After estimating the project capital cost of US$601 million at the start of this week, Kidman is currently in talking to receive the funds from Chile based joint venture partner Sociedad Quimica y Minera (SQM).
The funding intends to partially support the Kidman’s 50% of share in the capital expenditure to be incurred on the construction of the Mt Holland Lithium Project.
To put it more precisely, Kidman Resources Limited (ASX: KDR) has today entered into a funding term sheet with SQM for capex and working capital financing in respect of Mt Holland Lithium Project.
The statement read that SQM will provide US$100 million debt facility to Kidman but with interest, capitalized at 6-month USD LIBOR which is currently ~2.73%. In additional a margin of 2% is also attached with the new facility. It has been informed that this capex facility will mature on the earlier of the commissioning of the Mt Holland Lithium Project and 18 months from the first drawdown.
Further, the US$10 million of working capital facility is agreed to be provided by Chile’s SQM. The drawdowns from the working capital facility is intended to be used by Kidman in support to fund its share of JV cash calls prior to the receipt of SQM’s next milestone payments, at which point the facility will be repaid.
Kidman’s CEO and Managing Director, Martin Donohue stated that SQM’s financial support has demonstrated its confidence in Kidman and the Mt Holland Lithium Project. He added that the US$100 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, outlines the significant portion of total capital cost for the Project.
This funding term sheet is expected to be converted into legally binding agreement by as early as 31 December 2018 or may be before.
Further, the 50-50 partners Kidman and SQM have agreed to streamline the separate studies for the Mine & Concentrator and Refinery into a consolidated PFS and Definitive Feasibility Study (DFS) for the entire Mount Holland Lithium Project. This is said to reflect the integrated nature of the Project and its feasibility level and execution. Moreover, this integrated PFS is expected to be released in fourth quarter of 2018 while the integrated DFS is estimated to follow in first half of 2019.
Both the parties have also agreed to undertake a further exploration expenditures program at the Mt Holland Lithium Project in which Kidman’s share is reported to be between US$2.5 million and US$3.75 million.
On company’s plan of taking debt facilities, Kidman’s share price crashed 3.167% to close at $1.070 on 25 October 2018. In the past one-year KDR has fallen by 15.65% while in the last three months it has gone worst to 33.83% decline.
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