As announced in July, New York-listed SQM will pay $30 million for 50% of the project in stages, after which SQM will sole-fund $80 million of project expenditure.

SQM has also agreed to grant Kidman up to $21.5 million in credit to continue the development of the project until regulatory conditions are met.

The companies had set a September 30 deadline to formalise the deal, but SQM made it clear last month that it was keen to lock things in sooner.

Kidman managing director Martin Donohue described the signing of the formal agreements as a milestone moment.

“Since Kidman and SQM announced the proposed joint venture on July 12, 2017, we have been encouraged by the positive feedback from investors and stakeholders about the potential of our lithium project and refinery aspirations,” he said.

SQM CEO Patricio de Solminihac said the outlook for the lithium market had never been stronger and the company believed Mt Holland was the best undeveloped hard rock project in Australia.

“We are convinced that the capabilities we have developed in over 20 years producing and commercialising lithium products will be fundamental to successfully develop this project together with our partners,” he said.

“Mount Holland enters our portfolio of lithium projects in Chile and Argentina, as a very low-cost project with large reserves.

“We continue to see strong fundamentals in the growth of this market, and that encourages us to continue looking for new projects, where we can add value using our experience and capabilities.”

A working group has already been set up to advance the project, as well as undertake studies into a lithium refinery.

Earl Grey is set to start production in 2019 at a rate of around 220,000-300,000 tonnes per annum of 6% concentrate.

Kidman is mobilising two additional drill rigs to Mt Holland with the aim to potentially upgrade the Earl Grey resource of 128 million tonnes at 1.44% lithium oxide for 1.84Mt of lithium oxide, which was delineated in just five months by drilling only a small portion of the pegmatite.

Donohue said SQM’s backing would allow it to test the full potential of the area, as well as undertake more extensive regional exploration.

A scoping study is due to be released by the end of the month, with SQM assisting with optimisation of previously completed metallurgical work.

It is proposed that Earl Grey ore will be refined in WA to produce both lithium hydroxide and lithium carbonate.

Kidman plans to take up its rights for a 50% stake in the refinery development, which is slated to produce 40,000 tonnes per annum of carbonate from 2020.

Donohue confirmed the company would retain marketing rights over its 50% share of production, which would enhance funding optionality.

Kidman will also retain the Mt Holland gold rights. The project was initially acquired in late 2015 for its 1 million gold resource.

Shares in Kidman jumped by 5.2% to A80.5c, just shy of the October 2016 52-week high of 82c.