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Donohue needed cash. This was a good deal, with SQM bringing...

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catsecret

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02/01/18

19:57

Post #: 29993159
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Originally posted by Haplo ↑

A short history lesson on when the SQM deal was announced and the reaction to it. KDR management has consistently proved armchair experts wrong with the MZN lawsuit and SQM JV.

A financing deal for the refinery component will rocket the SP into the next solar system.

View attachment 902051

Kidman defends Chile JV lithium deal over time lag fears

Kidman Resources managing director Martin Donohue has dismissed the negative share price reaction to the company’s deal with Chilean chemicals giant SQM over its Mt Holland lithium project near Southern Cross.

The aspiring miner yesterday announced it would hand over 50 per cent of its project to the Santiago-based, New York-listed company in exchange for a cash payment of $US30 million, staged payments of $US80 million and a convertible loan of $US21.5 million.

The company’s share price fell sharply on the news with some investors querying the value of the deal and the estimated time it would take the joint venture to bring the project into production —2019 for the mine and 2021 for a proposed refinery.

Mr Donohue said yesterday he was confident Kidman had achieved enough competitive tension, citing considerable global interest in the company’s project. He attributed the short-term share price reaction to a lack of understanding of the deal.

“This is a different business model to what people are used to,” he said. “It is designed to make the most of the good times, but also ride out the bad times.”
Mr Donohue rejected any suggestion the company’s new global lithium supplier partner was looking to “landbank” the project.

“SQM have a desire to get this into production as soon as possible,” he said, adding the SQM funding would “go a long way” to funding Kidman’s share of bringing the project into production.
Under the terms of the deal, Kidman also has the option to take a 50 per cent stake in a lithium refinery SQM plans to build in WA after the mine’s construction. The refinery, to be build at either Kemerton, Kwinana or Kalgoorlie, would produce a high-grade, high-margin lithium carbonate or lithium hydroxide product.

The Earl Grey deposit at Mt Holland, which hosts a 1.84 million tonne resource, is still open with an estimated mine life of more than 50 years, underpinning plans for the refinery.
About 200 jobs are expected be created during the mine’s construction and about 200 once operating. At the refinery, up to 200 jobs are expected to be created during construction and 180 full-time jobs in production.

Kidman shares closed down 8.5¢, or 11.97 per cent, at 62.5¢ yesterday after hitting an intraday low of 60.5¢.

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Donohue needed cash. This was a good deal, with SQM bringing expertise. Management now see $3.

KDR Price at posting: $2.00 Sentiment: Buy Disclosure: Held
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