Ardea Resources Limited present an update on the Prefeasibility Study (PFS), following Sterilisation Drilling results adjoining proposed production pit locations. The program was designed for finalising the site layout General Arrangement Plan for the Kalgoorlie Nickel Project (KNP) - Goongarrie Hub. Additionally, the drilling was used to test Rare Earth Element (REE) targets previously generated by the Company's Critical Mineral Research and Development (R&D) in rocks adjoining the nickel laterite mineralisation.

One of two proposed infrastructure sites was at Goongarrie West adjoining the Goongarrie South Nickel Laterite mineralisation southwest of the Elsie Tynan pit. Three single hole traverses were designed at Goongarrie West as broad-spaced aircore drilling over a 3km NNW strike in a location containing no previous drilling. Intercepts of Total Rare-Earth Oxides (TREO) at a 1,000ppm TREO cut-off for the three hole Goongarrie West program were received, with highlights including: AGSA0224, 7m at 3,506ppm TREO from 64m, AGSA0225, 12m at 2,487ppm TREO from 40m, AGSA0226, 4m at 1,181ppm TREO from 56m.

These are considered significant intercepts, particularly based on such consistent mineralisation occurring in 1km spaced reconnaissance drill holes. Mineralisation in the three holes, based on drill-chip logging and associated geochemistry, is controlled by regolith contacts, specifically hosted by Saprolite Lower clay at its regolith contact with the underlying clay-weathered Saprock. Interpretation of results indicates the system is an Ionic Adsorption Clay (IAC) Rare Earth occurrence.

As such, the drill intercept grades are considered particularly significant, precluding Goongarrie West as an infrastructure site option. In view of the drill results at Goongarrie West and as required by the WA Mines Act 1978, the Department of Mines, Industry Regulation and Safety (DMIRS) has been notified that a discovery of economic interest has been made. The Prefeasibility Study (PFS) for the KNP ­ Goongarrie Hub (Figure 1) is designing a 3Mtpa High Pressure Acid Leach (HPAL) and 0.5Mtpa Atmospheric Leach (AL) circuit, with onsite Mineralised Neutraliser (MN) for hydrometallurgical solution neutralisation.

This is a well understood and proven flowsheet, so minimising any flowsheet technical risk. Strip ratio is approximately 2:1. In order to have a uniform plant feed and to coordinate exhausted pit void space for tailings storage, the earthmoving schedule exceeds the theoretical 10.5Mtpa and is up to 18.7Mtpa, necessitating both waste rock dumps and temporary ore feed laydown areas adjacent each and every pit. The "centre of gravity" for the Mineral Resource Estimate (MRE) is the Pamela Jean and Elsie Tynan pits at Goongarrie South, with the processing plant as close as practical to this location.

This then leads to two preferred alternatives for location of the laydown areas and Processing Infrastructure, being east to southeast of the Pamela Jean pit extending to the eastern mining lease boundary or southwest of the Elsie Tynan pit extending to the Goldfields Highway in the west. In order to confirm no non-outcropping mineralisation is present and that foundation conditions are suitable, Sterilisation Drilling is required. In view of the extensive historical exploration drilling for both nickel laterite and gold associated with the Bardoc Tectonic Zone (BTZ), Aircore drilling on a broad 320m x 160m pattern was utilised as a supplement to historic drill data.

Ardea's KNP Research and Development (R&D) commenced in 2017 with the systematic re-assay of archived KNP drill assay pulps for a multi-element suite including Rare Earth Elements (REE). This means that in addition to the pay-metals nickel and cobalt, all drill samples have been systematically assayed for REEs. Previous drilling at Goongarrie South has consistently recorded anomalous REE backgrounds both hosted within nickel laterite and on rare occasions within felsic rocks proximal to the nickel laterite.

Accordingly, the Goongarrie West drilling included assay of the full REE suite and associated elements. The development model for any REE at Goongarrie South does not yet contemplate any standalone REE processing, it is more as a by-product credit for the nickel, just as cobalt is. As with scandium, which is chemically very close to the REEs, the strategy is that once the metals are in solution through hydrometallurgy, it is a matter of ascertaining if there is an industry Solvent Extraction (SX) or Ion Exchange (IX) product that is able to preferentially recover a REE precipitate as a saleable product (likely a Mixed Carbonate Precipitate, MCP).

The sole Goongarrie REE development model is Ionic Adsorption Clay (IAC), being a clay weathering product upon which loosely held REE metals are adsorbed within the clay mineral sheeted lattice. The ionic-clay model at Goongarrie West can be quantified by hydrometallurgical bench-scale programs, but far more urgent PFS programs around AL and MN have unequivocal precedence.