ARDEA RESOURCES LIMITED — Capital/Financing Update 2017

Feb 27, 2017

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Cobalt and zinc-gold drilling update

ASX & Media Release

28 February 2017

Exposure to the developed world’s largest cobalt resource and a diversified portfolio of development and exploration assets

ASX Symbol

ARL

An important part of Ardea Resources Limited’s (ASX: ARL, “Ardea” or “the Company”) growth strategy is the advancement of key projects through drilling.

Ardea Resources Limited

1/7 Havelock St West Perth WA 6005

PO Box 1433 West Perth WA 6872

Our two lead projects, the KNP Cobalt Zone in WA and the Lewis Ponds zinc-gold project in NSW, require drilling in the near term. Ardea is committed to developing these projects for the benefit of shareholders.

Telephone

• At the Lewis Ponds zinc-gold project in NSW, the diamond drill rig arrived on site yesterday and is expected to commence drilling today (28 February 2017). The first phase of drilling will comprise four diamond drill holes, each on section lines that are 200 m apart. This will mark the first drilling for Ardea’s bulk tonnage open pit target model for the development of Lewis Ponds.

+61 8 6500 9200

Email

ardea@ardearesources.com.au

Website

www.ardearesources.com.au

• At Kalpini , in the eastern part of the KNP (see Appendix 1), statutory approvals are in place for the proposed reverse circulation (RC) drill program, to commence in March. The aim of the program is to investigate and infill highly anomalous cobalt intercepts, which will test whether Kalpini can be added to the high-grade KNP Cobalt Zone. This program is effectively a pilot program for promoting other outlying cobalt anomalies to the KNP Cobalt Zone.

Directors

Katina Law Chair

Matt Painter Managing Director

Ian Buchhorn Non-Executive Director

• At Black Range in the KNP Cobalt Zone, RC drilling will investigate the style and continuity of high-grade cobalt mineralisation. This will facilitate upgrading of the resource. Statutory applications have been submitted to the WA Department of Mines and Petroleum (DMP). Approval of our program is expected in the coming weeks, with drilling to be done back to back with the Kalpini program.

Issued Capital

Shares 67,000,747

Unlisted options 12,310,022

• At Goongarrie , Highway , and Black Range in the KNP Cobalt Zone, preparations are underway to generate fresh drillcore for metallurgical sampling and testing. Modelling of geometallurgical unit distributions is being finalised, and drill holes will be positioned accordingly. Statutory drilling applications will be lodged with DMP shortly, with drilling commencing in April.

ABN 30 614 289 342

Ardea looks forward to updating shareholders as drill results are received.

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For further information regarding Ardea, please visit www.ardearesources.com.au or www.heronresources.com.au or contact:

Ardea Resources:

Dr Matt Painter

Managing Director, Ardea Resources Limited Tel +61 8 6500 9200

Media or Investor Inquires:

FTI Consulting Jon Snowball Tel +61 2 8298 6100 or +61 477 946 068 jon.snowball@fticonsulting.com

Compliance Statement (JORC 2012)

A competent person’s statement for the purposes of Listing Rule 5.22 has previously been announced by the Company for:

1. Kalgoorlie Nickel Project on 21 October 2013 and 31 June 2014, October 2016, 2016 Heron Resources Annual Report and 6 January 2017;

2. KNP Cobalt Zone Study on 6 January 2017

The Company confirms that it is not aware of any new information or data that materially affects information included in previous announcements, and all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed. All projects will be subject to new work programs following the listing of Ardea, notably drilling, metallurgy and JORC Code 2012 resource estimation as applicable.

The information in this report that relates to KNP Exploration Results is based on information originally compiled by previous and current full time employees of Heron Resources Limited. The Exploration Results and data collection processes have been reviewed, verified and reinterpreted by Mr Ian Buchhorn who is a Member of the Australasian Institute of Mining and Metallurgy and currently a director of Ardea Resources Limited. Mr Buchhorn has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the exploration activities undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Buchhorn consents to the inclusion in this report of the matters based on his information in the form and context that it appears.

The exploration and industry benchmarking summaries are based on information reviewed by Dr Matthew Painter, who is a Member of the Australian Institute of Geoscientists. Dr Painter is a full-time employee and a director of Ardea Resources Limited and has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Dr Painter has reviewed this press release and consents to the inclusion in this report of the information in the form and context in which it appears.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

This news release contains forward-looking statements and forward-looking information within the meaning of applicable Australian securities laws, which are based on expectations, estimates and projections as of the date of this news release.

This forward-looking information includes, or may be based upon, without limitation, estimates, forecasts and statements as to management’s expectations with respect to, among other things, the timing and ability to complete the Ardea spin-out, the timing and amount of funding required to execute the Company’s exploration, development and business plans, capital and exploration expenditures, the effect on the Company of any changes to existing legislation or policy, government regulation of mining operations, the length of time required to obtain permits, certifications and approvals, the success of exploration, development and mining activities, the geology of the Company’s properties, environmental risks, the availability of labour, the focus of the Company in the future, demand and market outlook for precious metals and the prices thereof, progress in development of mineral properties, the Company’s ability to raise funding privately or on a public market in the future, the Company’s future growth, results of operations, performance, and business prospects and opportunities. Wherever possible, words such as “anticipate”, “believe”, “expect”, “intend”, “may” and similar expressions have been used to identify such forward-looking information. Forward-looking information is based on the opinions and estimates of management at the date the information is given, and on information available to management at such time. Forward-looking information involves significant risks, uncertainties,

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assumptions and other factors that could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking information. These factors, including, but not limited to, the ability to complete the Ardea spin-out on the basis of the proposed terms and timing or at all, fluctuations in currency markets, fluctuations in commodity prices, the ability of the Company to access sufficient capital on favourable terms or at all, changes in national and local government legislation, taxation, controls, regulations, political or economic developments in Australia or other countries in which the Company does business or may carry on business in the future, operational or technical difficulties in connection with exploration or development activities, employee relations, the speculative nature of mineral exploration and development, obtaining necessary licenses and permits, diminishing quantities and grades of mineral reserves, contests over title to properties, especially title to undeveloped properties, the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drill results and other geological data, environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins and flooding, limitations of insurance coverage and the possibility of project cost overruns or unanticipated costs and expenses, and should be considered carefully. Many of these uncertainties and contingencies can affect the Company’s actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company. Prospective investors should not place undue reliance on any forward-looking information.

Although the forward-looking information contained in this news release is based upon what management believes, or believed at the time, to be reasonable assumptions, the Company cannot assure prospective purchasers that actual results will be consistent with such forwardlooking information, as there may be other factors that cause results not to be as anticipated, estimated or intended, and neither the Company nor any other person assumes responsibility for the accuracy and completeness of any such forward-looking information. The Company does not undertake, and assumes no obligation, to update or revise any such forward-looking statements or forward-looking information contained herein to reflect new events or circumstances, except as may be required by law.

No stock exchange, regulation services provider, securities commission or other regulatory authority has approved or disapproved the information contained in this news release.

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Appendix 1 – About the KNP and the KNP Cobalt Zone

The KNP

There is a renewed global interest in cobalt owing to its prominent use in lithium ion batteries and associated technologies supporting renewable energy storage.

Ardea’s Kalgoorlie Nickel Project (KNP – Figure 1) is a globally significant lateritic nickel resource that contains substantial concentrations of cobalt. The global resource for the KNP is 805.3 Mt at 0.048 % cobalt and 0.70 % nickel (Table 1 below) which equates to over 386,000 t of contained cobalt metal .

Table 1 – KNP Resources breakdown

Resource Category	Quantity (Mt)	Co (%)	Ni (%)
Measured	9.6	0.081	1.02
Indicated	244.0	0.052	0.75
KNP Total Measured and Indicated	253.6	0.052	0.76
Inferred	551.7	0.046	0.68
KNP Total Resources	805.3	0.048	0.70

Recent recalculation of these resources with a focus on cobalt rather than nickel concentrations shows that the KNP is one of the world’s largest cobalt resources , and certainly the largest in the developed world.

The KNP Cobalt Zone

A cobalt-rich subset of the KNP, known as the KNP Cobalt Zone, contains a significant cobalt and nickel resource in its own right. The KNP Cobalt Zone contains 49.7 Mt at 0.12 % cobalt and 0.86 % nickel (Table 2) for a total contained cobalt metal of just under 60,000 t . Our aim is to substantially increase upon this initial resource through exploration of known outlying cobalt occurrences and drill intercepts, and through reinterpretation of the resource based on cobalt cut-off grades rather than the current 0.5 % nickel cut-off.

Table 2 – KNP Cobalt Zone, Resource Statement from RMRC consulting group

Area	Prospect Resource category Cutoff (% Co) Size (Mt) Cobalt (%) Nickel (%)
Goongarrie	Goongarrie South Measured 0.08 3.4 0.14 1.19 Indicated 0.08 11.2 0.11 0.92 Inferred 0.08 1.4 0.11 0.76
	Big Four Indicated 0.08 4.5 0.11 0.89 Inferred 0.08 0.2 0.11 0.95
	Scotia Inferred 0.08 2.9 0.14 0.88
	Goongarrie subtotal 23.6 0.12 0.94
Siberia	Black Range Inferred 0.50(Ni) 20.1 0.10 0.75
Yerilla	Aubils Inferred 0.08 6.0 0.15 0.90
KNP Cobalt Zone total resources 49.7 0.12 0.86

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Figure 1 – The KNP and KNP Cobalt Zone, near Kalgoorlie WA

Table 3 – Ardea Benchmarks, ASX-listed companies (+ Glencore) ranked by contained cobalt metal

	Company	Size (Mt)	Cobalt (%)	Co metal (kt)	Project	Mineralisation style
1	Ardea Resources	805	0.05%	386.4	Kalgoorlie Nickel Project, WA	Laterite Ni-Co
2	Glencore	256	0.07%	179.4	Murrin Murrin WA	Laterite Ni-Co
3	CleanTeq	109	0.10%	114.0	Syerston, NSW	Laterite Ni-Co-Sc
4	GME	108	0.06%	65.1	NiWest Project, WA	Laterite Ni-Co
5	Ardea Resources	50	0.12%	59.6	KNP Cobalt Zone, WA	Laterite Co-Ni-Mn
6	Conico	32	0.12%	39.3	Mt Thirsty, WA	Laterite Ni-Co
7	Cobalt Blue	36	0.08%	30.0	Broken Hill, NSW	Co sulphide
8	Regal	4	0.72%	29.1	Kalongwe, DRC	Cu-Co sulphide
9	Havilah	18	0.10%	17.5	Mutooroo, NSW	Cu-Co sulphide
10	CuDeco	57	0.03%	16.7	Rocklands, Qld	Cu-Au-Co sulphide

Data sourced from SNL.com except for Murrin Murrin (Glencore 2014 Resources and Reserves Report)

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Ardea plans to focus on the application of advanced metallurgical processes to optimise cobalt extraction and meet increasing cobalt demand from the booming vehicle electrification and energy storage sectors.

For reference, the ranking of the KNP and the KNP Cobalt Zone relative to other ASX listed companies and their cobalt resources, as well as Glencore’s Murrin Murrin deposit, is shown in Table 3.

Ethically sourced cobalt for technology industries and green energy

Cobalt is a major component of most lithium ion batteries, which are used in smartphones, computers, electric and hybrid vehicles, and solar power storage systems. Cobalt prices have risen substantially over the last year to $US44,000 per tonne (London Metal Exchange, 18 February 2017).

Securing a reliable and ethical source of cobalt is becoming challenging for many users. In January 2016, Amnesty International highlighted the extensive use of child labour in cobalt mining operations in the Democratic Republic of Congo (DRC)[1] , the world’s major supplier of cobalt. With presidential elections scheduled for next year in the DRC, the threat of political instability and interruptions to continuity of supply are also real.

Technology companies are looking to source cobalt from countries where ethical work practices are essential, particularly as these principled considerations become more acute as demand increases over time. The development of the KNP Cobalt Zone can provide a long-term stable supply of ethically sourced cobalt for our future technological and green energy needs.

1 *Source: “This is what we die for: Human rights abuses in the Democratic Republic of the Congo power the global trade in cobalt.” Amnesty International, January 2016 (AFR 62/3183/2016)

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