On Monday, Marindi launched legal proceedings against Kidman over ownership of the project after Kidman denied the two reached a binding contractual agreement over the sale of the lithium rights in April.
Today Kidman reiterated that it did not, nor had it ever, had a binding agreement with Marindi to sell it the Mt Holland lithium rights for $A275,000 in cash and shares and a 2% net smelter return.
“Kidman is disappointed that the allegation by Marindi has been made when discussions between Marindi and the company, that are the subject matter of the allegation, ended in April 2016, and without an agreement being reached,” the company said.
“Kidman notes that prior to the last few days, Marindi had not previously alleged any agreement, and in light of developments since April 2016, the company views Marindi’s actions as being opportunistic.”
Mt Holland contains the Earl Grey pegmatite, which many are speculating could be bigger than Pilbara Minerals’ 128 million tonne Pilgangoora project.
The project, which also contains a 1 million ounce gold resource, also contains other untested pegmatites.
Kidman paid $3.5 million for the project earlier this year, focused on the gold, but once market interest in lithium heated up, it revealed it had received third party enquiries about the lithium rights.
It conducted its own investigations into the lithium potential, re-assaying historical gold results for lithium, which is when the potential became clear.
Kidman now has drill rigs working around the clock ahead of the release of the much-anticipated maiden resource next month.
The company confirmed it had received correspondence from Marindi’s legal representatives but was yet to receive a writ of summons.
It said it would vigorously defend any proceedings.
Meanwhile, Kidman secured an exclusive right to use Poseidon Nickel’s nearby Lake Johnston processing plant to treat ore from Earl Grey.
It follows on from a memorandum of understanding signed in July.
Kidman will pay Poseidon a non-refundable deposit of $500,000 for the option, which expires in August next year.
The company’s early estimates indicate capital costs of around $8 million to modify the plant to produce 200,000-300,000 tonnes a year of 6% spodumene concentrate.
Poseidon said it would receive at least $6 million per year over the three-year deal.
Kidman plans to eventually build its own plant, drawing on the knowledge gained from running Lake Johnston.
“This agreement paves the way for Kidman to become a fully-fledged lithium producer very quickly and for very little capital outlay,” Kidman managing director Martin Donohue said.
“With the option over the plant secured, we will now push ahead as fast as possible with the engineering studies and the completion of the maiden JORC resource at Earl Grey.”
Poseidon said the cash injection would allow it to focus on the restart of its high-grade Silver Swan nickel mine.
Kidman shares dropped 14% on Monday and emerged from a trading halt this morning to gain half a cent to 45.5c. Marindi shares dropped 10% to 1.8c, while Poseidon dropped 5% to 5.5c.
