The Australian share market may have dropped sharply lower on Monday but that hasn't stopped the Kidman Resources Ltd (ASX: KDR) share price from charging higher.
In morning trade the lithium miner's shares were up over 12% to $1.50 at one stage. At the time of writing they have given back some of these gains but still sit 10.5% higher at $1.48.
Why is the Kidman Resources share price charging higher?
This morning Kidman Resources advised that it has executed a deed of settlement with the objectors to the applications for its exemption from the minimum expenditure obligations on its Mt Holland tenements.
In September the Perth mining warden to the WA minister for Mines and Petroleum recommended the minister refuse the applications for its exemption from minimum expenditure obligations for tenements held by its subsidiaries at the Mt Holland Project.
At the time there were fears that this could ultimately lead to the loss of the lucrative tenements.
But today's news means that all objections to the applications for exemption have been withdrawn and forfeiture applications at Mt Holland will also be dismissed.
Management advised that the specific terms of the settlement are confidential, but are not material to Kidman Resources.
What now?
The company believes this settlement provides certainty for Kidman Resources and its joint venture partner Sociedad Quimica y Minera de Chile S.A. (SQM), and will enable their Covalent Lithium business to progress the integrated project development unimpeded.
Furthermore, the conclusion of these matters will trigger the payment of SQM's outstanding milestone payments. These include US$25 million directly to Kidman Resources and US$60 million directly to the Covalent Lithium joint venture.
The company's CEO, Martin Donohoe, appeared to be relieved with the news.
Mr Donohoe said, "This settlement resolves this matter completely. With the settlement concluded, funding secured through to final investment decision and our recent lithium hydroxide offtake agreements with Tesla, Inc. and Mitsui & Co. Ltd, we will be able to wholly focus on progressing the development of the Mt Holland Lithium Project, secure further strategic offtake agreements with key global partners and continue our discussions in relation to the provision of debt facilities with prospective lenders."
Should you invest?
I think Kidman Resources is up there with the likes of Galaxy Resources Limited (ASX: GXY) and Orocobre Limited (ASX: ORE) as one of the most promising lithium miners in Australia. Especially given its joint venture with lithium heavyweight SQM.
I've kept away from the miner due to the potential forfeiture of its tenements, but with the matter now resolved it could be worth a closer look.
However, as with all lithium miners, whether or not they are successful investments will largely depend on where lithium prices go over the next few years. Opinion is extremely divided on this, which makes them risky investment options.
