Ardea Resources was recently admitted into the ASX. Could you describe the decision behind the spin-off from Heron Resources and what will be your primary focus?

Ardea Resources successfully satisfied all the conditions of the spin-off as of February 9th, 2017. It now holds Heron Resources’ gold and nickel-focused, non-Woodlawn assets in New South Wales and Western Australia. The reasoning behind the spin-off was to allow Heron to focus on the development of its 100% owned, high-grade, Woodlawn zinc-copper project, located 250km southwest of Sydney, in New South Wales. They had a vast area of ground that they were not realising the value for. Ardea Resources will operate as a completely independent entity to further develop the Kalgoorlie Nickel Project (KNP), one of the world’s largest cobalt deposits.

On operational matters, the drill program for Lewis Ponds has been approved by the NSW Department of Industry and the application for drilling at the KNP Cobalt Zone is underway. Drilling at both projects is expected to commence in February 2017 shortly after listing. Given that cobalt is very popular at the moment, the timing has been fantastic. Our other main focus is the Lewis Ponds zinc-gold project, out of NSW. Though historically the area has carried a focus on precious metals, in recent times, it has been on base metals.

You raised A$5.1 million on your IPO. How far will this take Ardea Resources and what kind of timeline can we expect to see for the KNP moving forward?

Ardea Resources aims to have a Pre-Feasibility (PFS) completed for the KNP by the end of 2017. The money from the IPO is sufficient to get us through the PFS studies for both the KNP and the Lewis Ponds project— we will continuously assess our options as we go. Aredea Resources has a strong team behind it, as well as the engineering firm Simulus, which has a lot of experience with laterite nickel. We are about to drill some core holes up in the main part of the KNP’s cobalt zone,which we will be using for metallurgical testing. Most of the KNP’s cobalt mineralization lies within 40m of surface, but there are parts of it where it goes down to about 140m to 150m, where there is an excellent grade to be found.

Area Resources has the 7th largest cobalt deposit in the world sitting within the KNP. Out of those seven, five are in the DRC, and one is off the coast of Tonga under 2.5 km of the Pacific Ocean. We have the largest cobalt deposit in the developed world and will be  focusing on the high grade zones. We want to complete a Definitive Feasibility Study (DFS) within a couple years after the PFS. In that time, we will be thinking about speaking to possible partners that could accelerate the project. Once we have the DFS, we will be looking to get into production. Or main challenge at the moment is the CapEx,  given that the OpEx is low. When it was first completed in 2007,  the CapEx was $2.5 billion. Since then, we have managed to make it $350 million. In this 2014 Ni-focused study, the mine pays itself back within five years and will carry on for the next 35. It is a massive project of state importance which requires a longer term vision. We are expecting the results of our new study for the cobalt project by early next year.

With the 7th largest deposit in the world, what role does Ardea Resources aim to play in the race for cobalt and what trends can we expect to see in the near-term? 

The demand for cobalt at the moment is quite phenomenal given the lithium-ion battery demand. Certainly what we are seeing in South Australia, with the state grid being augmented by similar sorts of systems is just the beginning. Phones and computers both play a role, but the true driving force in the next few years will be the complete electrification of the auto industry over time. By 2021, pretty much every car maker has said they want a range of electrified vehicles — full electrics, and various degrees of hybrids. People are talking about 2030 having up to 15% of all cars electrified, and I do think that is probably pessimistic.Hopefully this is the type of thing that would help push development and electrification in certain under-developed countries. Whereas some certainly will not be able to afford it, it might move them to push electricity through to more towns. Even in WA, there will be a push for this.

China, Japan and Korea have various organisations looking out for cobalt at the moment, as well as companies, such as Tesla. There is a widening cobalt deficit into the future, from a few hundred tonnes now, to several thousands of tonnes over the next five years. This is entirely driven by the technology and battery revolution. 

Do you have a final message for the E&MJ’s international readership?

It is becoming evident that understanding the provenance of material is increasingly important, given the ethical issues arising from sourcing cobalt in some underdeveloped countries. Amnesty International has highlighted some of the problems with child labour and unsafe work practices in the DRC. The only solutions are to to clean up the supply lines or for people to source their material somewhere else. With one of the world’s largest cobalt deposits, Ardena Resources would like to be that ‘somewhere else’.