Ardea adds $500M scandium kicker to giant WA nickel play

Ardea Resources has delivered a stunning set of numbers from a scoping study confirming significant potential to bolt on a highly profitable scandium recovery circuit to its giant tier-one Kalgoorlie nickel project (KNP) in Western Australia.

The independent study, conducted by the American Association of Cost Engineers, points to a pre-tax net present value (NPV) of US$509.8 million (A$744 million) and a stellar internal rate of return (IRR) of 59.6 per cent for the scandium by-product stream. The company says the proposed circuit would require a relatively modest capital outlay (Capex) of just US$73.5 million (A$107 million) to tap into the high-value critical mineral.

The study proposes extracting scandium from an existing process stream within the planned nickel-cobalt high-pressure acid leach (HPAL) plant at Goongarrie Hub, part of Ardea’s broader KNP. This could prove a smart piece of plumbing and engineering, as it leverages the significant capex already planned for the main project, rather than requiring a standalone operation.

The KNP project is no minnow. It hosts a globally significant mineral resource of 854 million tonnes grading 0.71 per cent nickel and 0.045 per cent cobalt, containing a massive 6.1 million tonnes of nickel and 386,000 tonnes of cobalt.

The project’s massive scale has already attracted a heavyweight Japanese consortium, comprising Sumitomo Metal Mining and Mitsubishi Corporation, which is earning a 35 per cent stake in the Goongarrie Hub by sole-funding the definitive feasibility study (DFS) to the tune of A$98.5 million.

The scandium scoping study, commissioned and managed by Ardea, employs an ion-exchange process to produce scandium oxide, which has a better-established market than other scandium compounds. Based on a long-term price of US$2000 (A$2923) per kilogram and less than a modelled 70 per cent recovery, the study estimated the circuit could generate annual revenue of US$43.8 million from a 30-tonne annual production.

This scoping study demonstrates the potential to further enhance the project by recovering scandium from an existing process stream, creating the opportunity to produce an additional high demand renewable energy critical mineral alongside planned nickel and cobalt production.

Notably, the study proposes recovering scandium from less than a quarter of the remaining processing liquid once the nickel and cobalt are extracted, potentially leaving plenty of room to ramp up production should scandium prices and demand take off.

The timing for a new western source of scandium could hardly be better. The metal is recognised as a critical mineral by Australia and the United States for its use in high-performance, lightweight aluminium alloys essential for the aerospace and defence industries.

However, the global market is small and dominated by supply from China and Russia, leaving it vulnerable to geopolitical disruption. Recent market intelligence suggests that China, the world’s biggest producer of scandium, has been tightening export restrictions, creating supply chain anxiety for defence contractors and tech companies in the West.

Most Western scandium is sourced as a by-product from the refining of titanium and aluminium, while targeted primary scandium production is confined to a handful of operations globally. Current combined annual production - estimated by the global strategy and transactions consulting arm of Ernst & Young, EY-Parthenon - sits between 60 and 80 tonnes as of February 2026, mainly from titanium oxide residues.

The group estimates global demand for scandium oxide could reach 91 tonnes per year by 2030, rising to 194 tonnes by 2035, and 706 tonnes by 2050. Supply, on the other hand, is forecast to reach only 266 tonnes over the same period.

The combination of supply shortfall and increasing demand for scandium in technical and defence applications has prompted governments to actively support the development of alternative supply chains. The scramble has also turned industry attention towards extracting scandium as a valuable by-product from existing and proposed nickel laterite operations, particularly those using HPAL processing technology.

While the scandium study has opened a significant value-add, nickel and cobalt remain the primary focus at Goongarrie. Export Finance Australia has already provided a letter of support for the KNP’s main nickel-cobalt development, as has the US Export-Import Bank.

The KNP ore reserve within the Goongarrie Hub alone stands at a solid 194.1 million tonnes at 0.70 per cent nickel and 0.05 per cent cobalt, as established in the mid-2023 prefeasibility study, equating to 1.36 million tonnes of contained nickel and 99,000 tonnes of contained cobalt.

Ardea’s ground also shows serious potential for a smorgasbord of other commodities. The company recently hit massive nickel sulphides at its Emu Lake prospect, with one drill hole returning 2.72 metres at a stunning 5.42 per cent nickel and 0.85 per cent copper. Additionally, the company has its hands on compelling lithium-caesium-tantalum (LCT) pegmatite and rare earth element targets within its current 3200-square-kilometre KNP tenure.

With $20.9 million in cash and no debt as of the end of September, Ardea remains well-funded to push ahead with the next phase of work on the scandium circuit, which still involves laboratory-scale metallurgical testwork to validate the study’s assumptions.

Ardea is already sitting on one of the world’s great nickel-cobalt deposits with some serious Japanese industrial muscle in its corner. This latest study suggests that for a relatively small bolt-on investment, it could also become a key supplier of a strategically vital critical mineral, just as the Western world looks to shore up its own independent sources of supply outside China and Russia.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au