20/03/2017 - 13:51

Kidman to buy more Western Areas tenements

20/03/2017 - 13:51

Bookmark

Save articles for future reference.

Kidman Resources has entered into an agreement to farm-in to 19 lithium-prospective tenements in Western Australia owned by nickel miner Western Areas, with the scrip-and-spend deal worth up to $11.6 million.

Kidman to buy more Western Areas tenements
Kidman is exploring for lithium at the Earl Grey deposit near Southern Cross.

Kidman Resources has entered into an agreement to farm-in to 19 lithium-prospective tenements in Western Australia owned by nickel miner Western Areas, with the scrip-and-spend deal worth up to $11.6 million.

Kidman will issue 6.3 million shares to Western in order to earn-in to the tenements, which lie adjacent to Kidman’s Earl Grey lithium deposit near Southern Cross.

At Kidman’s opening share price of 42 cents, the deal would be worth $2.6 million.

In exchange, Kidman will have the right to earn up to 50 per cent by spending $5 million on exploration over three years, plus a further 20 per cent by spending $4 million more over a further two years if Western elects not to co-contribute to exploration spending at the end of the first earn-in phase.

It follows news last month that Kidman had acquired two lithium tenements from Western through a $6 million all-scrip deal.

If the agreement is successful, Western will hold a 5.2 per cent stake in Kidman and have the right to appoint a director to the lithium hopeful’s board.

Kidman managing director Martin Donohue said the agreement would create significant value for shareholders of both companies.

“By consolidating this world-class lithium belt, we can maximise the exploration and production potential while minimising costs, generating strong returns for both companies,” he said.

Media reports this morning have speculated that US-based chemicals company Albemarle is planning a takeover of Kidman; although neither party has spoken on the rumours.

Kidman shares were 7.5 per cent higher to 43 cents each at the close of trade, while Western shares were 1.6 per cent higher to $2.44 each.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options