Why the Kidman Resources Ltd share price has rocketed higher today

The Kidman Resources Ltd (ASX: KDR) share price has started the week strongly, rising a whopping 12.5% in morning trade after the lithium miner made a major announcement.

According to the release Kidman plans to acquire lithium rights through an earn-in agreement with Western Areas Ltd (ASX: WSA) on 19 tenements within the greenstone belt that hosts Kidman’s world-class Earl Grey lithium deposit.

As part of the agreement Kidman will issue Western Areas 6.3 million shares, which will be escrowed for six months. Should the agreement conclude, the leading nickel producer will hold a 5.2% stake in Kidman.

Kidman Managing Director Martin Donohue believes the agreement would create significant value for both sets of shareholders. He stated that: “by consolidating this world-class lithium belt, we can maximise the exploration and production potential while minimising costs, generating strong returns for both companies.”

I would have to agree with Mr Donohue on this one. The agreement makes a lot of sense and I would expect to see it go ahead.

Should you invest in Kidman?

I can’t say I’m surprised to see investors pile into the lithium miner today on the back of this news. The Earl Grey lithium deposit is already known as one of the biggest hard-rock lithium deposits in the world, so I believe there’s significant potential from the surrounding tenements.

Whilst my preference in the industry remains Galaxy Resources Limited (ASX: GXY), I do believe Kidman is worthy of a closer look.

If demand for lithium to be used in batteries for electric vehicles, smart phones, and renewable energy remains as strong as many predict, both Galaxy and Kidman could have extremely bright futures.

But like all mining shares, an investment in either is of course a high risk one. I would suggest investors limit any exposure to the industry to just a small part of their portfolio.

Alternatively, these hot growth shares could be even better options in my opinion. I'm tipping each of them to smash the market this year.

Top 3 ASX Blue Chips To Buy In 2017

For many, blue chip stocks means stability, profitability and regular dividends, often full franked..

But knowing which blue chips to buy, and when, can often be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2017."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

If you're expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you'll be sorely disappointed. Not only are their dividends growing at a snail's pace, their profits are under pressure too due to the increasing competitive environment.

The contrast to these "new breed" blue chips couldn't be greater... especially the very real prospect of significant share price gains, something that's looking less likely from the usual blue chip suspects.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.