Kidman signs $US100m debt facility

Kidman Resources has announced plans to integrate the studies for its proposed Kwinana lithium refinery and Mt Holland mine near Southern Cross into a singular project, while also securing a $US100 million ($140 million) debt facility for the project.

Kidman and Chilean miner Sociedad Quimica y Minera de Chile (SQM) are 50-50 JV partners in the two projects, and recently released separate studies on each project, which estimated a capital expenditure of $US755 million ($1.06 billion)

Melbourne-based Kidman said today it had agreed to combine the projects, with an integrated pre-feasibility study expected in the last quarter of 2018.

A definitive feasibility study is scheduled for the first half of next year.

“Now that the economic viability of building a refinery as part of an integrated project has been demonstrated, Kidman and SQM have agreed to streamline the separate studies for the mine and concentrator and refinery into a consolidated PFS and DFS for the entire Mount Holland lithium project, which will better reflect the integrated nature of the project and its implementation and execution,” Kidman said in a statement to the ASX.

Kidman also announced it had secured a $US100 million debt facility with SQM to partially fund its share of the capital expenditure.

Under the facility, SQM will provide Kidman with the funds, with interest calculated at London Interbank Offer Rate (LIBOR) plus a 2 per cent margin.

The facility will be available for drawdown after a final investment decision is made in relation to the project.

Kidman has also locked in a $US10 million working capital facility to fund near-term commitments for the project.

Kidman managing director Martin Donohue said the company was delighted to announce the financing deal.

“SQM has been a committed partner in the Mt Holland lithium project since announcement of the JV in July 2017 and this is a further demonstration of SQM’s confidence in Kidman and the Mt Holland lithium project,” he said.

“The $US100 million capex facility, available to fund Kidman’s contribution to the Mt Holland lithium project, together with SQM’s matching contribution and the further US$60m milestone payment due, is such that today’s announcement is a meaningful portion of the total capital cost for the project announced earlier this week.”

Kidman said discussions with traditional debt financiers were progressing well.

Shares in Kidman finished down 3.17 per cent at $1.07 cents each today.