Notes from Kidman's AGM

Hi all,

I felt like a new thread should be made about this to separate an informative post from all the frantic vibes observed on every other thread today. I was at the AGM and had the chance to ask questions and also chatted with management afterwards. Here are my notes as promised...


1. The sale of Burbanks, time frame and ballpark price?
No time frame was specifically given except that it is still progressing along quickly and there are around 4 interested buyers. Kidman is hoping to fetch at least what is owed to them which is around $3M.
2. MOU to process ore using Poseidon Nickel’s plant. Progress update?
Nothing was given away except for what is already known. They are still undergoing studies and the agreement is continuing to progress. Martin said that their strategy is to hopefully utilise the POS plant for the first 3-5 years of production and to build a plant of their own.
3. If the POS agreement proceeds who will bear the cost of upgrading, how long will it take and roughly what cost price per tonne of 6% spodumene could KDR achieve?
Martin couldn’t comment on the specifics until completion of the agreement.
4. What is KDR’s target production date if the early December JORC is achieved?
None given, Martin didn’t want to fall into similar scenarios where other companies promised tight deadlines and didn’t fully deliver. But, he assures that their strategy right now is to bring this to production as quick as possible.
5. Can you comment on the possible size of our initial JORC? Could we see similar size to PLS?
He was hesitant to give anything away as it is still in progress, but from what he sees so far he thinks they should be able to achieve slightly higher grade than PLS and yes the initial JORC should be significant quite possibly close to what PLS has now. NOTE: even though he said this I personally think our expectations should still remain conservative and not to over expect…
6. Will management consider upgrading the bounty mill to process lithium? If so, at what estimated capex and can this be turned into a dual plant for processing both gold and lithium.
Short answer is no. Most of the assets were sold off after bounty stopped producing so what’s left is not able to be utilised. There may be a possibility that Kidman will reboot it as a gold mill.
7. Considering the fact that metallurgical results are still pending, have KDR been approached or had the opportunity to have preliminary conversations with potential customers?
Martin said it was still too early for formal talks due to the absence of metallurgy and JORC, although he did mention that there have been very general preliminary interests from various parties.
8. Considering the deal to sell unprocessed ore that Pilbara Minerals have recently signed with Shandong. What is the possibility of KDR being able to replicate a similar agreement? How economic is this given the nearest port from Mt Holland.
The agreement could be replicated if the price is right, but their main goal is still to bring this to production. They have been doing logistic studies and the nearest means of transport that they outlined were to truck ore to Esperance port or utilise the railway to Freemantle port.
9. Does Kidman plan to raise the number of drill rigs on site? What are the next targets for drilling?
They are planning to scale back the number of drills after POW as Martin mentions there is more than enough lithium at Earl Grey and my impression is that they plan to focus on bringing this to production rather than to continue exploring aggressively.
10. When will drilling continue at Blue Vein?
Resource drill out at Blue Vein as per the AGM presentation is continuing and my impression is to progress it more after the Earl Grey JORC.
11. In your opinion what is management doing to distinguish KDR and to gain competitive advantage over the many other lithium runners.
Bringing this to production as soon as possible. The management all agreed and understood that the lithium industry is clearly a race to production, hence why they are moving quickly.

Other notes:

- Resolution for the 10% placement was withdrawn due to institutions raising concerns over it and so they respectively decided not to pursue it in the comfort of holders.

- Another shareholder raised a query in regards to the sell off from 82cents and Martin mentioned that at the time he was in Hong Kong meeting with institutions and later he and the team checked who was selling and confirmed what most of us also knew from broker reports that it was mainly retail holders (CommSec) selling.

- I questioned him about what he was doing in Hong Kong and he said that they have institutional holders in Hong Kong and forgive me for my vague memory but I believe he mentioned it had something to do with concerns over Kidman being a take-over target. PLEASE DO NOT QUOTE ME ON THIS as it may have not been exactly what he said, but he definitely mentioned “takeover” in the conversation...Personally I think there is still much to be progressed before Kidman becomes a takeover target…

- Martin mentioned that he personally thinks that still not many people realise the significance of a flat lying pegmatite which in geologist’s perspective is economically great for mining.

- Now that the pegmatite extends further to the north below the Twinning gold mines, it basically confirms that there is literally open gold in the overburden above the north side of the Earl Grey pegmatite.

- The reason Acorn Capital sold a portion of their stake was because they originally bought KDR for its gold and after it turned out to be lithium Acorn became heavily overweight in lithium with their portfolio and had to follow the guidelines set out in their investment strategy. They notified management before selling and I believe the remaining stake in KDR is their larger holding amongst their other lithium investments.

- I questioned Capri’s (approximately 10% holding) intentions and he assures that they are here to stay and are not going to sell.

- Finally, after MZN’s announcement came out management’s reaction to a few of us was that MZN along with many others had originally shown interest in the lithium rights early on and Kidman had done the same with them as all others and never signed or agreed to anything. Later MZN told them that if KDR doesn’t respond then they will go ahead and tell the market that they “believe” they have a verbally binding agreement. My interpretation of the vague chatting is that management told MZN not to act on this, but clearly they felt otherwise.

- Martin described their behaviour as “greenmail” (although after seeing the definition I honestly don’t think this is what’s happening) and management pretty much summed up that MZN are quite late in the lithium run so they are sort of playing dirty now…I am not trying to down ramp MZN management, this is a complete regurgitation of what I heard at the AGM, so take it however you will. At the moment there are a lot of “I said he said” talk, so we will honestly have to see how it all pans out.

- In my opinion, the deal terms are absurd and I think all holders of MZN and KDR can both agree, whether binding or not in whoever’s favour…

- My main objective of heading to the AGM was to basically confirm the strategic direction management are taking, and I am thoroughly pleased to remain assured that they are 100% focused on bringing this to production as soon as possible. Martin knows this is a race and management all agreed. Just like us, they think they’re onto a significant winner and want this project to be a company maker and they know the only way to do that is to meet supply whilst the spod price is red hot.

Hope this can assist some holders in gaining greater understanding in certain aspects of management and the company. Still holding and I know many other significant holders are too…let’s hope this recent mess is settled soon.

Cheers,