QUARTERLY OPERATIONS REPORT September Quarter, 2017 Recent raisings place the Company in a sound financial position • The Company successfully raised $9.95 million through a share placement plan and a private placement. • Cash at hand is now $12.1 million. • Funds are being used to accelerate R&D programs with the main focus on bringing forward drilling of the KNP Cobalt Zone and expanding the PFS scope. • Full exercise of the $0.77 loyalty options by May 2018 would see the Company fully funded through the KNP Cobalt Zone Definitive Feasibility Study. KNP Cobalt Zone Pre-Feasibility Study • The Pre-Feasibility study is focused on defining a flowsheet that will produce cobalt sulphate and nickel sulphate for the battery industry. • Several by-products, including scandium, platinum, palladium, manganese, high-purity aluminium, and chromium are also being assessed as an addendum to the cobalt-nickel flowsheet. • Acid leach test work is achieving outstanding results with extraction of cobalt and nickel from the laterite and into solution commonly exceeding 98% for a variety of flowsheet options. • Rolling resource upgrades, recently at Black Range and Scotia Dam, further enhance the KNP Cobalt Zone with improved resources at each deposit. Funding secures the path to production This quarter, Ardea positioned itself financially to accelerate programs and provide certainty regarding ongoing funding for the Pre-Feasibility Study (PFS) on the KNP Cobalt Zone and, following on from that, the Definitive Feasibility Study (DFS).
Ardea is focused on the high-grade Cobalt Zone which comprises 64.4Mt at 0.13% cobalt + 0.77% nickel (see Table 1 for resource breakdown). The PFS flowsheet research is focused on production of high purity cobalt and nickel sulphate for sale directly to the battery industry. Additional by-products, such as scandium, platinum, palladium, manganese, chromium, and high-purity alumina, are also being assessed as ancillary products. Mining operations of up to 2 Mtpa are being modelled, which would produce up to 2,500 tpa cobalt-in-sulphate and 15,000 tpa nickel-in-sulphate. At these rates, the KNP Cobalt Zone would be a significant producer of battery and technology commodities for decades to come. The finances of the Company are secure thanks to the raising of almost $10 million during the quarter. Furthermore, exercising of the “in-the-money” 77c Loyalty Options prior to their expiry at the end of May 2018 would provide an additional $19.5 million, thereby fully funding the Company through to the end of the DFS. The extra funding from the raising is expediting the forthcoming DFS by bringing forward and commencing drilling programs now as part of the PFS. High-resolution drilling of the KNP Cobalt Zone, for which government approvals have just been received, will focus on previously drilled resources which will enable: • upgrading of resource classification and sampling for geo-metallurgical analysis through drilling for accurate definition of the mining schedule at Goongarrie, Black Range, Siberia, Aubils and Boyce Creek (at least 25,000 m RC drilling) • reserve definition and geo-metallurgical analysis at the Patricia Anne and Elsie Tynan areas of Goongarrie (around 45,000 m RC drilling) • metallurgical variability sampling in preparation for the DFS (~4,500m diamond drilling)
ARL Price at posting:
$1.18 Sentiment: Buy Disclosure: Held
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