Wesfarmers has entered into a Scheme Implementation Deed (SID) with Kidman Resources Limited confirming the terms to acquire 100% of the outstanding shares in Australian lithium miner Kidman Resources following a second bid of $544mn.
The price of $1.90 per share represents a premium of 47.3 per cent to the last closing price on 1 May 2019, prior to the announcement of Wesfarmers’ proposal to acquire Kidman, and corresponds to a transaction value of approximately A$776mn ($544mn).
Wesfarmers Managing Director Rob Scott said that the execution of the SID agreement with Kidman demonstrated significant progress towards the proposed acquisition of Kidman: “This is an important milestone in advancing a transaction that provides Wesfarmers with an attractive investment and delivers Kidman shareholders with a compelling premium and certain cash return.”
Kidman’s major asset is a 50% interest in the Mt Holland lithium project based in Western Australia, which it owns jointly with Sociedad Quimica y Minera de Chile S.A. (SQM), one of the world’s largest producers and marketers of lithium products.
The project includes the construction of a mine and co-located concentrator at Mt Holland, and a lithium hydroxide refinery in Kwinana. Lithium hydroxide is key to the electric vehicle value chain.
Kidman Resources CEO, Martin Donohue, commented: “We are extremely proud of the hard work and achievements of all our staff and the significant progress we have made to date in developing the Mt Holland Lithium Project. This transaction rewards shareholders for this progress while delivering them with certain cash value for their investment in Kidman today.”
Kidman and the Mt Holland lithium project
The Mt Holland lithium project comprises the development of a globally significant lithium operation. In joint venture with SQM, Kidman is pursuing the:
·development of the lithium deposit to produce spodumene ore;
·construction of a concentrator at Mt Holland, capable of processing the spodumene ore and
producing spodumene concentrate; and
·construction of a lithium hydroxide refinery in Kwinana to process the concentrate and produce approximately 45,000 tonnes per annum of lithium hydroxide at battery grade standards.
Subject to regulatory approvals and detailed engineering studies, construction of the project is expected to commence in FY2020. First production of lithium hydroxide from the refinery is expected in FY2022. Wesfarmers’ anticipated share of capital expenditure for the development of the Mt Holland mine, concentrator and Kwinana refinery is estimated at approximately $600mn.