Spending rules put cloud over Kidman Resources, SQM’s Mt Holland lithium mine
Summary: Kidman Resources’ Mt Holland lithium project near Southern Cross has been placed under a cloud by a recommendation of the WA Warden’s Court.....
The court yesterday recommended Mines Minister Bill Johnston refuse requests by Kidman to be exempt from minimum expenditure obligations over 13 mining tenements held by the company’s subsidiaries.
The recommendation, which follows a hearing in November last year, puts a question mark over whether the company will have the right to develop the tenements into a mine.
However, Mr Johnston will make a final decision on the matter and could rule against the recommendation.
The applications relate to a period from August 2014 to March 2016, before Kidman acquired the Mt Holland project in July 2016.
SQM chief executive Patricio de Solminihac and Kidman managing director Martin Donohue.
The matter came before the court because two parties — Phoenix Rise and Jeffrey Hull —opposed the exemptions being granted and also lodged forfeiture applications over the tenements.
Companies holding exploration and mining tenements have a responsibility to maintain them in good stead, which requires minimum expenditure typically on exploration.
Plainters can apply to the Warden’s Court for forfeiture if they consider the requirements have not been met.
Kidman is yet to respond to the Warden’s Court recommendation, after having yesterday put its shares in a trading halt.
However, its joint venture partner Chilean chemicals giant SQM overnight noted the recommendation, and described the tenements as a “requirement for the development of the project”.
It also noted the properties were yet to be transferred to the joint venture.
“Although this recommendation by the Warden’s Court is not a final decision on the requested exception, which should be made by the Mining Minster of Western Australia, it could generate uncertainty or delay the project,” SQM said in a statement.
“SQM and Kidman are reviewing the decision made by the Warden’s Court, and will define the next steps.”
Kidman is in a 50-50 joint venture arrangement with SQM to develop its Mt Holland lithium project based on the Earl Grey deposit.
The company also has an option to join SQM in the development of a lithium hydroxide/lithium carbonate plant, for which the two parties earlier this year identified a site in Kwinana.
Kidman had been expected to release a definitive feasibility study for Mt Holland soon.
In May, Kidmanstruck a binding offtake deal with Elon Musk’s Tesla for the supply of lithium hydroxide to be used in the batteries that power the company’s electric cars.
Kidman shares last changed hands for $1.265.