Kidman Resources (ASX:KDR) is acquiring two exploration licences from Western Areas (ASX:WSA), adjacent to Kidman’s world-class Earl Grey lithium deposit in Western Australia.
In December 2016, Kidman reported the maiden JORC resource for Earl Grey of 128 million tonnes at 1.44% lithium, containing 4.54 million tonnes of lithium carbonate equivalent.
Importantly, Kidman’s preliminary drilling shows the Earl Grey mineralisation extends into Western Areas’ ground and potentially continues toward the east.
The new deal significantly strengthens Kidman’s strategic landholding in the rapidly emerging Forrestania lithium belt.
The additional ground is expected to allow Kidman to adopt the optimum site layout for the Earl Grey processing facility and related infrastructure
As per the agreement, Kidman will issue Western Areas $6 million worth of Kidman shares and will grant a gross revenue royalty of 1.5% on future lithium production from the acquired tenements.
Kidman will also pay Western Areas $150 for every contained tonne of lithium classified as a JORC Ore Reserve.
Furthermore, Western Areas and Kidman are in advanced discussions regarding a potential farm-in agreement for lithium rights on Western Areas’ remaining northern Forrestania tenements.
Kidman’s share price has increased five-fold over the past one year, last trading at $0.48.