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Kidman Ties Up More Lithium Production with LG Chem Deal
Kidman Resources has entered a non-binding memorandum of understanding with LG Chem for lithium hydroxide from the Mount Holland project.
Kidman Resources (ASX:KDR) has entered into a non-binding memorandum of understanding (MOU) with Korean chemical company LG ChemĀ (KRX:051910) to supply lithium hydroxide from the Mount Holland project over a 10-year term.
The MOU entails Kidman supplying 12,000 tonnes of lithium hydroxide per year to LG Chem at a cost to be determined by market prices on a basis that will support Kidmanās proposed debt funding.
While other terms of the MOU have been kept confidential, the companies are working towards executing a binding strategic supply agreement by the end of July 2019.
Kidman is currently in the midst of securing offtake agreements for 75 percent of its share of lithium hydroxide production for Mount Hollandās initial years in Western Australia.
Mount Holland is a 50/50 joint venture between Kidman and major lithium producer Sociedad QuĆmica y Minera de Chile (NYSE:SQM).
The proposed LG Chem MOU accounts for about 50 percent of Kidmanās share of Mount Hollandās production, which sits at 22,600 tonnes for Kidman and 44,000 tonnes in total.
Upon finalization, the company will have met its offtake goals for Mount Holland as it already achieved an offtake agreement with Tesla (NASDAQ:TSLA) and a binding heads of agreement with Mitsui & Co. (TSE:8031) earlier this year.
āTodayās announcement is a significant milestone towards Kidmanās objective of securing offtake arrangements over approximately 75 percent of our share of production in the initial years of the project,ā Kidman CEO and Managing Director Martin Donohue said in a statement.
āLG Chem is the worldās number one automotive battery supplier and will continue to be a major supplier to the rapidly growing electric vehicle segment. We are pleased to be announcing this MoU and look forward to further developing our relationship with them,ā he added.
According to a prefeasibility study and updated scoping study for the project released in late October, Mount Holland is docketed to see life-of-project revenue of US$33.5 billion with a 47-year life.
Kidmanās share price was down 7.2 percent on the ASX at the end of trading on Wednesday (December 19), closing the day at AU$1.16.
Donāt forget to follow us @INN_Resource for real-time news updates!
Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.
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A graduate of Durham College's broadcast journalism program, Olivia has a passion for all things newsworthy. She got her start writing about esports (competitive video games), where she specialized in professional Call of Duty coverage. Since then, Olivia has transitioned into business writing for INN where her beats have included Australian mining and base metals.
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