Ardea Resources Limited

Ardea Resources Limited is an Australian mining company focused on developing its flagship Kalgoorlie Nickel Project (KNP),specifically the Goongarrie Hub in Western Australia. The company controls a globally significant nickel-cobalt resource with a total Mineral Resource Estimate (MRE) of 854Mt at 0.71% nickel and 0.045% cobalt, containing 6.1Mt of nickel and 386kt of cobalt. The Goongarrie Hub component represents 584Mt of this resource, containing 4Mt of nickel and 250kt of cobalt.

The investment opportunity is centred on Ardea's potential to become a major supplier of battery metals at a crucial time in the electric vehicle (EV) and battery energy storage revolution. Several factors make this compelling:

First, the project benefits from its location in Western Australia, one of the world's premier mining jurisdictions with excellent infrastructure and skilled workforce availability. The Goongarrie Hub's Pre-Feasibility Study (PFS) demonstrates strong economics with a post-tax NPV7 of A$4.98 billion and IRR of 23%, based on a 40+ year mine life producing approximately 30,000 tonnes of nickel and 2,000 tonnes of cobalt annually. [i]

Second, the project's timing aligns well with forecast nickel market dynamics. While current market conditions show a surplus, projections indicate a significant supply deficit emerging from 2028 onwards, coinciding with Goongarrie's planned production timeline. Battery demand is expected to grow seven-fold by 2040, with high-nickel cathodes gaining market share.

Third, the project demonstrates competitive operating costs, with C1 costs after cobalt credits of US$5,763/t nickel, positioning it favourably against both existing producers and Indonesian projects.

[i]  Ardea ASX PFS release 5 July 2023

The company is led by an experienced board and management team with relevant technical and corporate expertise. Managing Director and CEO Andrew Penkethman brings significant geological and corporate experience, including work across ASX, TSX, and AIM markets. Non-Executive Chair Mat Longworth provides valuable project evaluation experience, while Executive Director Ian Buchhorn contributes extensive geological and mineral economics expertise in the Eastern Goldfields region. Non-Executive Director, Maree Arnason, contributes extensive natural resources, energy and manufacturing sector experience. Recently appointed Executive Director Michael Rodriguez will be contributing his extensive Definitive Feasibility Study (DFS), project development and operations experience in delivering the optimum DFS for the Kalgoorlie Nickel Project – Goongarrie Hub.

Ardea's growth strategy centres on three key elements:

• Advancing the Goongarrie Hub through DFS phase, fully funded by strategic partners Sumitomo Metal Mining (SMM) and Mitsubishi Corporation (MC). The A$98.5M DFS funding agreement demonstrates strong validation from established industry players.
• Leveraging the broader KNP resource base beyond Goongarrie Hub. The company maintains 100% ownership of significant resources at Kalpini Hub and Yerilla projects, providing future growth options.
• Exploring additional value through complementary opportunities, including nickel sulphide potential at Emu Lake and scandium/rare earth elements at Kalpini.

The company's financial position is solid, with A$13.2M cash as of 31 December 2024 and no debt. The strategic partnership with SMM and MC provides full funding for the DFS, with the consortium earning a 35% interest (potentially increasing to 50% upon Final Investment Decision). The 2023 PFS estimated capital costs for the project of A$3.117B, with strong projected financial metrics including average annual EBITDA of A$800M and payback within 3.1 years.

The project's economics are robust across various nickel price scenarios, supported by significant cobalt credits and competitive operating costs. The large resource base supports a multi-decade operation, providing substantial optionality and potential for expansion.

Ardea Resources represents a compelling investment opportunity in the battery metals sector. The combination of world-class resource scale, strong project economics, strategic partnerships, and favourable timing relative to market dynamics creates significant potential for value creation. The management team's experience and focus on ESG considerations further enhance the investment case.

While development risks exist, these are mitigated by the involvement of high-quality partners and the project's robust fundamentals. The current market capitalisation of ~A$77M appears to significantly discount the project's potential value, particularly considering the post-tax NPV of A$4.98B and strategic optionality from the broader resource base.

For investors seeking exposure to the battery metals thematic with a focus on quality assets in tier-one jurisdictions, Ardea Resources offers an attractive risk-reward proposition at current levels. The partnership with SMM and MC (together the Consortium) provides strong validation and significantly de-risks the path to development.

The Consortium has received support under Japanese Ministry of Economy, Trade and Industry (METI) Critical Minerals Supply Security Plan, further validating its global significance.

Nickel is essential to the energy transition.  High nickel content batteries are essential for EV and energy storage needs. The low-cost multi-decade supply of nickel from the KNP Goongarrie Hub will be a critical part of the sustainable supply chain.