of Japan’s largest trading firms.

The Kalgoorlie nickel project contains a series of critical minerals deposits that Ardea claims contains the largest nickel-cobalt resources in the world, with 6.1 million tonnes of contained nickel and 380,000 tonnes of contained cobalt.

The project is sub-divided into three geographic areas: the Goongarrie Hub, Kalpini Hub and the Yerilla Hub.

The MoU announcement followed Ardea releasing its pre-feasibility study for the Goongarrie Hub, under which it tabled a $3.18 billion capital cost estimate to develop the open-pit mining operation and infrastructure.

Its pre-feasibility study for the Goongarrie Hub predicted an average annual EBITA of $800 million, with a total mine life estimate of 40 years. 

Under the non-binding MoU, the Japanese consortium will fund the Goongarrie Hub definitive feasibility study after defining the scope of work at the end of this quarter. 

Following the completion of the DFS, Ardea and its Japanese counterparts will work towards making a final investment decision and securing project development funding.

The consortium is also expected to earn a significant interest in a proposed joint venture to develop and operate the Goongarrie hub, and it would have certain offtake rights if and when it comes online.

The deal provides a framework for the two parties to negotiate a binding agreement to complete the Kalgoorlie nickel project’s definitive feasibility study, make a final investment decision and jointly secure project development funding.

“The Ardea team will be working with well-regarded and experienced partners who recognise the global significance of the Kalgoorlie nickel project to the renewable energy supply chain and see the development advantages derived from our location within the best resources operating jurisdiction in the world,” managing director Andrew Penkethman said.

“Sumitomo Metal Mining are most successful in developing and operating nickel-cobalt laterite operations, while Mitsubishi and Mitsui have decades of project development and operations experience in Australia and globally.

“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.”

Ardea said the state government had been supportive of the two parties developing the project.

Mines Minister Bill Johnston said the state government welcomed the signing of the MOU between Ardea and a consortium of prominent Japanese companies.

“The Western Australia government recognises nickel as a critical mineral integral to the global decarbonisation effort,” he said.

“As Australia’s only, and the world’s fifth largest producer of nickel, we look forward to such a resource being exploited in a responsible manner to the benefit of all Western Australians and many more people.

“Of course, in-line with the Cook government’s battery and critical minerals strategy, we look on with keen interest at how the DFS progresses and the potential pathways assessed for downstream processing in WA.”

The announcement sent Ardea's share price soaring up 51.685 per cent at market close.