Shares of Australia-listed Kidman Resources (ASX:KDR) surged on Monday (December 10) after the company announced it had settled a court dispute which had the potential to delay the development of its Mount Holland hard-rock lithium project in Western Australia.

The legal hurdle was over the amount of money that had been spent on the exploration holdings to develop them. Companies holding mining tenements in Western Australia have a responsibility to spend a certain amount on site development in order to maintain their right to their leases.

But Kidman had claimed that since it only found lithium after the period was up, it should be exempt from past minimum exploration-expenditure obligations.

“This settlement resolves this matter completely,” Kidman CEO Martin Donohoe said in a statement, which did not include the terms of the settlement and described the sum as “not material.”

The Melbourne-based company bought the Mount Holland leaseholdings for $3.5 million in early 2016. Last year, SQM (NYSE:SQM) bought a 50-percent stake in the Mount Holland spodumene mine and lithium concentrator for $110 million.

As a result of the settlement, SQM will resume its payments to Kidman and Covalent Lithium, its 50/50 joint venture with the Australian company. 

In May, Kidman Resources signed an offtake deal to supply lithium from its Mount Holland project with electric carmaker Tesla (NASDAQ:TSLA). Almost at the end of October, the company announced another offtake with Japanese company Mitsui (TSE:8031).

“With the settlement concluded, funding secured through to final investment decision and our recent lithium hydroxide offtake agreements with Tesla and Mitsui we will be able to wholly focus on progressing the development of the Mt Holland lithium project,” Donohoe said.

Covalent Lithium will produce spodumene concentrate at the joint venture’s Earl Grey hard rock lithium deposit located at Mount Holland near Southern Cross in Western Australia. The concentrate will then be treated at the Kwinana refinery. The initial production target for Mount Holland is set at 40,000 tonnes per year in 2021.

On Monday, shares of Kidman Resources were up 7.09 percent, closing in Sydney at AU$1.44.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.