KNP Cobalt and Nickel

Highlights

  • Cobalt development focus in light of surging demand from tech industry
  • KNP Cobalt Zone has a JORC 2012-compliant resource of 49.7Mt at 0.12% cobalt and 0.86% nickel
  • Cobalt-enriched zones are contained within and are a subset of the broader KNP resource of 805Mt at 0.05% cobalt and 0.7% nickel, being Australia and the developed world’s largest cobalt resource
  • KNP Chrysoprase (semi-precious gemstone) mechanised bulk production opportunity identified

The breakdown for the full KNP resource categories is as follows:

Resource Category Quantity (Mt) Co (%) Ni (%)
Measured 9.6 0.081 1.02
Indicated 244.0 0.052 0.75
KNP Total Measured and Indicated 253.6 0.052 0.76
Inferred 551.7 0.046 0.68
KNP Total Resources 805.3 0.048 0.70

Cobalt focus for the Kalgoorlie Nickel Project

High-grade cobalt resource

The global KNP resource of 805Mt at 0.05% cobalt and 0.7% nickel contains within it high-grade concentrations of cobalt-rich mineralisation at Goongarrie South, Big Four, Scotia Dam, Aubils and Black Range (refer Ardea Prospectus pages 84-87 for global resource details).

An upgraded cobalt-focused global resource for the KNP was defined as 49.7Mt at 0.12% Co and 0.86% Ni (refer Heron ASX announcement 6 January 2017 for global resource details). This resource comprises a recalculation of cobalt resources at Goongarrie South, Big Four, Scotia Dam and Aubils combined with the historic resource calculated for the Black Range area as defined in the Prospectus.

This new KNP Cobalt Zone resource is comprised as follows:

Table 1 – KNP Cobalt Zone – Resource Statement from independent consultancy Ridley Mineral Resource Consulting Pty Ltd
Area Prospect Resource category Cutoff (% Co) Size (Mt) Co (%) Ni % MgO* % FeO* % Al₂O₃* % SiO₂* % CaO* % Mn* % Cr* %
Goongarrie Goongarrie South Measured 0.08 3.4 0.14 1.19 1.6 47 6.3 17 0.16 1.02 1.27
Indicated 0.08 11.2 0.11 0.92 1.8 43 6.2 23 0.78 0.71 1.20
Inferred 0.08 1.4 0.11 0.76 1.8 39 5.9 30 0.32 0.74 1.20
Big Four Indicated 0.08 4.5 0.11 0.89 1.6 40 5.3 32 0.68 0.76 1.07
Inferred 0.08 0.2 0.11 0.95 1.6 38 4.2 36 0.25 0.73 1.09
Scotia Dam Inferred 0.08 2.9 0.14 0.88 3.2 34 4.4
Goongarrie subtotal 23.6 0.12 0.94
Siberia Black Range Inferred 0.50(Ni) 20.1 0.10 0.75 7.9 28 6.7
Yerilla Aubils Inferred 0.08 6.0 0.15 0.90 6.4 33 4.7 31 4.57 0.91
KNP TOTAL 49.7 0.12 0.86
*Estimates for MgO, FeO, Al₂O₃, SiO₂, CaO, Mn and Cr are provided for reference only and do not constitute Mineral Resources

Goongarrie South

The resource estimation reviewed existing KNP 0.5% Ni cut-off grade blocks which coincidentally exceed 0.08% Co and where they define coherent mining shapes. These grade shells were subsequently trimmed on an individual wireframe basis, excluding wireframe pods with less than three mineralised drillhole intersections, except where nearby adjacent drillhole intersections demonstrate continuity of the mineralisation above the 0.08% Co cut-off grade.

The cobalt review included the Goongarrie South–Big Four–Scotia Dam resource belt. This area will clearly will be the focus of Ardea’s future cobalt program.

The current working concept is a Goongarrie South to Scotia Dam production rate of 2Mtpa at 0.12% Co and 0.94% Ni for approximately 2ktpa cobalt in intermediate product (a cobalt- and nickel-bearing manganese oxide) with in addition some 16ktpa nickel (distributed between battery feedstock and conventional nickel refinery feed). Plant site location would be at Goongarrie South at the northern end of the cobalt belt, with initial mine scheduling being a zone at Goongarrie South termed the “Pamela Jean Deeps”.

KNP, Australia’s largest cobalt resource

Containing 386,400 tonnes of contained cobalt metal, the KNP is Australia’s largest cobalt deposit. By this measure, it is more than three times larger than Australia’s second largest cobalt deposit. The newly-reported cobalt resource from the high-grade KNP Cobalt Zone is a subset of the larger KNP resource, and this subset is by itself Australia’s fourth largest cobalt resource, containing 59,600 tonnes of cobalt metal. The KNP Cobalt Zone also has one of the highest cobalt grades in Australia.

The updated resource reporting for cobalt-rich zones provides an insight into the potential to define further cobalt-rich zones in the KNP on the basis of remodeling work planned by Ardea that is focused on cobalt. Updated resource reporting on the cobalt-rich mineralisation at the KNP marks the first part of a refocusing for the KNP onto the cobalt component of the deposit.

Forthcoming drilling and metallurgical studies will move the KNP towards a PFS focusing on feedstocks for the lithium ion battery industry (Lithium Nickel Manganese Cobalt Oxide - LiNiMnCoO₂ or NMC).

The drilling focus in ranking will be the contiguous cobalt zones in the Goongarrie South belt and at Black Range and Kalpini. The drilling will secure material for bench-scale metallurgical assessment.

Semi-precious gemstones within the KNP – Chrysoprase (“Australian Jade”)

The Kalgoorlie Nickel Project is characterised by widespread occurrences of the semi-precious gemstone chrysoprase. Chrysoprase is a rare, highly valued, nickel-bearing variety of chalcedony. Colour varies from apple green to deep green, and the highest quality material is translucent. Chrysoprase is commonly known by gemologists as “Australian jade” and is often used in jewellery as a substitute for jade due to its harder wearing characteristics. Chrysoprase is highly valued in east Asia notably China.

The occurrence of chrysoprase in shallow strongly weathered horizons throughout the KNP is directly analogous to the occurrence of opal in the opal fields of Coober Pedy (SA) and Lightning Ridge (NSW). As in the opal fields, chrysoprase has developed in veins within cracks and crevices in the clay-rich host rocks. In the KNP, the highest quality, deepest green chrysoprase shows a direct spatial relationship to the cobalt- and nickel-rich parts of the orebodies. Ardea has defined five advanced stage chrysoprase pit opportunities within the KNP.

Ardea estimates open-pit mining costs of approximately $6/t with run-of-mine chrysoprase valued at approximately $8-20/kg, and gem quality in excess of $20/kg (break-even grade 1kg/t of lower quality chrysoprase). Kalgoorlie chrysoprase mining has traditionally been labour-intensive and conducted by small scale tributers. Ardea has scoped a mechanised production model using ore sorting technology.

Ardea believes an east Asia jewellery producer would be a preferred chrysoprase development partner.