Kidman Resources Ltd (ASX: KDR) operates in the exploration for base metal and rare earths industry within Australia. It is more popularly known as a small-cap lithium player with a market capitalization of $758.470 million. The group witnessed a stock performance change of 2.77% on May 17, 2018 as the investors seem to like the group’s move on inking a binding agreement to supply lithium hydroxide to electric car maker Tesla Inc. The deal is for an initial three-year term on a fixed-price, take-or-pay basis from the first product delivery, and contains two three-year term options, the company said in a statement. It is anticipated that Tesla might buy 5,000 tonnes of lithium hydroxide from Kidman each year.

Kidman said it was also in talks with other strategic, globally significant parties seeking offtake of refined lithium, a key ingredient used in batteries for electric vehicles.
It has been quite recently only that Kidman chose a site in Kwinana, Western Australia, with its joint venture partner Sociedad Quimica y Minera de Chile SQM to develop a lithium processing plant. The site is expected to start production in mid-2019, creating 400 jobs and producing about 40,000 tons a year (t/y) of lithium carbonate.

Kidman said that the Tesla deal would represent less than a quarter of its share of initial nameplate production from the refinery for the first three years. The specific details of the deal have not been released as such. On the other hand, and in addition to agreement with Tesla, Kidman is in discussions with other strategic, globally significant parties to mark key milestones of its long-term strategy. Kidman is currently targeting to enter into offtake agreements, while leaving a minority portion of future supply uncontracted.

We maintain a positive outlook on the group and give a ‘buy’ recommendation at the current market price of $2.22. Further, this update led many other lithium miners advance up. For instance, Galaxy Resources Ltd (ASX: GXY) soared by 8.36%.
 

KDR’s Objectives (Source: Company Reports)

 
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