Securing the agreement with Kidman is a significant milestone for Poseidon as it will potentially deliver a minimum of $6 million per year in cash for the duration of the contract.
Whilst Poseidon remains focussed on developing its nickel assets, the agreement with Kidman offers shareholders a unique opportunity to deliver cash back to the business with little downside risk.
The Lake Johnston 1.5 million tonne per annum process plant has the potential of processing lithium hosted pegmatite ores to produce a spodumene concentrate.
Under the terms of the agreement, Kidman will pay Poseidon $500,000 immediately in cash as a non-refundable option fee, valid until 31 August 2017.
If the option is exercised, Kidman will pay all costs associated with refurbishing the Lake Johnston facility.
3 months after exercising the option, Kidman will begin paying Poseidon a minimum of $6,000,000 per year for 3 years for the lease of the Lake Johnston facility.
Upon completion of the lease agreement, Poseidon will have a commissioned an operating plant at no cost to the company and potentially receive a minimum $18,500,000 cash injection.