PERTH (miningweekly.com) – ASX-listed Kidman Resources and lithium producer Sociedad Quimica y Minera de Chile SA (SQM) have finalised the joint venture (JV) agreement over the Mt Holland lithium project, in Western Australia.

The transaction, first announced in July, will see SQM invest $110-million to acquire a 50% stake in the Mt Holland spodumene mine and lithium concentrator.

Kidman will transfer a 50% interest in the Mt Holland tenements for a $30-million payment, with the two companies establishing a JV under which SQM would commit to sole-fund $80-million of JV expenditure.

“This is a milestone moment for Kidman shareholders,” MD Martin Donahue said on Tuesday.

“The fact that Kidman and SQM were able to finalise the JV well before the September 30 target date clearly demonstrates the commitment of both parties to develop Mt Holland into a truly world-class lithium operation.”

The two companies are planning on building a mine and concentrator adjacent to the Earl Grey deposit, while also advancing studies and the development of a refinery to produce lithium carbonate, lithium hydroxide or a combination of the two, depending on end-user demand.

Kidman reported that work had already started on developing the project, with the establishment of a working group to oversee the development of the Earl Grey mine and concentrator, and to advance feasibilities on the lithium refinery.

The Earl Grey deposit is estimated to host a mineral resource of some 128-million tonnes, grading 1.44% lithium oxide for 1.84-million tonnes of lithium oxide; however, limited drilling has been conducted, and with SQM’s support, Kidman was hoping to test a series of targets to evaluate the true potential size of the deposit.

A scoping study on the project is expected before the end of September, and SQM will assist in further optimising the metallurgical testwork already completed to date.

The two companies have also jointly started work on a feasibility study for the lithium refinery, which will be incorporated into the updated Earl Grey technical results.

“Kidman is excited about the lithium refinery potential and intends to take up its rights for a 50% share of the development,” Donahue said.

“Kidman is also pleased to confirm that it will retain marketing rights to its share of the production from the planned lithium refinery, which will greatly enhance funding optionality for the company. We consider the refinery will be of significant strategic value to Kidman and its shareholders well into the future.”

The JV agreement is subject to a number of conditions, including regulatory approvals.

While the conditions are being satisfied, SQM will grant Kidman up to $21.5-million in credit through a converting note, with the first $6-million available for drawdown by Sept 12, and the remaining $15.5-million by the end of October.