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Ardea Resources Limited

Goongarrie Nickel-Cobalt Project ARL 100%

The Goongarrie Nickel-Cobalt Project is Ardea’s flagship project. The 100% owned GNCP is part of the largest Nickel Cobalt Resource in the developed world. Goongarrie is located in the tier-one mining jurisdiction of Kalgoorlie, which offers world-class infrastructure in an established mining hub.

Goongarrie is a globally significant, readily scalable project, which is being developed to become a long-term producer of high-quality nickel-cobalt sulphate.

With resource of 773 million tonnes at 0.71% Ni and 0.05% Co, Goongarrie is currently positioned as the premium nickel-cobalt project in Australia, whilst also offering significant upside with only 5% of the Kalgoorlie Nickel-Project landholding being factored in to the current resource.

Ardea is positioning Goongarrie to be a supplier of high-purity nickel and cobalt sulphate to the lithium ion battery market as the automotive electrification revolution continues to rapidly grow. The electric vehicle market is expected to account for 14% of new car sales by 2025, whilst the cobalt sulphate market is forecasted to reach US$9.5 billion by 2025.

Increased demand for cobalt sulphate is driven by the higher energy density it provides to both electric vehicle and energy storage system batteries.

Highlights

Feasibility Programs

During 2020, feasibility work streams will also extend to a project expansion study termed “WINNER”, referring to Water, Inpit Neutraliser and Nickel Enhanced Reserve study (WINNER). This initiative will leverage off Ardea’s extensive reserve and resource base additional to its flag-ship GNCP. Other projects within hauling distance, initially the Highway and Siberia North deposits, will be appraised for selective high-grade (>1% nickel) plant feed.

The aim is to optimise plant feed grades to a 2Mtpa Pressure Acid Leach (PAL) plant exceeding 1% nickel for at least the initial 15 years. Options to develop a second 2Mtpa PAL train will also be considered. Ardea is in a unique position of having this resource optionality as it has amongst the largest nickel and cobalt resources in the developed world.

During the quarter the Ardea team continued its feasibility work streams including flow-sheet development, bench-scale metallurgy, resource reporting, resource modelling, pit optimisation, mine planning reporting, ground water assessment and availability of infrastructure sites. These programs influence the planned site layout and footprint, which is a critical parameter for the approvals process.

Resource Modelling

Resource reporting was completed for the Goongarrie South, Big Four and Scotia Dam deposits that cover 19km of strike on the Goon Line nearest the proposed GNCP plant site.

The mineralisation over these deposits is remarkably consistent, occurring as a uniform goethite sheet beneath a thin surface calcrete horizon and barren lateritised alluvial cover and above a carbonated serpentine saprock basement. In the resource modelling, the “Base of Alluvium” and “Top of Saprock” are the key contacts. The goethite material between these two contacts uniformly exceeds 0.5% Ni, which fortuitously is also the mineral resource estimation cut-off grade for the GNCP.

The alluvium is comprised of clay, quartz sand, re-worked haematite clast gravel, and most importantly, an alluvial gravel cemented with nodular dolomite or magnesite containing carbonate which can be used for neutralising the autoclave acidic discharge. All alluvium variants have distinct geochemical signatures, which are the basis for interpreting the Base of Alluvium in resource modelling, as well as defining the Material Type for use in site infrastructure (road and ramp sheeting, dam liners and the like).

The nickel-cobalt laterite mineralisation is invariably associated with the hydrated iron oxide mineral, goethite, which is the preferred plant feed for this style of deposit, due to its rapid leach kinetics with excellent rheology and does not require drying or screening prior to processing (goethite is the predominant ore feed at the successful PAL operations at Goro, Moa Bay and Coral Bay).

The base of the laterite mineralisation is defined by the Top of Saprock. Saprock is an indurated weathered bedrock consisting variously of dolomite-magnesite-serpentine-silica-goethite. The hard competent saprock contrasts sharply with the overlying soft goethite mineralisation, allowing excellent visual grade control in mining.

From Q1, 2020 onwards, resource modelling efforts will move to Goongarrie Hill, located 10km north of the GNCP plant site and then move onto Highway, which is only 30km north, with ready access via the sealed Goldfields Highway, and Siberia North located 25km west along gazetted public roads.

High Grade Mine Schedule

The Life of Mine (LOM) plan and updated mining study on the GNCP deposits Goongarrie South, Big Four and Scotia Dam, has been completed and shown that plant feed grades in the first decade of operation can be maintained at in excess of 1% nickel and a resultant low acid consumption (at 262kg/t) throughout the LOM.

Following the success of this undertaking, a similar approach will be applied to the Goongarrie Hill, Highway and Siberia North block models, once available, with the aim of maintaining PAL feed grades in excess of 1% nickel for a minimum of 15 years.

On-site neutraliser testwork

The GNCP Pit Optimisation results have confirmed that neutraliser material can be sourced during the normal course of mining and stockpiled for use as autoclave neutraliser. Sourcing of neutraliser onsite is expected to result in improved outcomes for the project by eliminating the need to import either externally sourced neutraliser material and/or commercial grade carbonate product.

Water source and treatment

To further advance water sources for both the base case and expansion scenarios contemplated as part of the WINNER initiative, a gravity survey has been completed over the Papertalk West palaeo-channel target in mapped granites. This geophysical data has helped confirm the channel trends and axis and been used to plan follow-up water assessment drilling which is planned for Q1, 2020.

During the gravity survey some undocumented historic water exploration bores were located and water samples taken. The results from these samples have indicated favourable Total Dissolved Solids (TDS) values and confirm the area as a potential good quality process water source. Additionally, Ardea’s water assay suite indicated the presence of mafic rafts in the granite and anomalous gold-arsenic (Ardea has over-pegged mineral rights within its water exploration areas).

Other optimum process water related work streams include using membrane separation on select pit dewatering streams and for recycling spent process water as a cost-effective alternative to chemical-based water softening. Following highly encouraging membrane separation testwork results indicating that more expensive thermal desalination treatment is unlikely to be required and can be replaced by conventional reverse osmosis technology, a second round of testwork will be completed in the United States, during Q1, 2020.

Flowsheet

A mass balance review is continuing which is optimising the process flowsheet by incorporating the results from metallurgical testwork and includes:

All these initiatives are expected to further enhance the GNCP economics.

Environment and Approvals

The GNCP is part of the Kalgoorlie Nickel Project (KNP) and is being designed to minimise its environmental footprint. Key attributes include:

Water supply options continue to be investigated with raw water sources identified including aquifers associated with paleo-channels (within granted Ardea mining tenure) and where possible linked to pit de-watering, as well as outlying areas that are also covered by granted Ardea tenure.

The Company continues to progress its environmental knowledge base in preparation for the Definitive Feasibility Study and statutory approval lodgement.

GNCP is favoured by a benign arid environmental setting, which is much easier managed than wet tropical settings such as Indonesia, PNG and the Philippines where submarine tailings disposal or valley-fill tailings dams are most common. The benign environmental attributes favour GNCP as a future “ethical” source of the nickel and cobalt that the Electric Vehicle and Static Storage Battery industries increasingly favour.

Processing Research and Development

The GNCP continues to have unique attributes identified in Ardea Research and Development (R&D) programs, with research continuing during the December 2019 Quarter:

Geo-metallurgical/Geological Research and Development

Research has been extended to the Highway deposits, aiming to define Material Types that complement the GNCP flow-sheet. Numerous shallow high-grade nickel zones were defined in the study, which may be suited as a blended feed at GNCP. Experiments are required to evaluate the behaviour of the premium GNCP goethite ore feed when blended with other more serpentine-dominant material types.

Rare Earth Elements

Research was completed on the full Ardea drill data base, defining multiple REE laterite settings. The REE enrichment mirrors Ni-Co enrichment being at the Magnesia Discontinuity within the regolith profile. The R&D programs have focussed on REE recovery (notably cerium, neodymium and praseodymium) in parallel circuit with scandium (using Ion Exchange).

GNCP milestones since Ardea listed in 2017

Geology

Metallurgy

Project Studies

Location

(December 2019)