Ardea Resources (ASX:ARL) -Japanese Back Australia's Largest Nickel Project

Feb 25, 2025

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Interview with Andrew Penkethman, MD & CEO of Ardea Resources Ltd.

Our previous interview: https://www.cruxinvestor.com/posts/ardea-resources-asx-arl-bigger-than-the-picture-they-framed-us-to-see-238

Recording date: 24th February 2025

Ardea Resources (ASX: ARL) is making significant progress on its Goongarrie Hub, part of the Kalgoorlie Nickel Project, which contains 4.1 million tons of nickel and represents Australia's largest nickel-cobalt resource.

The company has secured a strategic partnership with Japanese industrial giants Sumitomo Metal Mining and Mitsubishi Corporation, who will collectively invest $98.5 million to earn a 35% stake in the project. The final 15% will be issued upon a successful final investment decision, expected in Q1 2027.

According to CEO Andrew Penkethman, the Goongarrie Hub is projected to produce approximately 30,000 tons of nickel and 2,000 tons of cobalt annually as a mixed hydroxide precipitate (MHP), with an estimated 40-year mine life. The project's Definitive Feasibility Study (DFS) is currently about 50% complete and expected to be finalized by late 2025, with production targeted to begin in 2029.

The initial capital expenditure was estimated at AU$3.1 billion (approximately US$2 billion) in the 2023 Pre-Feasibility Study. Despite current low nickel prices of around $15,000 per ton, Penkethman emphasized that the project remains economically viable due to its scale, grade, and strategic location with existing infrastructure access.

The partnership with Sumitomo and Mitsubishi brings more than just capital. It secures offtake agreements, with 75% of production allocated to the consortium partners, significantly enhancing bankability for future project financing. The company is also exploring financing tools including export credit agencies from both Australia and Japan, offtake prepayments, and potential government grants.

Ardea's timing for production aligns with independent forecasts predicting a return to market deficit for nickel around 2029-2030. The company positions itself as an alternative to Indonesian production, which is dominated by Chinese-funded operations. Penkethman noted that major economies including Japan, the United States, South Korea, India, and the European Union are actively seeking diversity of supply and supply chain security.

Despite the substantial strategic investment, Ardea's market capitalization remains around AU$100 million. The company maintains a concentrated shareholder base, with approximately 60% of shares held by about 40 shareholders, including Golden Energy and Resources, which holds more than 5%.

Beyond the six deposits included in the current DFS, Ardea retains growth potential with three additional deposits within the Goongarrie Hub and 100% ownership of other projects containing approximately 2 million tons of nickel within the broader Kalgoorlie Nickel Project portfolio.

View Ardea Resources' company profile: https://www.cruxinvestor.com/companies/ardea-resources-limited