Ardea Resources (ASX:ARL) has released results of an independent AACE Class 5 Scoping Study evaluating the economic potential of a Scandium Recovery Circuit (SRC) integrated within the proposed Kalgoorlie Nickel Project – Goongarrie Hub High Pressure Acid Leach (HPAL) processing facility, returning a Net Present Value of US$509.8 million and an Internal Rate of Return of 59.6% at a 7% cost of capital.

Key Points

  • The Scoping Study was commissioned and managed by Ardea and completed by Elemental Engineering Australia Pty Ltd to an AACE Class 5 level of engineering definition.
  • The proposed Scandium Recovery Circuit requires an estimated capital investment of US$73.5 million, with a Net Present Value of US$509.8 million and IRR of 59.6% at a 7% cost of capital.
  • Ion exchange was selected as the preferred scandium extraction technology, targeting less than 70% scandium recovery from a bleed of barren HPAL process liquor.
  • The study assumed approximately 25% of the HPAL flowsheet barren liquor flowrate as feed for the SRC, with production targets underpinned by Measured and Indicated Resources only.
  • Joint venture partner Sumitomo Metal Mining noted the Scoping Study was prepared solely by Ardea and that neither Kalgoorlie Nickel Pty Ltd nor the Japanese Consortium endorsed its content or financial economics.

Scandium Recovery Circuit Design and Technology Selection

The Scoping Study evaluated scandium recovery utilising an existing process stream within the proposed Goongarrie Hub HPAL facility, with ion exchange selected as the preferred extraction technology. The circuit is designed to treat a bleed of barren HPAL process liquor otherwise destined for tailings, with an estimated scandium recovery of less than 70%. The study assumed less than 25% of the total HPAL flowsheet barren liquor flowrate as feed for the SRC. According to the filing, the study noted optionality to expand scandium production in the future given the assumed feed proportion.

Capital Cost and Forecast Financial Outcomes

The Scoping Study estimated the SRC would require a capital investment of US$73.5 million. This estimate relates solely to the proposed scandium recovery circuit and assumes integration with the planned Goongarrie Hub Nickel-Cobalt HPAL operation. As disclosed, it excludes mining, HPAL processing and broader project infrastructure costs already associated with the base nickel-cobalt development. The filing stated there is no certainty that Ardea will be able to raise the required funding, and that funding may only be available on terms dilutive to or otherwise affecting the value of existing shares.

Regulatory Disclosures and Joint Venture Partner Position

The filing noted that any future development of the proposed SRC is subject to successful completion of metallurgical testwork, further engineering studies, environmental and regulatory approvals, financing, and a decision to proceed with the broader Goongarrie Hub Project. The Scoping Study feed assumptions are partially based on the Nickel-Cobalt-Scandium Mineral Resource Estimate released by Ardea on 30 June 2023. Sumitomo Metal Mining, one of the Joint Venture partners, confirmed the study was prepared solely by Ardea and that neither Kalgoorlie Nickel Pty Ltd nor the Japanese Consortium was involved in its preparation or endorsed its financial economics.