Trident Royalties - 2023 Full Year Results
02/05/2024 07:00
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RNS Number : 9113M Trident Royalties PLC 02 May 2024
2 May 2024
Trident Royalties Plc
("Trident" or the "Company")
2023 Full Year Results
Trident Royalties Plc (AIM: TRR, OTC: TDTRF), the diversified mining
royalty company, today announces its full year results for the year ended 31
December 2023. The Annual Report and Accounts for the year ended 31 December
2023 and Notice of the 2023 Annual General Meeting will be made available to
download from the Company's website at www.tridentroyalties.com
(http://www.tridentroyalties.com/) in due course.
Chairman's Statement
The last year has been challenging for the global financial industry: in 2022,
geopolitical tensions rose with a war in Ukraine and then, in 2023, war broke
out in the Middle East. Both have potential for escalation, as we have seen
with the recent attacks on ships in the Red Sea. Grant Shapps, the UK Defence
Secretary, described the world as moving from a post-war period to a pre-war
period where "combined threats risk tearing apart the rules-based
international order."
Within the mining industry, we experience these rising geopolitical tensions
through an ever- shrinking field on which it is prudent to invest.
Twenty years ago, China, India and Russia were open for foreign resource
investment, but this is no longer the case. In the last ten years, large parts
of Africa have been effectively closed to Western investment with military
coup d'etats in Sudan, Guinea, Burkina Faso, Niger, Mali, Gabon and Chad. In
more recent years, several Central and South American governments have been
elected by a populace more sceptical of the mining industry with Panama, in
2023, choosing to permanently close its world-class Cobre Panama Mine in the
face of political protests.
Taking these factors into account, the supply side of our industry is going to
face increasing challenges whether from regulatory delays, community dissent
or events of expropriation. The Mining Journal's World Risk Report amply
demonstrates this where the number of mining jurisdictions that are considered
high risk has increased from 18 to 36 in the last five years. We can expect
commodity prices to rise over time due to these difficulties, as well as the
entirely appropriate, but ever-increasing, costs associated with developing
mines in serenity with modern community, environmental, safety and other
standards.
For most investors in junior mining companies, the height of the rising wall
is believed too high to scale. Many junior mining companies have seen their
shares descend in value over time in the face of repeated (and dilutive)
capital raises, delays in permitting, changing commodity prices, political
interference, capricious litigation and project expropriation. It is therefore
unsurprising that, of the junior mining companies listed on the TSX Venture
Exchange and AIM markets, approximately 60% and 35% of them, respectively,
have a market cap of less than US$10m.
What does this mean for Trident Royalties?
First and foremost, it means that Trident is likely to have more and more
opportunities to help provide a capital solution to our counterparties in the
resource industry. Second, we must continue to be selective about which
projects to back. In 2023, we demonstrated our screening process by filtering
out all but four material projects that received Board approval for
investment; namely, two royalties in the USA (copper and lithium), one in
Mexico (silver), one in Mali (gold).
The decision to invest in our Mali asset was taken after extensive
deliberation. We considered a range of factors, but ultimately concluded that
the risk was justified on the basis of (i) the long term presence of the
operator (B2 Gold) in Mali, (ii) the size of the operator; (iii) the
importance of the Fekola mine to the operator's business (circa 600k oz per
annum), (iv) the potential for near-term cash flow; (v) exploration upside,
and (vi) the linkage of a substantial part of the consideration to royalty
receipts.
We can assure our shareholders that we will continue to exercise prudence in
our decision making. Trident has a strong and effective board, as well as a
highly competent management team. The Board meets regularly, including the CEO
and CFO, to consider and debate investment opportunities and strategy. The
Board has a broad diversity of opinion, skills and experience, and is always
conscious of its responsibility, as a fiduciary, to our shareholders.
We continue to maintain our strategy of building a diversified portfolio of
royalties, which broadly mirrors the commodity exposure of the global mining
sector and where the asset owner demonstrates a commitment to safe, efficient,
cost-effective operations where ESG impacts are managed in a responsible
manner. Over time, our business model will lead to our investors being exposed
to a diversified range of commodities and a balanced exposure to geopolitical
risks. Over time, our portfolio will also mature and eventually underpin a
dividend when we can reliably predict strong cash flows from long-life assets.
As previously stated, the Board recognises the importance of returning cash to
its shareholders.
Since listing in 2020 with a single royalty, we have made good progress on
this journey with our portfolio now consisting of 21 assets, of which 12 are
cash flowing. In tandem, we have been able to progressively reduce our cost of
capital, most recently transitioning our debt funding to a revolving credit
facility, significantly lowering borrowing costs and increasing balance sheet
flexibility. This improves our competitive positioning for asset acquisitions
and will enhance returns to shareholders.
Finally, I would like to add my thanks to our shareholders and long-term
supporters throughout a difficult year.
We believe that the next few years will be very exciting and I look forward to
reporting on our progress.
Chief Executive Officer's Statement
2023 saw Trident capitalise on the wider economic landscape of softer equity
markets by pursuing an aggressive acquisition strategy which added to the
scale and diversification of the portfolio. Our objective of acquiring and
aggregating value accretive royalties has been yielding results as evidenced
in increasing revenue returns totalling US$11.0m in 2023, and we are confident
in future revenue growth as portfolio assets either expand or advance into
production.
Due to weak equity markets, 2023 saw mine operators increasingly seek
alternative sources of financing leading to a total of four material
acquisitions in the year. In the first half of 2023, we acquired royalties
over the La Preciosa Silver Project, while in the latter part of the year, we
announced transactions over the Paradox Lithium Project, the Antler Copper
Project and the Dandoko Gold Project, further bolstering our exposure to
lithium, copper and gold.
In addition to the growth of the portfolio through acquisitions, we have seen
material organic growth as several key assets progress through project
milestones. At the beginning of 2023, we confirmed the completion of a sale of
several pre-production gold royalties acquired shortly after listing in 2020,
in exchange for cash proceeds of up to US$15.55m, crystalising a 140% ROI.
This strengthened our cash position and the value unlocked by this transaction
supported our objective to successfully reduce our cost of capital through a
restructuring of our existing debt facility. Other key acquisitions made
shortly after listing in 2020 have now had time to mature, with the royalties
over the Koolyanobbing Iron Ore Mine and the Mimbula Copper Mine having fully
recovered their initial acquisition costs by mid-2023, with further mine life
remaining at both projects.
One of Trident's cornerstone assets, our portfolio of gold offtakes, performed
well across 2023, delivering increased year-on-year revenues across all four
quarters buoyed by strong gold prices and volatility. With the Greenstone Gold
Project targeting first production in H1 2024, we expect the growth in ounces
delivered to Trident to continue into 2024. At Thacker Pass, we were delighted
to note favourable court rulings at the start of the year allowing the
project, the largest known lithium resource in North America, to commence
construction. The project reaffirmed its status as a Tier 1 asset, with the
operator Lithium Americas announcing it had secured US$650m in funding from
General Motors and recently announcing it has received a conditional
commitment from the U.S. Department of Energy for a US$2.26 billion loan under
the Advanced Technology Vehicles Manufacturing Loan Program.
As Thacker Pass advances through the construction phase, we have looked to
increase our interaction with North American investors and were pleased to be
admitted to trading on the OTC market allowing us to increase accessibility
and strengthen our engagement with US investors. This strategy was further
strengthened with two further acquisitions over royalties located in the US in
2023 and is a focus for 2024.
Following the completion of several deals in the latter half of the year, we
were able to further reduce our cost of capital with a new debt facility which
also provides greater flexibility in managing our cash and increases our
potential borrowing capacity. By lowering our cost of capital, we have
directly increased our competitiveness with regards to making new
acquisitions.
I would like to thank our shareholders for their continued support throughout
a difficult year for equity markets across the sector. I stand confident in
our investment strategy and believe that the material organic growth we are
seeing across our portfolio, as well our active acquisition of value-accretive
royalties, will continue to drive long-term revenue growth and deliver
shareholder returns.
Operational Review
Lithium
Lithium's primary use is in the manufacture of batteries, supporting the
transition away from fossil fuels and enabling vehicle manufacturers across
all industries to electrify their fleets in order to meet stringent net zero
carbon emission targets.
Governments globally have brought in legislation to accelerate the transition
to EVs, including Europe and UK's targets to ban the sale of petroleum powered
cars. This rapid transition has resulted in an increase in demand for lithium
batteries. As well as uses in electric vehicles, lithium is also used in
mobile phones, laptops and other electronic devices.
Trident is exposed to lithium through its acquisition of 60% of a royalty over
the Thacker Pass Lithium Project in Nevada, which is the largest known lithium
resource in the USA. Trident has also secured the right to acquire an indirect
1.5% Gross Revenue Royalty over the Sonora Lithium Project, Mexico and holds a
2.5% NSR over the Paradox Basin Project in the USA.
Copper
Due to copper's electrical and thermal conductivity, it is used in most
electrical systems including the battery and wiring required for the charging
of electric vehicles. EVs require up to four times more copper than
traditional petrol or diesel vehicles, and renewable energy systems use up to
six times more copper than fossil fuel systems therefore global demand for
copper has significantly increased.
The development of electric transport, electricity transmission grids and
renewable power generation is forecasted to have pushed global demand for
copper up to 55Mt/year by 2040 1 (#_ftn1) .
Trident is exposed to copper through its royalty over the advanced Pukaqaqa
Asset in Peru, the Antler Project in USA, and the producing Mimbula Mine in
Zambia.
Mineral Sands
Mineral sands, also commonly known as 'heavy mineral sands', contain
concentrated amounts of economically important minerals such as zircon and
titanium minerals, including rutile and ilmenite.
Mineral sands are used most frequently in household products such as suncream,
inks, paints and tiles but are also used in medical devices, welding
materials, purification systems as well as other industrial uses.
Trident has exposure to minerals sands through its acquisition of a 0.25% Free
on Board royalty over the Kwale Mineral Sands Project in Kenya.
Iron Ore
Iron ore is the essential component of the global iron and steel industries
with 98% of mined iron ore being used in the production of steel.
The construction and transport industries are reliant on the iron ore and
steel industry, and it is critical to the development of energy infrastructure
such as the production of wind turbines.
Trident is exposed to iron ore through its 1.5% Free on Board royalty over
certain tenements at the Koolyanobbing Iron Ore Mine in Australia.
Silver
As well as the traditional investment into this precious metal as a hedge
against inflation, silver due to its conductivity, is now a key component in
electrical systems including solar panels and those used in electric vehicles
such as automatic braking, power steering and navigation systems. The increase
in demand for electric vehicles and the move to autonomous driving vehicles
has significantly increased the global demand for silver.
Trident is exposed to silver through its 1.25% NSR Royalty and 2.00% GVR
Royalty over certain tenements at the La Preciosa Project in Mexico.
Gold
Gold offers investors a hedge against inflation and in 2023 the global gold
price increased by 13%. Trident holds a portfolio of gold offtake contracts
over 10 mines. An offtake contract is a contract in which the operator agrees
to sell, and the purchaser agrees to buy, refined gold produced from the mine
over which the offtake is granted. Offtake returns are driven by the direction
and volatility of gold prices but like royalties are not impacted by operator
capex or operating costs.
The key commercial terms of the contract are stated in the table below. A
positive margin can normally be made on the resale of the gold. The average
margin is typically larger during periods of increased volatility and
higher/rising gold prices.
Trident also hold a 1% NSR royalty over the Dandoko Gold Project, operated by
B2 Gold in Mali, and a 1.5% NSR over the Lincoln Gold Mine, USA.
Further details of the Group's investments are provided on its website at
www.tridentroyalties.com (http://www.tridentroyalties.com) .
Gold Offtakes, worldwide
Trident has a portfolio of gold offtake contracts, comprising of offtake
contracts over 10 mines across six countries. The details of the offtake
contracts are outlined below.
Asset(s) Operator Country Status Quotation period Contract Key Terms
Los Filos Equinox Gold Mexico Production 6 Days Offtake on 50% of all refined gold production,
up to cap of 1,100,000 ounces of refined gold
Eagle Victoria Gold Canada Production 7 Days Offtake on 25% of all refined gold production,
up to cap of 1,111,500 ounces of refined gold
Blyvoor Blyvoor Gold South Africa Production 8 Days Offtake on 100% of all refined gold production (after
deduction of streamed ounces), up to cap of 2,700,000
ounces of refined gold
RDM, Fazenda & Santa Luz Equinox Gold Brazil Production 6 Days Offtake on 35% of all refined gold production, up to a cap of 658,333 ounces
of refined gold.
Bonikro Allied Gold Cote d'Ivoire Production 6 Days Offtake on 50% of all refined gold production
(after deduction of streamed ounces), no cap
i-80 Gold i-80 Gold USA Production 7 Days Offtake on 100% of refined gold production subject to an annual ounce cap
Sugar Zone Silver Lake Resources Canada Construction/ 7 Days Offtake on 80% of the gold doré produced at Silver Lake Resources' Sugar Zone
Gold Mine up to 961,250 delivered ounces
Restart
Greenstone Equinox Gold Canada Construction 6 Days Offtake on 100% of refined gold production, up to cap of 58,500 ounces per
year through March 2027. If annual production cap not achieved in 2024-25,
then Trident is paid US$23.50/oz on any shortfall
The gold offtake portfolio continued to develop as several projects continued
to ramp up, and exploration activities were completed across various assets in
the portfolio. Quarterly revenue increased across all four quarters and the
gold offtakes portfolio generated US$6.9m in revenue this year, an increase of
12.8%, in comparison to 2022 in which US$6.1m in revenue was received.
Post period end, Trident completed the acquisition of a further incremental
offtake at the Sugar Zone Gold Mine resulting in Trident holding three
offtakes over the project for a combined 80% of the gold doré produced up to
961,250 delivered ounces.
The outlook for the offtake portfolio is strong heading into 2024 with the
commencement of production at Greenstone expected in H1 2024 expected to
deliver increased ounces, alongside the potential for increased production
from Blyvoor, i-80 Gold and Santa Luz. Sugar Zone is expected to benefit from
the merger between Red 5 and Silver Lake Resources, providing a larger
operator with a stronger balance sheet to support the recommencement of
production in due course.
Producing Royalties
Koolyanobbing, Australia - Iron ore
Key facts
· Location: Australia
· Operator: Mineral Resources Ltd (ASX: MIN)
· Commodity: Iron ore
· Mine Type: Open pit, Direct Ship Ore
· Stage: Production
· Royalty: 1.5% Free on Board
· Total Reserves & Resources:
o 9.3Mt @ 59.9% Fe Reserves (Deception Pit)
o 19.5Mt @59.9% Fe Resources (Deception Pit)
o 40.8Mt @ 58.2% Fe Reserves (Yilgarn)
o 108.6Mt @ 56.8% Fe Resources (Yilgarn)
Trident owns a 1.5% Free on Board revenue royalty covering part of the
producing Koolyanobbing Iron Ore Operation in Western Australia. The royalty
is over tenements which cover part of the Deception Pit and all of the Claw
Pit at Koolyanobbing.
The royalty provides Trident with cash flow from a producing iron ore asset
operated by an established mining company in a worldclass jurisdiction.
Following the Q2 2023 royalty payment Trident has now fully recovered its
investment into the asset.
During the year Trident received US$1.88m (2022: US$1.55m) in royalty
income.
Mimbula, Zambia - Copper
Key facts
· Location: Zambia
· Operator: Moxico Resources Plc (private)
· Commodity: Copper
· Mine Type: Open Pit
· Stage: Production
· Royalty: Gross Revenue Royalty 0.3%
· Total Reserves and Resources
• 93.7Mt @ 0.97% Total Copper ("TCu") Resources
• 67.5Mt @ 0.92% TCu Reserves
Trident held a 1.25% GRR over all copper produced from the Mimbula Mine in
Zambia, operated by Moxico Resources PLC. In Q2 2023 Trident recovered its
investment in full and following the end of the Minimum Payment Schedule the
GRR decreased to 0.3%, with a subsequent decrease to 0.2% once the royalty has
been paid on 575,000 tonnes of copper.
Moxico during the year has successfully ramped up production and capacity is
expected to double in 2024 with the full Phase 2 expansion to 56,000 tonnes
expected to commence in mid-2025.
During the year Trident received US$1.6m (2022: US$2.0m) of payments from
Mimbula, the decrease in royalty payments was expected due to the conclusion
of the minimum payment schedule.
Kwale, Kenya - Mineral Sands
Key facts
· Location: Kenya
· Operator: Base Resources (ASX:BSE)
· Commodity: Mineral Sands
· Mine Type: Open Pit
· Stage: Production
· Royalty: 0.25% Free on Board
· Total Reserves and Resources
• 21Mt @ 2.2% Heavy Mineral ("HM") Reserves
• 184Mt @ 1.5% HM Resources
Trident acquired a 0.25% Free on Board royalty over the Kwale Mineral Sands
Project with an effective acquisition date of 1 October 2022. Kwale
commenced production in 2013, with operator Base Resources extending the
scheduled mine life to the end of 2024.
Royalties Advancing towards Production
Thacker Pass, USA - Lithium
Key facts
· Location: USA
· Operator: Lithium Americas Corp. (NYSE/TSX:LAC)
· Commodity: Lithium
· Mine Type: Open pit
· Stage: Construction
· Royalty: 60% interest in a 1.75% gross revenue royalty (1.05% net
to Trident), assuming the buyback is completed, as detailed below
· Total Reserves: 3.7m tonnes of Lithium Carbonate Equivalent
("LCE") at 3,160ppm Li
In 2021 Trident acquired a 60% interest in a GRR over the Thacker Pass Lithium
Project for US$28.0m. This project is the largest known lithium deposit in
North America and the operator Lithium Americas is targeting 80,000 tonnes per
annum of battery-quality lithium carbonate production capacity in two phases
of 40,000 tonnes per annum. Phase 1 production is expected to commence in
2027.
Thacker Pass is a critical asset in the USA's development of its own critical
minerals supply chain. Thacker Pass entered the construction phase this year
after several key permitting decisions were reached. An appeal relating to the
issuance of the Record of Decision for Thacker Pass was dismissed by the US
District Court, District of Nevada subject to minor additional work which was
successfully completed in May 2023. This decision was subsequently appealed to
the 9(th) U.S. Circuit Court of Appeals, which rejected the arguments the
opponents had put forth in their appeal and ruled that the U.S. Bureau of Land
Management, which approved Thacker Pass, had acted "reasonably and in good
faith".
In February 2023, General Motors invested US$650m toward project development
and entered into a 10-year offtake agreement to purchase Phase 1 production to
support production of up to 1 million electric vehicles per year.
In March 2024, Lithium Americas received a conditional commitment from
the U.S. Department of Energy for a US$2.26 billion loan under the
Advanced Technology Vehicles Manufacturing Loan Program for financing the
construction of the processing facilities at Thacker Pass.
La Preciosa, Mexico - Silver
Key facts
· Location: Mexico
· Operator: Avino Silver & Gold mines Ltd (TSX:ASM)
· Commodity: Silver
· Mine Type: Underground
· Stage: Construction
· Royalty: 1.25% NSR and 2.00% gross value return royalty
· Total Resources: 137Moz Ag Equivalent - Indicated 17.4Mt @ 202
g/t Ag Eq & Inferred 4.4Mt @ 170 g/t Ag Eq
In May 2023 Trident acquired a 1.25% NSR Royalty over the area covering the
Gloria and Abundancia veins and a 2.00% GVR Royalty over the surrounding area
at the La Preciosa Silver Project in Mexico. Additionally, Trident is entitled
to a milestone payment of US$8.75m from the operator Avino Silver and Gold
Mines ("Avino") within 12 months of first production. The milestone payment
may be paid up to 50% in shares of Avino. Avino intends to begin processing
stockpiled material from La Preciosa in H1 2024 at its mill, before commencing
production from fresh ore in 2024. Avino intends to ramp up annual silver
production from La Preciosa to circa 3 million ounces by 2027, increasing to
3.5 million ounces in 2028. With a current total Mineral Resource estimate of
120Moz of silver and 224,000 ounces of gold, La Preciosa is expected to be a
long-life asset with further expansion potential.
Gaining exposure to silver was a strategic decision for Trident, as silver has
the characteristics of a precious metal as well as an increasingly significant
industrial use due to its usage in electrical systems in EVs and solar panels.
Antler, USA - Copper
Key facts
· Location: USA
· Operator: New World Resources Ltd (ASX:NWC)
· Commodity: Copper, Zinc
· Mine Type: Underground
· Stage: Advanced
· Royalty: 0.90% NSR Royalty
· Total Reserves: 11.4Mt @ 4.1% Cu-Equivalent
Trident acquired in Q4 2023 a 0.90% NSR royalty over the current tenement
package which covers the entire Antler Copper Project, including the
copper-zinc Antler deposit and five named exploration targets. The Royalty
also includes a 0.45% NSR royalty over any ground subsequently acquired by New
World within 5km of the Project Area Royalty boundary.
The Antler Project has a JORC (2012) Compliant Mineral Resource estimate of
11.4Mt @ 4.1% Cu-equivalent for approximately 467,000 tonnes of Cu-equivalent.
An Enhanced Scoping Study published in May 2023 outlined a 13-year mine life
with average annual production of 32,700 tonnes copper equivalent.
A Pre-Feasibility Study on the Project is expected in Q4 2024, with
commencement of pre-construction development works targeted for Q1 2025.
Together with Trident's investment and a recent AUD$5m investment from a
leading mining private equity firm, New World is well funded to advance
through the remainder of its planned feasibility studies. Trident considers
there to be significant upside potential, with New World concurrently
targeting exploration opportunities across its land holdings.
Paradox Basin, USA - Lithium
Key facts
· Location: USA
· Operator: Anson Resources Ltd (ASX:ASN)
· Commodity: Lithium, Bromine
· Mine Type: Brine
· Stage: Advanced
· Royalty (sliding scale NSR): 2.50% NSR Royalty
· Total Resources:
o Indicated Resource of 366,737t of LCE and 1.91Mt of Bromine
o Inferred Resource of 1.14Mt of LCE and 5.70Mt of Bromine
In August 2023 Trident acquired a 2.50% NSR royalty over projects owned by
Anson Resources in the Paradox Basin in Utah, USA including the Paradox
Lithium Project and the Green Lithium River Project. Trident will also be
entitled to 2.00% of the net sales proceeds of any projects at which point the
royalty would no longer apply to the sold asset. The Paradox Lithium Project
is an advanced stage lithium brine project, targeting use of direct lithium
extraction.
In October 2023 the operator announced a 45% increase in the JORC (2012)
Compliant Mineral Resource to 1.504Mt of Lithium Carbonate Equivalent (LCE)
and 7.61Mt of Bromine and the strategic acquisition of the Green Energy
Lithium project directly adjacent to Paradox.
Dandoko, Mali - Gold
Key facts
· Location: Mali
· Operator: B2Gold Corporation Limited (TSX:BTO)
· Commodity: Gold
· Mine Type: Open pit
· Stage: Advanced
· Royalty: 1% NSR Royalty
· Total Resources:
o Indicated 7.95Mt @ 1.33g/t Au, for 400Koz Au
o Inferred 1.55Mt @ 0.79g/t Au, for 34Koz Au
In September 2023 Trident acquired a 50% interest in a 2% net smelter return
royalty over the Dandoko Gold Permit owned by B2 Gold Corporation Limited.
Dandoko is located 25km from B2Gold's largest operating asset, the Fekola
Mine. B2 Gold have stated they believe the metallurgical characteristics of
mineralisation at Dandoko are similar to Fekola and will be amenable to
processing at Fekola.
B2Gold has completed a study confirming the potential for near-term production
by trucking saprolite material to Fekola. The company has budgeted US$79m to
facilitate Phase 1 saprolite mining from the Anaconda and Dandoko areas. Of
the budgeted US$79m, US$16m has been allocated for haul road construction to
Fekola from the Anaconda and Dandoko projects.
B2Gold is also currently advancing an engineering study of the 'Fekola
Regional Development Plan' to assess the potential for a new, standalone 4Mtpa
processing facility located at Anaconda, with Resources from Anaconda and
Dandoko forming the basis for the engineering study. Fulfilment of this plan
will permit more substantial production in the medium term.
Pukaqaqa, Peru - Copper
Key facts
· Location: Peru
· Operator: Nexa Resources SA (TSX:NEXA)
· Commodity: Copper, Molybdenum
· Mine Type: Open pit
· Stage: Exploration
· Royalty (sliding scale NSR): Three royalties
· Total Resources: 349.1Mt @ 0.40% Cu
Trident holds a portfolio of three royalties over the Pukaqaqa Copper project,
an advanced stage copper molybdenum asset located in Peru and operated by
South-American focused Nexa Resources. The Pukaqaqa Project has NI 43-101
compliant Measured and Indicated Resources of 309Mt at 0.41% Cu (approximately
1.26m tonnes of contained copper), with an additional Inferred Resource of
40.1Mt at 0.34% Cu (for 136,340 tonnes contained copper and related molybdenum
credits).
The most recent technical report contemplates an open-pit mining operation to
feed a 30,000 tonne-per-day processing plant to produce copper and molybdenum
concentrates over an initial 19-year mine life.
Lincoln, USA - Gold
Key facts
· Location: California, USA
· Operator: Seduli Holdings Pty (private)
· Commodity: Gold
· Mine Type: Underground
· Stage: Production
· Royalty: 1.5% net smelter return royalty (over down dip extension
zone)
· Total Resource: 958Kt @ 9.29g/t Au for 286koz gold
Trident acquired a 1.5% NSR gold royalty covering the entire Lincoln gold
project in California. The royalty includes a 5-mile area of interest which
spans the majority of the exploration area. The royalty is fully secured by
the project assets and reduces to a 0.75% NSR in perpetuity once the royalty
has paid US$3m.
The Lincoln Gold Mine is the only permitted project and processing plant on
the Californian Mother Lode, providing it with significant leverage to
aggressively explore and acquire additional tenure for further upside.
Despite achieving first gold pour in H1 2022, the operator Seduli Holdings
Pty, suspended production operations to undertake resource expansion
activities. Trident agreed to provide various waivers in relation to its
security position in exchange for the implementation of a minimum payment
schedule which will replace the revenue expected from Stage 1.
During the year Trident received US$0.60m of payments from Lincoln under the
minimum payment schedule.
Sonora, Mexico - Lithium
Key facts
· Location: Mexico
· Operator: Ganfeng Lithium (SEHK:1772)
· Commodity: Lithium
· Mine Type: Open pit
· Stage: Advanced
· Royalty: 50% interest in a 3.0% indirect gross revenue royalty
(1.5% net to Trident)
· Total Reserves: 244Mt @ 3,480ppm - 4,515kt LCE
In 2022 Trident announced that Sonoroy, a 50%-held joint venture between
Trident and Marmottes Capital Limited, entered into an agreement to acquire a
3.0% Gross Revenue Royalty (1.5% attributable to Trident) over the Sonora
Lithium Project. The terms of the agreement were the long-stop date to
complete the acquisition of the royalty is the earlier of 31 January 2025, or
the date which is six months after the first royalty payment.
However, Bacanora Minerals Ltd. have pursued legal action against the validity
of the royalty. Subsequently, in September the General Directorate of Mines in
Mexico issued a formal decision that nine lithium concessions, which comprise
the Sonora Lithium Project, were cancelled. Gangfeng have indicated that they
believe that its Mexican subsidiaries have complied with their obligations as
required by Mexican law, and therefore have filed administrative review
recourses before the Secretary of Economy.
The conditions requiring Trident to provide funding in respect of Sonoroy to
enable it to complete the acquisition remain at Trident's discretion and
includes a provision that, at the time of funding, no changes in Mexico's
regulatory regime materially affects the Sonora project and that ongoing
litigation regarding the royalty is favourably resolved. If Trident elects to
exit the joint venture, the repayment date of an initial loan made by Trident
to Sonoroy of US$2.5m is due six months from notification of termination of
the Sale and Purchase Agreement or Joint Venture Agreement. Trident will
continue to monitor the situation carefully but currently intends to maintain
its rights in respect of the asset. The long stop date to complete the
transaction has been extended to 31 December 2026.
2023 Financial Review
During 2023, Trident made significant progress across many areas of the
business. The gold offtake portfolio continued to mature, with increasing
production volumes and a 13% increase in cash flows. Looking forward, the
commissioning of the Greenstone mine in Canada and developments at other
assets should provide further growth in offtake revenues in 2024. An important
milestone was achieved with the Koolyanobbing and Mimbula royalty investments,
as the initial capital outlay was recovered during 2023, approximately three
years after the initial investments.
The proceeds from the sale of the Australian gold royalty portfolio, were
successfully redeployed during 2023 into a number of new assets, further
enhancing the scale and diversity of the portfolio. We look forward to near
term cash flow from the La Preciosa silver deposit in Mexico and positive
project developments at the Antler, Paradox Basin and Dandoko projects.
The evolution of the Group's capital structure continued during 2023, with the
announcement of a new revolving credit facility with BMO and CIBC, two leading
financiers in the mining sector. The new facility provides several benefits;
materially lowering interest costs, providing additional capacity with an
accordion feature to increase the facility to US$60m and reducing ongoing
standby costs, as the facility is revolving and can be drawn as required.
Trident is well positioned with a diverse portfolio of royalty assets,
combined with a strong balance sheet to pursue future growth opportunities.
Royalty and Offtake Transactions
The Group acquired the following royalties during the year:
· La Preciosa silver royalties in Mexico (1.25% NSR Royalty over
the Gloria and Abundancia veins and a 2.00% GVR Royalty over the surrounding
area) and a U$8.75m milestone payment, acquired for US$8m (US$7m on completion
and a further US$1m upon receipt of the milestone payment);
· Dandoko gold project in Western Mali (1% NSR Royalty) acquired
for total consideration of US$6.25m (US$3.75m upfront and a further US$2.5m as
production linked milestone payments);
· Paradox Basin lithium project in the USA (2.5% NSR Royalty)
acquired for total consideration of US$10m (US$1.5m upfront and a further
US$8.5m as production linked milestone payments);
· Antler copper project in the USA (0.9% NSR Royalty covering the
Antler deposit and five named exploration areas and a 0.45% NSR Royalty over a
wider area) acquired for total consideration of A$11m; and
· Kwale mineral sands project in Kenya (0.25% FOB Royalty).
In addition, on 22 February 2023 the Group completed the sale of several
pre-production exploration stage gold royalties over assets in Australia for
cash proceeds of up to US$15.55m.
Statement of Financial Position
Royalty intangible assets at 31 December 2023, consist of US$104.98m cost,
less US$5.36m amortisation and additions of US$28.41m relating to new
acquisitions and US$6.73m relating to the reclassification of Mimbula as a
royalty intangible asset, resulting in a total net book value of US$134.76m
representing the Thacker Pass, Pukaqaqa, Koolyanobbing, Mimbula and Lincoln
projects together with the acquisitions outlined.
The royalty financial instrument representing the fair value of the Mimbula
royalty was reclassified as a royalty intangible asset in July 2023, following
completion of the minimum payment schedule. The royalty financial instrument
had been classified as fair value through profit and loss with the fair value
gains and losses recognised in 'revaluation of royalty financial assets' line
item in the income statement. The value at the beginning of the financial
year was US$7.65m, US$1.50m royalty income was received in during H1 and a
fair value increase of US$0.58m was recognised in the income statement,
resulting in a value of US$6.73m at reclassification.
Trade and other receivables totalling US$9.81m (2022: US$10.40m) includes
US$5.87m receivable from Macquarie bank relating to gold offtake trades which
settled after the year end, US$0.57m in respect of Q4 2023 royalty income due
from Koolyanobbing and Mimbula receivable after the year-end. Other
receivables also include US$2.50m in respect of the Sonora lithium project
cash deposit, treated as an interest free loan.
Trade and other payables totalling US$2.20m (2022: US$2.28m) consisted
predominantly of US$0.99m payables relating to the gold received under the
offtake contracts, which had been sold but not yet settled with the operators,
trade payables, social security and taxation and accruals with all amounts
within agreed payment terms.
At the year-end the net gold receivable amount was US$4.88m.
Deferred contingent consideration of US$8.19m represents contingent payments
to the vendors of the La Preciosa, Paradox and Dandoko assets based on the
operators meeting certain production targets. The amounts have been
discounted and treated as non-current liabilities, given managements'
assessment of when the projects will become operational and the targets
achieved.
Total cash at the end of the year was US$3.25m (US$8.13m including the net
gold trading receivables) and total debt was US$30.00m.
Total net assets increased to US$108.56m during the year from US$104.87m at 31
December 2022 largely due to acquisitions outlined.
Statement of Comprehensive Income and EBITDA
The Group reported a gross profit of US$4.16m (2022: US$2.99m) from reported
net revenues of US$9.52m (2022: US$7.85m). The increase in net revenue was
from the gold offtake portfolio, Koolyanobbing and Lincoln. The fair value
gain on the Mimbula was US$0.58m (2021: US$2.19m) predominantly due to the
payment of the minimum payment schedule in lieu of the mine currently in ramp
up and therefore not materially depreciating in value.
A profit on disposal of US$6.94m was made on sale of Australian pre-production
gold royalties - with gross proceeds of US$14.30m. The Group made a foreign
exchange gain totalling US$0.02m (2022: US$1.01m loss). Finance charges
totalled US$3.55m including US$4.48m in interest payments to Macquarie Bank
and US$1.28m gain relating to amortised finance arrangement fees and warrant
charges and other finance charges. Profit after taxation was US$2.39m (2022:
US$3.68m loss) and basic earnings per share of 0.82c (2022: 1.28c loss).
The Group generated net revenue from its gold offtake portfolio of US$6.88m
(2022: US$6.07m), US$1.87m (2022: US$1.43m) at Koolyanobbing, US$0.60m
(2022: US$0.35m) from Lincoln and US$0.17m (2022: $Nil) from other assets. The
amortisation charge was US$5.37m (2022: US$4.86m) and total Group overheads of
US$5.27m (2022: US$4.67m) including US$0.41m (2022: $0.47m) non-cash
share-based payments and other charges; resulting in an operating loss of
US$1.11m (2022: US$1.67m). The gold offtakes, Koolyanobbing and Mimbula
assets are amortised on a unit of production basis over the life of the
assets.
EBITDA and Adjusted EBITDA
The below table summarises EBITDA and adjusted EBITDA:
Year ended 31 December 2023 Year ended 31 December 2022
US$'000 US$'000
Profit/(loss) after tax 2,392 (3,684)
Income tax 1,411 (945)
Amortisation 5,365 4,857
Finance costs net of finance income 2,631 6,002
EBITDA 11,799 6,230
Net foreign exchange losses (23) 1,007
Income from financial instrument through profit and loss 1,500 2,000
Revaluation of royalty financial assets (578) (2,193)
Share-based payments charge and other non-cash items 408 474
Profit on disposal of intangible asset (6,944) (1,862)
Adjusted EBITDA 6,162 5,656
The following table shows total royalty receipts for the period for royalty
intangible assets, net offtake interests, disposals and financial assets:
Year ended 31 December 2023 Year ended 31 December 2022
US$'000 US$'000
Royalty interests 2,643 1,780
Offtake interests (net proceeds)* 6,878 6,070
Royalties due or received from royalty financial assets 1,500 2,000
Proceeds from Mercedes gold offtake amendment - (gross) - 3,706
Proceeds from the Australian gold royalties sale - (gross) 14,300 -
25,321 13,556
* Offtake interests
An offtake contract is a contract pursuant to which the operator agrees to
sell, and the purchaser (Trident) agrees to buy, refined gold produced from
the mine or mines over which the offtake is granted. The key commercial terms
include those relating to the amount of gold to be purchased, the duration of
the contract, and the payment terms. Trident has the right to purchase gold at
the lowest reference price in a defined quotation period, which is typically
6-8 days. The revenue from these contracts is disclosed net of the purchase
costs in the income statement. Net proceeds comprises gross offtake revenue
of US$522.0m less purchase costs of US$515.1m.
Cashflow and Borrowings
Net cash decreased in the period by US$13.33m (2022: US$28.37m). Financing
outflows were US$14.74m (2022: US$30.06 inflow) resulting from the repayment
of US$10m of the Macquarie Bank facility and financing costs; US$3.28m
(2022: US$54.90m) was invested into acquiring royalty assets, after allowing
for proceeds received from asset sales, cash from royalty financial assets and
finance income, as noted above, and US$4.69m generated (2022: US$3.53m used)
in operating activities.
During 2023 the net gold trading receivable decreased by US$0.24m to US$4.88m.
Depending on the timing and settlement of gold trades and the payments to
operators, this figure fluctuates and can be a receivable or payable item. The
Group had a separate US$5.00m short term overdraft facility with Macquarie
Bank to provide funding for the gold trading receivable over the 2-day
settlement period if required. A similar US$2.00m overdraft facility has been
arranged with CIBC, alongside the new revolving credit facility and the
Macquarie overdraft was terminated upon the refinancing.
The cash figure (excluding the net gold trading receivable) at 31 December
2023 was US$3.25m (31 December 2022: US$16.58m) with the majority held in US
dollars with HSBC Bank plc and Macquarie Bank Limited. On 19 February 2024,
Trident entered into a new fully secured US$40m revolving credit facility with
an option to increase the facility to US$60m via an accordion feature with BMO
Capital Markets and CIBC. The proceeds are to be applied to retire the
existing US$40m secured debt facility provided by Macquarie Bank Limited.
Taxation
During the period the Group paid US$0.34m (2022: US$Nil) in respect of tax
due. A deferred tax asset was recognised totalling US$1.49m (2022: US$2.01m)
primarily in relation to taxable losses incurred in the Company and US
subsidiaries. Following the sale of the Australian gold royalties outlined
above, the deferred tax losses held in the Australian subsidiary were used
during the year; resulting in a deferred tax debit to the income statement of
US$1.97m (2022: US$0.68m credit).
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2023
Continuing operations Notes Year ended Year ended
31 December 2023 31 December 2022
US$'000 US$'000
Royalty and offtake related revenue 3 9,521 7,850
Amortisation of royalty intangible assets 12 (5,365) (4,857)
Gross profit 4,156 2,993
Administrative expenses 4 (5,267) (4,667)
Operating loss (1,111) (1,674)
Revaluation of royalty financial assets 13 578 2,193
Profit on disposal of intangible assets 14 6,944 1,862
Finance income 7 915 241
Other finance costs 8 (3,546) (6,244)
Net foreign exchange gains/(losses) 23 (1,007)
Profit/(loss) before taxation 3,803 (4,629)
Income tax 9 (1,411) 945
Profit/(loss)/profit attributable to owners of the parent 2,392 (3,684)
Other comprehensive income
Items that may be subsequently reclassified to profit and loss:
Exchange gains on translation of foreign operations 36 141
Other comprehensive income for the period, net of tax 36 141
Total comprehensive income/(loss) attributable to owners of the parent 2,428 (3,543)
Earnings per share:
Basic and diluted earnings/(loss) per share (U.S. cents) 10 0.82 (1.28)
Consolidated Statement of Financial Position
As at 31 December 2023
Notes 31 December 2023 31 December
2022
US$'000 US$'000
Non-current assets
Royalty intangible assets 12 134,755 104,975
Royalty financial assets at fair value through profit and loss 13 - 7,653
Deferred tax asset 9 1,489 2,005
Total non-current assets 136,244 114,633
Current assets
Trade and other receivables 17 9,805 10,398
Cash and cash equivalents 18 3,248 16,577
13,053 26,975
Assets classified as held for sale 14 - 6,750
Current assets 13,053 33,725
Total assets 149,297 148,358
Current liabilities
Trade and other payables 19 2,203 2,277
Current tax liabilities 225 -
Borrowings 21 5,064 6,775
Total current liabilities 7,492 9,052
Non-current liabilities
Contingent consideration 20 8,188 408
Borrowings 21 23,814 31,576
Derivative financial liability 21 607 2,452
Deferred tax liability 9 637 -
Total non-current liabilities 33,246 34,436
Total liabilities 40,738 43,488
Net assets 108,559 104,870
Equity attributable to owners of the parent
Share Capital 22 3,855 3,835
Share Premium 22 107,220 106,387
Share-based payments reserve 23 919 511
Foreign exchange reserve 295 259
Retained Earnings (3,730) (6,122)
Total equity 108,559 104,870
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Share capital Share premium Share based payments reserve Retained earnings Total
Foreign exchange reserve
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 January 2021 3,307 87,046 403 118 (2,804) 88,070
Loss for the year - - - - (3,684) (3,684)
Other comprehensive income:
Exchange gains on translation of foreign operations - - - 141 - 141
Total comprehensive income - - - 141 (3,684) (3,543)
Transaction with owners in their capacity as owners:
Issue of share capital 528 19,613 - - - 20,141
Share issue costs - (272) - - - (272)
Share-based payment charge - - 108 - 366 474
Total transactions with owners recognised directly in equity 528 19,341 108 - 366 20,343
Balance at 31 December 2022 3,835 106,387 511 259 (6,122) 104,870
Profit for the year - - - - 2,392 2,392
Other comprehensive income:
Exchange gains on translation of foreign operations - - - 36 - 36
Total comprehensive income - - - 36 2,392 2,428
Transaction with owners in their capacity as owners:
Issue of share capital 20 833 - - - 853
Share-based payment charge - - 408 - - 408
Total transactions with owners recognised directly in equity 20 833 408 - - 1,261
Balance at 31 December 2023 3,855 107,220 919 295 (3,730) 108,559
Consolidated Statement of Cash Flows
for the year ended 31 December 2023
Notes Year to Year to
31 December 2023 31 December 2022
US$'000 US$'000
Cash flow from Operating Activities
Profit/(loss) before taxation 3,803 (4,629)
Revaluation of royalty financial assets 13 (578) (2,193)
Profit on sale of intangible asset 14 (6,944) (1,862)
Finance income 7 (915) (241)
Other finance costs 8 3,546 6,244
Net foreign exchange losses 37 1,442
Amortisation of royalty intangible asset 12 5,365 4,857
Share-based payments charge 408 474
Net cash generated before changes in working capital 4,722 4,092
Movement in payables (60) 1,424
Movement in receivables 62 (9,048)
Net cash generated/(used) in operating activities before tax 4,724 (3,532)
Corporate income tax paid (34) -
Net cash generated/(used) in operating activities 4,690 (3,532)
Cash flows from investing activities
Payments for acquisition of royalty intangible assets(1) 12 (19,485) (60,518)
Net cash received from sale of intangible assets 14 13,292 3,528
Cash received from royalty financial assets 13 2,000 1,875
Finance income 7 915 215
Net cash used in investing activities (3,278) (54,900)
Cash flows from financing activities
Issue of share capital 22 - 6,438
Share issue costs 22 - (272)
Proceeds from borrowings 21 - 40,000
Repayment of borrowings 21 (10,000) (10,000)
Issue costs of credit facility - (1,576)
Finance costs 8 (4,742) (4,529)
Net cash (used)/generated from financing activities (14,742) 30,061
Net (decrease) in cash and cash equivalents during the year (13,330) (28,371)
Cash at the beginning of year 18 16,577 45,637
Effect of foreign exchange rate on cash and cash equivalents 1 (689)
Cash and cash equivalents at the end of the year 18 3,248 16,577
( )
(1) During 2023, non-cash consideration of US$0.75m in shares and $8.19m of
contingent consideration were recognised in relation to the acquisition of
royalty intangible assets. See note 12 for further details.
Company Statement of Financial Position
As at 31 December 2023
Notes 31 December 2023 31 December
2022
US$'000 US$'000
Non-current assets
Investment in subsidiaries 15 113 113
Royalty intangible asset 12 6,685 -
Royalty financial assets at fair value through profit and loss 13 - 7,653
Amount due from subsidiary undertakings 16 99,704 90,553
Deferred tax asset 9 323 221
Total non-current assets 106,825 98,540
Current assets
Trade and other receivables 17 3,615 4,041
Cash and cash equivalents 18 1,667 9,537
Current assets 5,282 13,578
Total assets 112,107 112,118
Current Liabilities
Trade and other payables 19 486 322
Current liabilities 486 322
Non-current Liabilities
Derivative financial liability 21 607 2,452
Total liabilities 1,093 2,774
Net assets 111,014 109,344
Equity
Share Capital 22 3,855 3,835
Share Premium 22 107,220 106,387
Share-based payments reserve 23 919 511
Foreign exchange reserve (23) (23)
Retained Earnings (957) (1,366)
Total equity 111,014 109,344
Company Statement of Changes in Equity
For the year ended 31 December 2023
Share capital Share premium Share based payments reserve Retained losses Total
Foreign exchange reserve
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 January 2022 3,307 87,046 403 (23) (412) 90,321
Loss for the year - - - - (1,320) (1,320)
Total comprehensive income for the year - - - - (1,320) (1,320)
Issue of share capital 528 19,613 - - - 20,141
Share issue costs - (272) - - - (272)
Share options lapsed - - (366) - 366 -
Share-based payment charge - - 474 - - 474
Total transactions with owners recognised directly in equity 528 19,341 108 - 366 20,343
Balance at 31 December 2022 3,835 106,387 511 (23) (1,366) 109,344
Profit for the year - - - - 409 409
Total comprehensive income for the year - - - - 409 409
Issue of share capital 20 833 - - - 853
Share-based payment charge - - 408 - - 408
Total transactions with owners recognised directly in equity 20 833 408 - - 1,261
Balance at 31 December 2023 3,855 107,220 919 (23) (957) 111,014
Company Statement of Cash Flows
for the year ended 31 December 2023
Notes Year to Year to
31 December 2023 31 December 2022
US$'000 US$'000
Cash flows from operating activities
Profit/(loss) before taxation 332 (1,364)
Revaluation of royalty financial asset 13 (578) (2,193)
Finance income (463) (113)
Intercompany interest received (250) (831)
Other finance (income)/costs 8 (1,645) 1,694
Net foreign exchange losses/(gains) (5) 127
Amortisation of royalty intangible asset 64 -
Share-based payments charge 408 474
Net cash used before changes in working capital (2,137) (2,206)
Increase in payables 249 86
Increase in receivables (272) (2,154)
Net cash used in operating activities before tax (2,160) (4,274)
Corporate income tax paid - -
Net cash used in operating activities (2,160) (4,274)
Cash flows from investing activities
Cash received from royalty financial asset 13 2,000 1,875
Finance income 463 113
Net foreign exchange gains - 7
Loans granted to subsidiary undertakings 16 (22,994) (28,696)
Loan repayments from subsidiary undertakings 16 14,817 -
Net cash used in investing activities (5,714) (26,701)
Cash flows from financing activities
Issue of share capital 22 - 6,438
Share issue costs 22 - (272)
Net cash generated from financing activities - 6,166
Net decrease in cash and cash equivalents during the year (7,874) (24,809)
Cash at the beginning of year 9,537 34,480
Effect of foreign exchange rate on cash and cash equivalents 4 (134)
Cash and cash equivalents at the end of the year 1,667 9,537
Notes to the financial statements
1. GENERAL INFORMATION
Trident Royalties plc is a company incorporated and domiciled in the United
Kingdom. The Company is a public limited company, which is listed on AIM of
the London Stock Exchange, incorporated and domiciled in England and Wales.
The address of the registered office is 6(th) Floor 60 Gracechurch Street,
London, United Kingdom, EC3V 0HR.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these
financial statements are set out below. The policies have been consistently
applied throughout the year presented, unless otherwise stated.
Basis of preparation
The Group's consolidated financial statements and the Parent Company financial
statements have been prepared in accordance with UK-adopted international
accounting standards and the requirements of the Companies Act 2006.
The financial statements have been prepared under the historical cost
convention except for financial assets at fair value through profit and loss
account, contingent consideration and financial derivative liabilities which
are measured at fair value. The principal accounting policies adopted are set
out below. The Group financial statements are presented in US Dollars (US$)
and rounded to the nearest thousand.
The preparation of the Group financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's
accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the
consolidated financial statements are explained below.
Going Concern
The financial position of the Group and cash flows as at 31 December 2023 are
set out above. The Group meets its day-to-day working capital and other
funding requirements with its current cash, raised through equity placings,
proceeds from the disposal of assets and revenue from its cash generating
royalties. The Group actively manages its financial risks as set out in note
24 and operates Board-approved financial policies, that are designed to ensure
that the Group maintains an adequate level of headroom and effectively
mitigates financial risks.
On the basis of current financial projections (at least 12 months from the
date of approval of the financial statements), the Directors have a reasonable
expectation that the Group has adequate resources to continue in operational
existence, and meet its liabilities as they fall due, for the foreseeable
future. Accordingly, the Directors consider it appropriate to adopt the going
concern basis in preparing these financial statements.
Standards, interpretations and amendments to published standards not yet
effective
The Directors have considered those standards and interpretations, which have
not been applied in the financial statements, that are in issue but not yet
effective and do not consider that they will have a material impact on the
future results of the Group or Company.
Basis of consolidation
The consolidated financial statements present the results of the Company and
its subsidiaries as if they formed a single entity. Intercompany transactions
and balances between group companies are therefore eliminated in full.
At 31 December 2023, the consolidated financial statements combine those of
the Company with those of its subsidiaries. Subsidiaries are entities over
which the Group has control. Control is achieved when the Group is exposed, or
has rights, to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the investee.
Generally, there is a presumption that a majority of voting rights result in
control. To support this presumption and when the Group has less than a
majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an
investee, including:
· The contractual arrangement with the other vote holders of the
investee;
· Rights arising from other contractual arrangements; and
· The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated from the
date that control ceases. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in the Group
financial statements from the date the Group gains control until the date the
Group ceases to control the subsidiary.
Investments in subsidiaries are accounted for at cost less impairment within
the Company financial statements. Where necessary, adjustments are made to the
financial statements of subsidiaries to bring the accounting policies used in
line with those used by other members of the Group
Segment Reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker which is considered
to be the Board.
Foreign currency
Transactions entered into by Group entities in a currency other than the
currency of the primary economic environment in which they operate (their
"functional currency") are recorded at the rates ruling when the transactions
occur. Foreign currency monetary assets and liabilities are translated at
the rates ruling at the reporting date. Exchange differences arising on the
retranslation of unsettled monetary assets and liabilities are recognised
immediately in profit or loss.
Exchange gains and losses arising on the retranslation of monetary financial
assets are treated as a separate component of the change in fair value and
recognised in profit or loss. Exchange gains and losses on non-monetary OCI
financial assets form part of the overall gain or loss in OCI recognised in
respect of that financial instrument.
Translation into presentation currency
The Group presents its financial information in US Dollars (US$), which is the
functional currency of the Group and Company. The functional currency of all
the Company's subsidiaries is US$ except for TRR Services Australia Pty Ltd
which has an AUD functional currency.
· Assets and liabilities for each financial reporting date
presented (including comparatives) are translated at the closing rate of that
financial reporting period.
· Income and expenses for each income statement (including
comparatives) is translated at exchange rates at the dates of transactions.
For practical reasons, the Company applies average exchange rates for the
period.
· All resulting changes are recognised as a separate component of
equity.
· Equity items are translated at exchange rates at the dates of
transactions.
The following exchange rates were used in the retranslation of these financial
statements.
At 31 December 2023 At 31 December 2022
US$/AUD closing rate at financial reporting date 0.6812 0.6806
US$/AUD average exchange rate during the reporting period 0.6737 0.6926
Intangible assets
Royalty arrangements
Royalty arrangements which are identified and classified as intangible assets
are initially measured at cost, including any transaction costs, less
provision for impairment where required.
Upon commencement of production at the underlying mining operation intangible
assets are amortised on a units of production basis matching the depletion of
the ore body over the life of the mine. Amortisation rates are adjusted on a
prospective basis for all changes to estimates of the life of mine reserves.
Impairment
At each reporting date, the Group reviews the carrying amounts of its
intangible assets to determine whether there is any indication that those
assets are impaired. If such an indication is identified, the recoverable
amount of the asset is estimated in order to determine the extent of any
impairment. The recoverable amount is the higher of fair value (less costs of
disposal) and value in use. In assessing value in use, the estimated cash
flows are discounted to their present value using a pre-tax discount rate. If
the recoverable amount of the asset is estimated to be less than its carrying
value, the carrying amount of the asset is reduced to its recoverable amount.
An impairment loss is also recognised in the income statement. Should an
impairment loss subsequently reverse, the carrying amount of the asset is
increased to the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment been recognised. A reversal of an impairment
loss is also recognised in the income statement.
Assets held for sale
Non-current assets classified as held for sale are measured at the lower of
carrying amount and fair value less costs to sell.
Non-current assets are classified as held for sale if their carrying amount
will be recovered through a sale transaction rather than through continuing
use. This condition is regarded as met only when the sale is highly probable,
and the asset is available for immediate sale in its present condition.
Management must be committed to the sale which should be expected to qualify
for recognition as a completed sale within one year from the date of
classification.
Investments
Investment in subsidiaries are recorded at cost less provision for impairment.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
Current tax
Current tax is calculated at the tax rates (and laws) that have been enacted
or substantively enacted in the countries in which the Group operates by the
Statement of Financial Position date and is based on taxable profit or loss
for the year.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit or loss and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises from the
initial recognition of goodwill or from the initial recognition (other than in
a business combination) of other assets and liabilities in a transaction that
affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the
year when the liability is settled, or the asset is realised. Deferred tax
is charged or credited in the income statement, except when it relates to
items charged or credited directly to equity, in which case the deferred tax
is also dealt with in equity. Deferred tax assets and liabilities are offset
when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by
the same taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they
relate to items that are recognised in other comprehensive income or directly
in equity, in which case, the current and deferred tax are also recognised in
other comprehensive income or directly in equity respectively.
Share-based payments
The fair value of the employee services received in exchange for the grant of
the options is recognised as an expense. The total amount to be expensed is
determined by reference to the fair value of the options granted, excluding
the impact of any non-market service and performance vesting conditions.
Non-market and performance vesting conditions are included in assumptions
about the number of options that are expected to vest. The total amount
expensed is recognised over the vesting period, which is the period over which
all of the specified vesting conditions are to be satisfied. At each reporting
date, the entity revises its estimates of the number of options that are
expected to vest based on the non-market vesting conditions. It recognises the
impact of the revision to original estimates, if any, in profit and loss, with
a corresponding adjustment to equity.
Financial Instruments
Financial instruments comprise cash and cash equivalents, borrowings,
financial assets and liabilities, derivative financial liabilities and equity
instruments. Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of the financial
instrument and comprise trade and other receivables and trade and other
payables respectively.
Cash and cash equivalents
Cash and cash equivalents comprise cash at hand and current and deposit
balances at banks.
Borrowings
Interest bearing debt facilities are initially recognised at fair value, net
of directly attributable transaction costs. Transaction costs are recognised
in the income statement on a straight-line basis over the term of the
facility.
Trade and other receivables
Trade and other receivables are accounted for under IFRS 9 using the expected
credit loss model and are initially recognised at fair value and subsequently
measured at amortised cost less any allowance for expected credit losses.
Impairment provisions for receivables from related parties and loans to
related parties are recognised based on a forward-looking expected credit loss
model.
Royalty financial assets at fair value through profit and loss
Royalty financial assets are recognised or derecognised on completion date
where a purchase or sale of the royalty is under a contract, and are initially
measured at fair value, including transaction costs.
All of the Group's royalty financial assets have been classified as at fair
value through profit and loss ("FVTPL").
The royalty financial assets at FVTPL are measured at fair value at the end of
each reporting period, with any fair value gains or losses recognised in the
'revaluation of royalty financial assets' line item of the income statement.
Fair value is determined in the manner described in note 13.
Trade and other payables
Trade and other payables are recognised initially at their fair value and
subsequently measured at amortised cost using the effective interest method.
Contingent consideration
Contingent consideration is initially recognised at its fair value based on
the expected future cash flows. After initial recognition the contingent
consideration is remeasured at the end of each reporting period with any gains
or losses recognised in the royalty intangible asset balance on the balance
sheet.
Warrant liability at fair value through profit and loss
The warrant liability is initially measured at fair value, including
transaction costs. The liability is measured at fair value at the end of
each reporting period, with any gains or losses recognised as other finance
costs in the income statement. Fair value is determined by the calculation
described in note 21.
Equity instruments and reserves description
An equity instrument is any contract that evidences a residual interest in the
assets of the Company after deducting all of its liabilities. Equity
instruments issued by the Company are recorded at the proceeds received net of
direct issue costs.
Ordinary shares are classified as equity.
Deferred shares are classified as equity but have restricted rights such that
they have no economic value.
Share capital account represents the nominal value of the ordinary and
deferred shares issued.
The share premium account represents premiums received on the initial issuing
of the share capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income tax
benefits.
Share based payment reserve represents equity-settled share-based employee
remuneration until such share options are exercised.
Foreign exchange reserve represents
· differences arising on the opening net assets retranslation at a
closing rate that differs from opening rate; and
· differences arising from retranslating the income statement at
exchange rates at the dates of transactions at average rates and assets and
liabilities at the closing rate.
Retained earnings include all current and prior period results as disclosed in
the Statement of Comprehensive Income.
Revenue recognition
The revenue of the Group comprises mainly royalty income. It is measured at
the fair value of the consideration received or receivable after deducting
discounts, value added tax and other withholding tax. The royalty income
becomes receivable on extraction and sale of the relevant underlying
commodity, and by determination of the relevant royalty agreement.
Trident adopts IFRS 15 revenue from contracts with customers ("IFRS 15") -
except in the case of the offtake contract revenue. The strict legal
interpretation of IFRS 15 deems Trident to be principal in the transaction
(and not agent) and accordingly should disclose revenue and costs gross.
However, management considers that the substance of these instruments (and
revenue and cost) is such that Trident will always sell the gold within the
quotation period, does not intend to hold gold for long term trading and will
not make a gross loss. As a result of the above judgement, revenue in the
income statement is stated net. The gross revenue, and related costs, are
disclosed in note 3 - Business and Geographical Reporting.
Interest income is accrued on a time basis, by reference to the carrying value
and at the effective interest rate applicable.
Provisions
Provisions are recognised when the Group has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of
resources will be required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation. The Group's estimate in respect
of contingent consideration that may be payable following the acquisition of
Royalty Intangible Assets, is capitalised as an asset acquisition cost. The
value of the provision is determined by the amounts deemed payable by
management at the balance sheet date.
Critical accounting estimates and judgements
The preparation of the financial statements in conformity with IFRS requires
the use of estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the
reported amounts of expenses during the reporting period. Although these
estimates are based on management's best knowledge of the amounts, events or
actions, actual results ultimately may differ from these estimates.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Critical accounting judgements
Classification of royalty arrangements: initial recognition and subsequent
measurement
The Directors must decide whether the Group's royalty arrangements should be
classified as:
· Intangible assets in accordance with IAS 38 Intangible Assets; or
· Financial assets in accordance with IFRS 9 Financial Instruments
The Directors use the following selection criteria to identify the
characteristics which determine which accounting standard to apply to each
royalty arrangement:
Type 1 - Intangible assets: Royalties, are mainly classified as intangible
assets by the Group. The Group considers the substance of a simple royalty to
be economically similar to holding a direct interest in the underlying mineral
asset. Existence risk (the commodity physically existing in the quantity
demonstrated), production risk (that the operator can achieve production and
operate a commercially viable project), timing risk (commencement and quantity
produced, determined by the operator) and price risk (returns vary depending
on the future commodity price, driven by future supply and demand) are all
risks which the Group participates in on a similar basis to an owner of the
underlying mineral licence. Furthermore, in a royalty intangible, there is
only a right to receive cash to the extent there is production and there are
no interest payments, minimum payment obligations or means to enforce
production or guarantee repayment. These are accounted for as intangible
assets under IAS 38.
Type 2 - Financial royalty assets (royalties with additional financial
protection): In certain circumstances where the risk is considered too high,
the Group will look to introduce additional protective measures. This has
taken the form of minimum payment terms. Once an operation is in production,
these mechanisms generally fall away such that the royalty will display
identical characteristics and risk profile to the intangible royalties;
however, it is the contractual right to enforce the receipt of cash which
results in these royalties being accounted for as financial assets under IFRS
9.
Accounting classification Substance of contractual terms Accounting treatment Examples
Royalty intangible assets and offtake interests Simple royalty with · Investment is presented as an intangible asset and carried at cost less · Koolyanobbing
accumulated amortisation and any impairment provision
no right to receive cash other than through a royalty related to production
· Thacker Pass
· Royalty or offtake income is recognised as revenue in the income statement
· Lincoln gold
· Intangible asset is assessed for indicators of impairment at each period
An offtake contract is a contract where an operator agrees to sell, and the end · Sugar Zone offtake
purchaser agrees to buy, refined metal produced from the mine or mines over
which the offtake is granted. The key commercial terms include those relating · Equinox Gold offtake
to the amount of metal to be purchased, the delivery mechanics, and the
payment terms. · Allied Gold offtake
· Blyvoor Gold offtake
· i80 Gold offtake
· Victoria Gold offtake
· Mimbula
· Kwale
· La Preciosa
· Dandoko
· Paradox
· Antler
Royalty financial instruments Royalty arrangement with a contractual right to receive cash (e.g. through a · Financial asset is recognised at fair value on the balance sheet · Mimbula (till 1st July 2023)
minimum payment profile)
· Fair value movements taken through the income statement (FVTPL)
· Royalty income is not recognised as revenue in the income statement and
instead reduces the fair value of the asset
The Directors are cognisant that the Lincoln gold royalty is subject to a
minimum payment schedule and is classified as a Royalty intangible asset. The
classification decision was arrived at having considered that the minimum
payment schedule was introduced as an amendment to the original royalty
agreement in order to assist the operator with the progression of the asset
development and with the intention to revert to a standard royalty arrangement
upon commencement of production. The classification will be reviewed at each
reporting date.
Gold offtake revenue recognition
The Directors have decided that Trident acts as an agent in the gold offtake
transaction and accordingly should disclose revenue and costs net. The strict
legal interpretation of IFRS 15 deems Trident to be the principal. However,
the Directors consider that the substance of these instruments (and revenue
and cost) is such that Trident will always sell the gold within the quotation
period, does not intend to hold gold for long term trading and will not make a
gross loss. As a result of the above judgement, revenue in the income
statement is stated net. Further details are disclosed in note 3 - Business
and Geographical Reporting.
Going concern
The Group and Company financial statements have been prepared on a going
concern basis as the Directors have assessed the Group's and Company's ability
to continue in operational existence for the foreseeable future. The
operations are currently being funded through existing cash reserves and
royalty income.
The financial statements do not include the adjustments that would result if
the Group or Company were not to continue as a going concern. See Going
Concern section for more details.
Loans to subsidiaries
Loans to subsidiaries have a carrying value at 31 December 2023 of US$99.7m
(2021: US$90.6m). The Directors have assessed the carrying value, in
accordance with the IFRS 9 Expected Credit Loss model and consider it to be
equal to fair value on the basis that the loans will be recovered from the
subsidiaries as they generate cash flow from their underlying investments in
royalty assets. In the event that the underlying value of the royalty asset
becomes impaired, and the loans are not considered to be recoverable, an
impairment charge will then be recognised in the Statement of Comprehensive
Income.
Key sources of estimation uncertainty
Assessment of fair value of royalty arrangements held at fair value
The Mimbula royalty was held at fair value until its reclassification as a
royalty intangible asset. Fair value was determined based on discounted cash
flow models (and other valuation techniques) using assumptions considered to
be reasonable and consistent with those that would be applied by a market
participant. The determination of assumptions used in assessing fair values is
subjective and the use of different valuation assumptions could have a
significant impact on financial results.
In particular, expected future cash flows, which are used in discounted cash
flows models, are inherently uncertain and could materially change over time.
They are significantly affected by a number of factors including commodity
prices, exchange rate changes and reserves and resources and timing/likelihood
of mines entering production if not already generating income.
The key assumptions relating to the Group's royalty financial asset classified
as fair value through profit or loss is set out in note 13.
Impairment review of intangible assets
Intangible assets are assessed for indicators of impairment at each reporting
date with the assessment considering variables such as the production
profiles, production commissioning dates where applicable, forecast commodity
prices and guidance from the mine operators.
Where indicators are identified, the starting point for the impairment review
will be to measure the expected future cash flows from the royalty arrangement
should the project continue/come into production. A pre-tax nominal discount
rate is applied to the future cash flows. The discount rate of each royalty
arrangement is specific to the underlying project, making reference to the
risk-free rate of return expected on an investment with the same time horizon
as the expected mine life, together with the country risk associated with the
location of the operation. Changes in discount rate are most sensitive to
changes in the risk-free rate, country risk premiums and the expected mine
life.
The outcome of this net present value calculation is then risk weighted to
reflect management's current assessment of the overall likelihood and timing
of each project coming into production and royalty income arising. This
assessment is impacted by news flow relating to the underlying operation in
the year, in conjunction with management's assessment of the economic
viability of the project based on commodity price projections.
Amortisation
The Group's amortisation policy is based on a depletion method using units of
production. Management regularly review the life of its assets, the
amortisation rates and methodology, and amortisation rates may be adjusted for
changes to the estimates.
3. BUSINESS AND GEOGRAPHICAL REPORTING
The Group's chief operating decision maker is considered to be the Executive
Board. The Executive Board evaluates the financial performance of the Group by
reference to its diversified portfolio - split between precious, bulk, battery
and base metal assets - its reportable segments.
The following individual royalty arrangements are aggregated into the
reportable segments:
Precious: Lincoln Gold Mine, Gold Offtake Contracts, La Preciosa, Dandoko
Bulk: Koolyanobbing, Kwale
Battery Metals: Thacker Pass, Paradox
Base: Mimbula, Pukaqaqa, Antler
Below is a summary of the Group's results, assets and liabilities by
reportable segment as presented to the Executive Board. Operating
profit/(loss) is stated before revaluation of royalty financial instruments,
one off costs, finance income and expense foreign exchange gains and taxation.
Segmental information as at 31 December 2023:
Precious Bulk Base Other Total
Battery metals
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Royalty and offtake related revenue 7,478 1,930 - 113 - 9,521
Amortisation of royalty intangible assets (4,148) (1,153) - (64) - (5,365)
Gross profit 3,330 777 - 49 - 4,156
Administrative expenses - - - - (5,267) (5,267)
Total segment operating profit/(loss) 3,330 777 - 49 (5,267) (1,111)
Total segment assets 81,107 2,118 35,296 17,041 13,735 149,297
Total segment liabilities (31,205) - - - (9,533) (40,738)
Segmental information as at 31 December 2022:
Precious Bulk Battery metals Base Other Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Royalty and offtake related revenue 6,418 1,432 - - - 7,850
Amortisation of royalty intangible assets (3,796) (1,061) - - (4,857)
-
Gross profit 2,622 371 - - - 2,993
Administrative expenses - - - - (4,667) (4,667)
Total segment operating result 2,622 371 - - (4,667) (1,674)
Total segment assets 82,732 2,445 28,234 11,714 23,233 148,358
Total segment liabilities (40,081) - - - (3,407) (43,488)
As at 31 December 2023, the Group had received royalty income from the Gold
Offtake portfolio and Lincoln gold (precious segment), Koolyanobbing and Kwale
(bulk segment) and Mimbula (base segment). Additionally, a fair value gain of
US$0.6m (2022: US$2.2m) was recognised in the base segment relating to the
Mimbula asset for the period prior to its reclassification as a Royalty
intangible asset (see note 13).
US$6.9m (2022: US$6.1m) of the precious revenue relates to net proceeds from
gold offtake contracts - gross revenue was US$522.0m (2022: US$446.1m) with
US$515.1m (2022: US$440.0m) costs.
4. ADMINISTRATIVE EXPENSES
Year ended 31 December 2023 Year ended 31 December 2022
US$'000 US$'000
Employee benefit expense (note 6) 3,309 2,946
Legal and professional 1,126 1,068
Other operating expenses 832 653
Total operating expenses 5,267 4,667
5. AUDITOR REMUNERATION
During the year the Company obtained the following services from the auditor:
Year ended 31 December 2023 Year ended 31 December 2022
US$'000 US$'000
Fees payable to the auditor for the audit of the Group and Company 55 69
Total auditor's remuneration 55 69
Other assurance services pursuant to legislation - -
Details of the Company's policy on the use of auditors for non-audit services,
the reasons why the auditor was used rather than another supplier and how the
auditor's independence and objectivity are safeguarded are set out in the
Audit Committee Report.
6. EMPLOYEE BENEFIT EXPENSE
Group Company Group Company
Year ended 31 December 2023 Year ended 31 December 2023 Year ended 31 December 2022 Year ended 31 December 2022
US$'000 US$'000 US$'000 US$'000
Directors' salary and fees 1,617 1,014 1,185 585
Employee costs 1,051 68 1,103 455
Social security costs 233 115 184 90
Share based payments 408 408 474 474
Total employee benefit expense 3,309 1,605 2,946 1,604
Further disclosures in respect of Directors' remuneration are included within
the Directors' Remuneration Report. The average number of employees
(including Directors) during the year was 9 (2022: 9).
7. FINANCE INCOME
Year ended 31 December 2023 Year ended 31 December 2022
US$'000 US$'000
Interest from bank deposits 915 241
915 241
8. OTHER FINANCE COSTS
Year ended 31 December 2023 Year ended 31 December 2022
US$'000 US$'000
Interest paid 4,483 3,774
Amortisation of financing costs (including warrant (credit)/charge) (1,284) 2,220
Other finance charges 347 250
3,546 6,244
A fair value credit of US$1.6m (2022: US$1.7m charge) relating to the
outstanding warrants held in the Company was recognised in the year.
9. INCOME TAX
Year ended 31 December Year ended 31 December 2022
2023 US$'000
US$'000
Analysis of charge for year:
United Kingdom corporation tax - -
Overseas taxation 258 84
Adjustments in respect of prior years - -
Current tax expense 258 84
Deferred tax charge/(credit) in current year 1,476 (1,317)
Adjustments in respect of prior years (323) 318
Effect of changes in tax rates - (30)
Deferred tax 1,153 (1,029)
Income tax charge/(credit) 1,411 (945)
Year ended 31 December 2023 Year ended 31 December 2022
US$'000 US$'000
Factors affecting the tax charge for the year:
Profit/(loss) before taxation 3,803 (4,629)
Tax on result calculated at UK Corporation tax of 23.5% (2022: 19%) 894 (880)
Tax effects of:
Items non-taxable/deductible for tax purposes:
Non-deductible expenses 47 107
Non-taxable income - -
Temporary and other differences:
Foreign tax credits 34 83
Effect of differences between local and UK tax rates 502 (420)
Prior year adjustment to current and deferred tax (323) 319
Deferred tax not recognised (100) (27)
Remeasurement of deferred tax for changes in tax rates 365 (127)
Other adjustments (8) -
Income tax 1,411 (945)
The Group is subject to taxation in United Kingdom, USA and Australia with
applicable tax rates of 25.00%, 21.00% and 30.00% respectively. The Group does
not have any unresolved tax matters or disputes with the tax authorities in
the jurisdictions in which it operates.
DEFERRED TAXATION
The following are the deferred tax assets and liabilities recognised by the
Group and the movements during the year:
Group Tax losses Other Total
US$000 US$000 US$000
At 1 January 2022 1,482 (439) 1,043
Credit/(charge) to income statement 1,317 (289) 1,028
Exchange differences - (66) (66)
31 December 2022 2,799 (794) 2,005
(Charge)/credit to income statement (2,521) 1,382 (1,139)
Exchange differences - (14) (14)
At 31 December 2023 278 574 852
Analysed as:
Deferred tax asset 278 1,211 1,489
Deferred tax liability - (637) (637)
The deferred tax asset predominantly relates to the US subsidiaries. Based on
the forecast future cashflows for the royalty assets held by these
subsidiaries the losses are expected to be fully utilised, accordingly the
deferred tax asset has been recognised in full.
The deferred tax liability principally relates to accelerated capital
allowances in the Australian subsidiary.
Company Tax losses Other Total
US$000 US$000 US$000
At 1 January 2022 - 93 93
Credit to income statement - 128 128
At 31 December 2022 - 221 221
Credit to income statement - 102 102
At 31 December 2023 - 323 323
10. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the loss attributable to
equity holders of the Company by the weighted average number of ordinary
shares in issue during the period.
NET PROFIT/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS Year ended 31 December Year ended 31 December 2022
2023 US$'000
US$'000
Profit/(loss) 2,392 (3,684)
The weighted average number of shares in issue for the purpose of calculating
basic and diluted earnings per share and basic and diluted adjusted earnings
per share are as follows:
WEIGHTED AVERAGE NUMBER OF SHARES IN ISSUE 2023 2022
Basic number of shares outstanding 291,749,788 288,853,068
Dilutive effect of Employee Share Option Scheme 40,859 -
Diluted number of shares outstanding 291,790,647 288,853,068
Earnings/(loss) per share - basic 0.82 c (1.28) c
Earnings/(loss) per share - diluted 0.82 c (1.28) c
The effect of the outstanding warrants and options in respect of the prior
year as disclosed under note 23 would have been anti-dilutive (reducing the
loss per share) and accordingly is not presented.
In addition, the effect of the issue of ordinary shares shortly after year
end, would also have been anti-dilutive, and accordingly is not considered.
The issue, however, may be dilutive in future periods.
11. DIVIDENDS
There were no dividends paid or proposed by the Company in either period.
12. ROYALTY INTANGIBLE ASSETS
Group Royalty Offtake Total
Interests Interests US$'000
US$000s US$000s
Cost
At 1 January 2022 46,167 - 46,167
Acquisitions - 74,018 74,018
Disposals - (1,833) (1,833)
Reclassified as assets held for sale (6,750) - (6,750)
Exchange differences (768) - (768)
At 31 December 2022 38,649 72,185 110,834
Acquisitions 28,406 - 28,406
Additions 18 - 18
Disposals - - -
Reclassified from royalty financial assets 6,731 - 6,731
Exchange differences 4 - 4
At 31 December 2023 73,808 72,185 145,993
Accumulated Amortisation
At 1 January 2022 (1,267) - (1,267)
Amortisation (1,062) (3,795) (4,857)
Disposal - 166 166
Exchange differences 99 - 99
At 31 December 2022 (2,230) (3,629) (5,859)
Amortisation (1,217) (4,148) (5,365)
Disposal - - -
Exchange differences (14) - (14)
At 31 December 2023 (3,461) (7,777) (11,238)
Net book value at 31 December 2022 36,419 68,556 104,975
Net book value at 31 December 2023 70,347 64,408 134,755
Company Royalty Offtake Total
Interests Interests US$'000
US$000s US$000s
Cost
At 1 January 2022 and 31 December 2022 - - -
Acquisitions - - -
Additions 18 - 18
Reclassified from royalty financial assets 6,731 - 6,731
At 31 December 2023 6,749 - 6,749
Accumulated Amortisation
At 1 January 2022 and 31 December 2022 - - -
Amortisation (64) - (64)
At 31 December 2023 (64) - (64)
Net book value at 31 December 2022 - - -
Net book value at 31 December 2023 6,685 - 6,685
Amortisation
Amortisation is charged on a units of production basis (over initial estimated
reserves) on those assets in production. In the case of Koolyanobbing it is
estimated that circa 20% (2022:52%) of the original acquired reserve remains.
Impairment
The royalty intangible assets are reviewed for impairment indicators at each
reporting date. In the event that impairment indicators exist a full
impairment review will take place to determine whether the discounted future
cash flows exceed cost.
The sensitivity of the discounted future cash flows to changes in management's
key assumptions, such as commodity prices and production rates, has been
reviewed to assess for indicators of impairment. It has been concluded that
any reasonable change in the key inputs would not result in a material
impairment.
Material acquisitions
La Preciosa
In May 2023 Trident acquired royalties and a milestone payment over the La
Preciosa Silver Project in Mexico. The royalty assets comprise:
· 1.25% net smelter return royalty covering the Gloria and
Abundancia veins;
· 2.00% gross value return royalty covering all other areas of La
Preciosa; and
· US$8.75m milestone payment (the "Milestone Payment"), payable
within 12 months of first silver production at La Preciosa.
In consideration, Trident paid US$7m in cash on completion and will pay a
further US$1m, in cash or shares at Trident's election, upon receipt of the
Milestone Payment or other circumstances as set out in the SPA.
Dandoko
In September 2023 Trident acquired a 50% interest in a 2% net smelter return
royalty over the Dandoko Gold Project in Western Mali, Africa. The total
consideration was US$6.25m comprising US$3m in cash and US$0.75m in Trident
shares paid on completion of the investment. Further consideration will be
paid on the following milestones:
· US$1.25m in cash on first royalty receipt from the royalty area,
and
· US$1.25m in cash on receipt of payment on 500,000 ounces gold
sold from the royalty area.
Antler
In November 2023 Trident acquired royalties which compromises of:
· 0.90% net smelter return royalty covering Antler deposit and five
named exploration targets ("Project Area Royalty");
· 0.45% net smelter return royalty covering royalty over any ground
subsequently acquired by New World within 5km of the Project Area Royalty
boundary.
In consideration, Trident paid AUD$11m in cash.
Paradox
In September 2023 Trident acquired a 2.50% net smelter royalty in the Paradox
Basin in Utah, USA. In consideration, Trident paid US$1.5m on completion and
will pay a further consideration on the achievement of the following
milestones:
· US$3.5m upon commencement of commercial production by Anson at
Paradox ('First Contingent Payment');
· US$5.0m on the second anniversary of the First Contingent Payment
Reclassified from royalty financial asset
In July 2023 Trident's entitlement to receive a minimum payment from the
Mimbula Royalty ceased with royalty payments being received thereafter.
Consequently, the Mimbula Royalty no longer meets the conditions to be
classified as royalty financial asset and has been reclassified as a royalty
intangible asset. See note 13 for further information regarding the terms of
the royalty.
13. ROYALTY FINANCIAL ASSETS
In July 2020 the Group acquired the Mimbula Royalty from Moxico Resources plc
a staged GRR over production from the operating Mimbula copper mine and
associated stockpiles located in Zambia's prolific Copperbelt Province. The
GRR was acquired for cash consideration of US$5.00m. Trident is entitled to
royalty payments on production which commenced on 1 July 2020 and extend in
perpetuity.
Until June 2023 Trident was entitled to receive either a Minimum Payment
("MP") or a royalty payment, whichever was higher. Thereafter, Trident would
only receive royalty payments. The royalty payments are calculated as a
percentage of the gross revenue derived from sale of finished copper and
copper concentrate. Per the terms of the agreement, the royalty percentage is
calculated as follows:
a. During the MP period, 1.25% of gross revenue;
b. During the period commencing on the day after the expiry of MP period
and ending on the date on which royalty payments have been made to Trident in
respect of a total aggregate quantity of no less than 575,000 tonnes of copper
cathode or other finished copper product, 0.3% of gross revenue; and
c. during the period commencing on the day after the expiry of the MP
period and continuing for the duration of the agreement, 0.2% of gross
revenue.
Group and Company
Fair Value 2022
2023 US$'000
US$'000
At 1 January 7,653 7,461
Royalties due or received (1,500) (2,000)
Revaluation of royalty financial asset recognised in profit or loss 578 2,192
Reclassified to royalty financial assets (6,731) -
At 31 December - 7,653
On the 1 July 2023, following the expiry of the minimum payment period the
Mimbula royalty was reclassified as a royalty intangible asset (see note 12).
14. ASSETS HELD FOR SALE
Group 2022
2023 US$'000
US$'000
At 1 January 6,750 -
Royalty intangible assets reclassified as held for sale - 6,750
Disposal (6,750) -
At 31 December - 6,750
In December 2022 the Group agreed to sell its pre-production gold royalties
over Lake Rebecca, Spring Hill and four other projects acquired as a portfolio
from Talga Resources to Franco-Nevada in exchange for cash proceeds of up to
US$15.8m. One early-stage royalty was removed from the portfolio prior to
closing and the transactions proceeds were adjusted to be up to US$15.6m. Cash
consideration of US$14.3m ($13.3m net of transaction costs) was received in
the year with a further US$1.3m to be paid upon first production from the
Rebecca Gold Project. A profit on disposal of US$6.9m was recognised in the
year following the netting off of contingent consideration (US$0.4m) attached
to the Spring Hill royalty (see note 20). The sale of these investments was
completed in February 2023.
There were no assets held for sale in the Company (2022: US$Nil).
15. INVESTMENTS IN SUBSIDIARIES
Company US$'000
Cost
At 1 January 2022 and 1 January 2023 113
Investment in subsidiary -
At 31 December 2023 113
As at 31 December 2023 the Company held interests in the following subsidiary
and joint venture companies:
Country of registration Proportion held
Company Registered Office Nature of business
TRR Services, LLC USA 100% 7233 S.Kellerman Way, Aurora, CO 80016 Service company
TRR Services Australia Pty Limited Australia 100% Service company
Floor 2, 44A Kings Park Road, West Perth, WA 6005
TRR Services Schweiz AG Switzerland 100% Service company
Grafenauweg 8, 6300 Zug
TRR Services UK Ltd United Kingdom 6th Floor 60 Gracechurch Street, London, United Kingdom, EC3V 0HR Service company
100%
TRR Holdings LLC USA 100% 251 Little Falls Drive, Wilmington, DE 19808 Service company
TRR Offtakes LLC USA 100% 251 Little Falls Drive, Wilmington, DE 19808 Service company
Tiomin Peru S.A.C Peru 100% Parque las Leyendas MZA, 13 Lote,°902A Al Costado de Metro De La Av La Dormant
Marina, Lima, Peru
TRR Sonora Limited United Kingdom 100% 6th Floor 60 Gracechurch Street, London, United Kingdom, EC3V 0HR Dormant
Sonoroy Holdings Limited United Kingdom 50% Lynton House 7-12 Tavistock Square, London, England, WC1H 9BQ Dormant
16. AMOUNT DUE FROM SUBSIDIARY UNDERTAKINGS
Company 2023 2022
US$'000 US$'000
Loans and contributions to subsidiaries 99,704 90,553
99,704 90,553
During the year ended 31 December 2023 the maximum amount owed by the
subsidiaries to the Parent Company was US$99.7m (2022: US$90.6m). The related
party loans are unsecured, repayable upon demand and have a 6% interest rate
where applicable. The fair value of loans to subsidiaries is the same as their
carrying values stated above.
17. TRADE AND OTHER RECEIVABLES
Group Company Group Company
2023 2023 2022 2022
US$'000 US$'000 US$'000 US$'000
Trade receivables 9,270 2,655 9,938 3,015
Prepayments and accrued income 511 905 394 989
Current tax asset - - 29 -
Indirect taxes recoverable 24 55 37 37
9,805 3,615 10,398 4,041
Due to the short-term nature of the current receivables, their carrying amount
is considered to be approximate to their fair value.
18. CASH AND CASH EQUIVALENTS
Group Company Group Company
2023 2023 2022 2022
US$'000 US$'000 US$'000 US$'000
Cash at bank and on hand 3,248 1,667 16,577 9,537
All of the Company's cash and cash equivalents are held in accounts which bear
interest at floating rates and the Directors consider their carrying amount
approximates to their fair value. Details of the credit risk associated with
cash and cash equivalents is set out in note 24.
19. TRADE AND OTHER PAYABLES
Group Company Group Company
2023 2023 2022 2022
US$'000 US$'000 US$'000 US$'000
Trade payables 1,343 231 1,556 85
Other taxation and social security 6 - 113 -
Accrued expenses 854 255 608 237
2,203 486 2,277 322
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and ongoing costs. The Company has financial risk management
policies in place to ensure that all payables are paid within the pre-agreed
credit terms. The Directors consider that the carrying amount of trade
payables approximates to their fair value.
20. CONTINGENT CONSIDERATION
Group US$'000
At 31 December 2022 408
Additions 8,188
Disposal (408)
At 31 December 2023 8,188
The brought forward Contingent consideration relates to the acquisition of the
Spring Hill royalty which was sold on 23 February 2023. The 2023 additions
relate to three royalties; Dandoko US$1.83m, Paradox US$5.43m, La Preciosa
US$0.93m. The above amounts represent managements estimate of the amounts due
and their belief that the events that trigger payment of the additional
consideration will be met. See note 12 for further information regarding the
conditions attached to the contingent payments. The amounts are discounted and
expected to fall due after more than one year.
21. BORROWINGS
Group 2023 2022
US$'000 US$'000
At 1 January 38,351 10,536
Repayment of debt facility - (10,536)
Secured loan facility at amortised cost - 40,000
Prepayment of debt facility (10,000) -
Other movements 527 (1,649)
At 31 December 28,878 38,351
On 1 July 2021 the Group entered into a US$10m secured loan facility agreement
with a syndicate managed by Tribeca Investment Partners. The Facility was
drawdown on 3 August 2021 and repaid in full on 6 January 2022.
On 10 January 2022, a new fully secured US$40m loan facility was entered into with Macquarie Bank Limited. The facility had a 3-year term with interest charged at 7.75% plus SOFR. On 23 February 2023, the facility was restructured, with a one-year extension to December 2025 and a reduction in the coupon to 5.75% plus SOFR (subject to maintaining certain leverage ratios). On 29 November 2023, a US$ 10m prepayment was made against the facility. Other movements includes non-cash amortisation of US$0.53m (2021: US$0.81m) on the arrangement fees of US$2.46m incurred on the Macquarie Bank facility in the prior year which have been netted off against the borrowings in accordance with IFRS 9 'Financial Instruments'. In the prior year's Annual Report and Accounts the amortised arrangement fees were not netted off against borrowings and were disclosed within the trade and other receivables balance. This has resulted in a restatement of the disclosed borrowings balance of $40.0m to $38.4m and a reduction in the trade and other receivables balance from US$12.0m to US$10.4m as at 31 December 2022.
Maturity analysis
Group 2023 2022
US$'000 US$'000
Amounts due within one year 5,064 6,775
Amounts due after more than one year 23,814 31,576
28,878 38,351
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Group 2023 2022
US$'000 US$'000
Cash and cash equivalents 3,248 16,577
Secured loan facility (30,000) (40,000)
Net debt (26,752) (23,423)
Net (decrease)/increase in cash and cash equivalents in the year (13,330) (28,371)
Cash outflow/(inflow) from change in secured loan facility 10,000 (29,464)
Exchange differences 1 (689)
Change in net debt resulting from cash flows (3,329) (58,524)
Net debt at the start of the year (23,423) 35,101
Net debt at the end of the year (26,752) (23,423)
The net gold receivable amount of US$4.88m (2022: US$5.12m) is not included in
the net debt reconciliation shown above.
WARRANT LIABILITY
As part of the Tribeca facility, 3,500,000 share warrants to subscribe for
shares in the Company were issued exercisable at £0.5166 per share ('Tribeca
Warrants'). The Tribeca Warrants expired on 2 August 2023.
As part of the Macquarie facility, 14,840,517 share warrants to subscribe for
shares in the Company were issued exercisable at £0.51 per share ('Macquarie
Warrants'). The Macquarie Warrants were exercisable immediately on issue and
expired 36 months from drawdown. Following the restructuring of the facility
on the 23 February 2023, the expiry date was extended for a further twelve
months. As the US$ value of the Macquarie Warrant exercise price is a variable
amount they have been treated as a derivative financial liability and are
classified as fair value through profit and loss. The inputs used to calculate
the fair value of the Warrants on initial recognition is shown in note 23.
Group and Company
Fair Value US$'000
At 1 January 2023 2,452
Revaluation of derivative financial asset recognised in profit or loss (1,845)
At 31 December 2023 607
22. SHARE CAPITAL AND SHARE PREMIUM
Group and Company Number of ordinary shares of 1p Number of deferred shares of 1p Share Share
capital premium
US$'000 US$'000
At 1 January 2022 251,592,413 - 3,307 87,046
Share issue - placing 13,118,057 - 179 6,259
Share issue - royalty acquisitions 26,013,903 - 344 13,156
Share issue - non-executive directors' fees 406,227 - 5 198
Share issue expenses - - - (272)
At 31 December 2022 291,130,600 - 3,835 106,387
Share issue - non-executive directors' fees 174,366 - 2 101
Share issue - royalty acquisitions 1,425,210 - 18 732
At 31 December 2023 292,730,176 - 3,855 107,220
Share issues during the year:
On 17 January 2023, 174,366 ordinary shares were issued at 49p per share in
lieu of non-executive directors' fees.
On 6 September 2023, 1,425,210 ordinary shares were issued at 42p as
consideration for the acquisition of the Dandoko royalty.
Shares issued subsequent to the year-end
On 2 January 2024, 349,206 ordinary shares were issued at 33p per shares to
directors and management of the Company.
23. SHARE BASED PAYMENTS
Share options
During 2023 and the previous year share options were granted to Directors and
Senior Management of the Company. Under IFRS 2 "Share-based Payments", the
Company considers these to be equity settled share-based payments and
determines the fair value of the options issued to Directors and employees as
remuneration and recognises the amount as an expense in the statement of
income with a corresponding increase in equity.
At 31 December 2023, the Company had outstanding options to subscribe for
Ordinary shares as follows:
Option exercise price Expiry date Vesting date Fair value of individual option At 01/01/2023 Expired or At 31/12/2023
lapsed
Issued
£0.2000 02/06/2030 02/06/2021 £0.0630 1,041,666 - - 1,041,666
£0.2400 02/06/2030 02/06/2022 £0.0608 1,041,667 - - 1,041,667
£0.2800 02/06/2030 02/06/2023 £0.0605 1,041,667 - - 1,041,667
£0.2965 20/12/2030 20/12/2022 £0.1260 200,001 - - 200,001
£0.3558 20/12/2030 20/12/2023 £0.1180 200,000 - - 200,000
£0.4551 20/12/2030 20/12/2024 £0.1060 199,999 - - 199,999
£0.3700 20/04/2028 20/12/2024 £0.1068 510,000 - - 510,000
£0.5000 01/02/2029 01/02/2023 £0.1010 1,280,000 - - 1,280,000
£0.5000 01/02/2029 31/12/2023 £0.0910 1,280,000 - - 1,280,000
£0.5000 01/02/2029 31/12/2024 £0.0830 1,280,000 - - 1,280,000
£0.5000 01/02/2029 31/12/2025 £0.0740 1,280,000 - - 1,280,000
£0.5000 01/02/2029 31/12/2026 £0.0650 1,280,000 - - 1,280,000
£0.5000 20/09/2029 20/09/2023 £0.1690 320,000 - - 320,000
£0.5000 20/09/2029 31/12/2023 £0.1610 320,000 - - 320,000
£0.5000 20/09/2029 31/12/2024 £0.1510 320,000 - - 320,000
£0.5000 20/09/2029 31/12/2025 £0.1440 320,000 - - 320,000
£0.5000 20/09/2029 31/12/2026 £0.1310 320,000 - - 320,000
£0.5550 13/03/2030 13/03/2025 £0.2620 - 333,333 - 333,333
£0.6600 13/03/2030 13/03/2026 £0.2311 - 333,333 - 333,333
£0.7700 13/03/2030 13/03/2029 £0.2502 - 333,334 - 333,334
12,235,000 1,000,000 - 13,235,000
On 13 March 2023, 1,000,000 share options were granted to a senior manager,
with time-based vesting conditions. One third of the options will vest on 12
March 2025 and then one-third at the end of each subsequent year thereafter
until all options have vested. The fair value of the share options was
determined using a Black Scholes model using the following inputs:
Weighted average share price on date of grant (£)
£0.555 £0.555 £0.555
Exercise price (£) £0.555 £0.666 £0.777
Length (years) 7 7 7
Expected volatility,% 36% 36% 36%
Expected dividend growth rate,% 0% 0% 0%
Risk-free interest rate (5-year bond),% 3.65% 3.65% 3.65%
The share options granted in 2022 with a £0.50 exercise price are subject to
two vesting conditions. The options vest upon the occurrence of both the
earliest vesting date and upon the remuneration committee determining the
Hurdle volume-weighted average price less the total dividend per share
(excluding any tax credit) ("VWAP") has been achieved for at least a period of
365 days consecutively at any time between the grant date to the seventh
anniversary of the grant date ("Performance Period"). There are five hurdles
and subsequent vesting dates, with 20% of the total options granted vesting
once these are achieved.
The fair value of the share options was determined using a Monte Carlo model
that can simulate a range of possible outcomes. The Monte Carlo model uses a
normal distribution of outcomes and is capable of capturing the market-based
performance conditions which should be included in the option fair value, by
allowing the simulation of daily VWAP share price. The Monte Carlo model used
the following inputs:
Grant date
1 February 2022 20 September 2022
Weighted average share price on date of grant £0.409 £0.497
Exercise price £0.50 £0.50
Expected volatility,% 36% 36%
Expected dividend growth rate,% 0% 0%
Risk-free interest rate (5-year bond),% 1.29% 3.24%
Share-based remuneration expense related to the share options in issue and
those granted during the year is included in the administration expenses line
in the consolidated income statement in the amount of US$0.41m (2022:
US$0.47m).
Volatility was determined by reference to historic share price data and
comparison to peer groups where historic data is limited to a short time
period.
Share warrants
On 11 January 2022, 14,840,517 share warrants to subscribe for shares in the
Company were issued to Macquarie Bank Limited. See note 20 for further
information.
Warrant exercise price £0.51
Fair value of one option, £ 0.044
Option pricing model used Black Scholes
Weighted average share price at grant date, £ 0.352
Weighted average contractual life, years 3
Expected volatility,% 35%
Expected dividend growth rate,% 0%
Risk-free interest rate (5-year bond),% 0.73%
The fair value on initial recognition of the warrants was US$879,000.
Subsequent remeasurement of the warrants was determined using the Black
Scholes pricing model with reference to updated key inputs being the share
price of one ordinary share at 31 December and share price volatility
(calculated as the volatility of one ordinary share over a period equivalent
to the remaining expected term to redemption). Following the restructuring of
the facility on 23 February 2023, the expiry date of the warrants was extended
for a further 12 months to 31 December 2025.
24. FINANCIAL RISK MANAGEMENT
The Group's activities expose it to a variety of financial risks which result
from its operating and investing activities; market risk (foreign currency
exchange risk and commodity price risk), liquidity risk, capital risk and
credit risk. These risks are mitigated wherever possible by the Group's
financial management policies and practices described below. The Group's
financial risk management is carried out by the finance team led by the Chief
Financial Officer and under policies approved by the Board. Group finance
identifies, evaluates and mitigates financial risks in close co-operation with
the Group's senior management team.
Capital risk
The Group's objectives when managing capital are:
· to safeguard the Group's ability to continue as a going concern,
so that it continues to provide returns and benefits for shareholders;
· to support the Group's growth; and
· to provide capital for the purpose of strengthening the Group's
risk management capability
The Group actively and regularly reviews and manages its capital structure to
ensure an optimal capital structure and equity holder returns, taking into
consideration the future capital requirements of the Group and capital
efficiency, prevailing and projected profitability, projected operating cash
flows, projected capital expenditures and projected strategic investment
opportunities. Management regards total equity as capital and reserves, for
capital management purposes. The Group is not subject to externally imposed
capital requirements.
Commodity price risk
The royalty portfolio exposes the Group to commodity price risk through
fluctuations in commodity prices of its royalty investments particularly the
prices of iron ore, gold and copper. The Board consider that the strategy of
the Group to build a diversified portfolio of royalty assets that mirrors the
global natural resources sector is sufficient mitigation with regard to the
exposure to commodity price risk. Prior to committing to royalty
acquisitions the Board obtain independent price forecasts to ensure that such
investments are priced in accordance with consensus pricing. The Group does
not hedge against commodity price movements.
Credit risk
Credit risk refers to the risk that the Group's financial assets will be
impaired by the default of a third party (being non-payment within the agreed
credit terms). The Group is exposed to credit risk primarily on its cash and
cash equivalent balances as set out in note 18 and on its trade and other
receivable balances as set out in note 17. The Group's credit risk is
primarily attributable to its other receivables, being royalty receivables. It
is the policy of the Group to present the amounts in the balance sheet net of
allowances for doubtful receivables, estimated by the Group's management based
on prior experience and the current economic environment. In certain cases,
the Group has the right to audit the reported royalty income.
For banks and financial institutions, only parties with a minimum credit
rating of BBB are accepted. The majority of cash is held with HSBC Bank plc in
the UK and Macquarie Bank Limited in Australia.
The Directors have considered the credit exposures and do not consider that
they pose a material risk at the present time. The credit risk for cash and
cash equivalents is managed by ensuring that all surplus funds are deposited
only with financial institutions with high quality credit ratings. There are
currently no expected credit losses.
Liquidity risk
Liquidity risk relates to the ability of the Group to meet future obligations
and financial liabilities as and when they fall due. The Group currently has
sufficient cash resources to pay the trade and other payables and contingent
consideration when they fall due. The table below analyses the Group's
financial liabilities, which will be settled on a gross basis. The amounts
shown are the contractual undiscounted cash flows.
Future expected payments
Group 2023 2022
US$'000 US$'000
Trade and other payables within one year 2,203 2,277
Contingent consideration due > one year 12,000 408
Borrowings due within one year 5,625 7,500
Borrowings due > one year 24,375 32,500
The US$40m of borrowings, as at 31 December 2022 was restructured in February
2023, with the first repayment not due until mid-2024. A prepayment of US$10m
was made in the year on the Macquarie Bank loan facility resulting in
undiscounted borrowings of US$30m as at 31 December 2023. The Group has
sufficient resources to service the borrowings and meet related financial
covenants.
Foreign exchange risk
The Group is exposed to foreign exchange risk arising from currency exposures,
primarily with respect to the United States Dollar, British Pound (GBP) and
the Australian Dollar.
The following table highlights the major currencies the Group operates in and
the movements against the US Dollar during the course of the year:
Average rate
Reporting spot rate
2023 2022 2023 2022
Movement Movement
British Pound 1.25 1.23 (0.14) 1.27 1.21 (0.14)
Australian Dollar 0.69 0.69 (0.06) 0.68 0.68 (0.05)
The Group's exposure to foreign currency risk based on US Dollar equivalent
carrying amounts of monetary items at the reported date:
2023
US$'000 2022
US$'000
US$ GBP US$ GBP
Other Other
Cash and cash equivalents 2,863 20 365 15,383 280 914
Trade and other receivables 8,730 - 517 9,436 - 486
Trade and other payables (1,415) (485) (293) (1,585) (321) (259)
Contingent consideration (8,188) - - - - (408)
Net exposure 1,990 (465) 589 23,234 (41) 733
The royalty financial asset held in 2022 was denominated in US dollars.
The Group does not hedge against foreign exchange movements.
Exchange rate sensitivity
The Group is mainly exposed to foreign exchange risk on the cash balances and
trade and other payables denominated in currencies other than US$ as detailed
above. A +/- 10% change in the USD: GBP and USD: AUD rate and the impact of
a +/- 10% change on the exchange rates on the translation of foreign
subsidiaries into the Group's presentation currency would result in the
following changes:
2022
2023 US$'000
US$'000
Profit/(loss) Profit/(loss) Equity
Equity
British Pound (7) - (32) -
Australian Dollar 497 137 145 314
The sensitivity of the profit/(loss) to movements in the Australian Dollar was
impacted in the year by the one-off profit on disposal of intangible assets in
the Australian subsidiary.
25. FINANCIAL INSTRUMENTS
The Group and Company held the following investments in financial instruments:
Group Company Group Company
2023 2023 2022 2022
US$'000 US$'000 US$'000 US$'000
Fair value through profit and loss
Royalty financial assets - - 7,653 7,653
Cash and cash equivalents 3,248 1,667 16,577 9,537
Financial assets at amortised cost
Trade and other receivables 9,247 102,359 9,922 93,553
Financial liabilities at amortised cost
Trade and other payables 2,193 485 2,165 321
Contingent consideration 8,188 - 408 -
Borrowings 28,878 - 38,351 -
Financial liabilities at fair value through profit and loss
Warrant liability 607 607 2,452 2,452
Trade and other receivables and trade and other payables excludes all amounts
considered to be statutory arrangements (such as VAT recoverable and
corporation tax) and prepayments.
Fair value hierarchy
Prior to its reclassification on 1 July 2023, the Group and Company had one
asset, the Mimbula investment that was measured at fair value. Mimbula was
recognised as a royalty financial asset at fair value through profit and loss
totalling 2023: US$Nil (2022: US$7.65m). The asset was deemed to be a level
3 asset under the fair value hierarchy criteria - some of the inputs for the
fair value determination were not based on observable market data (mainly
private resource data).
26. RELATED PARTY TRANSACTIONS
During the year legal fees totalling US$0.30m (2022: US$0.33m) were paid to
Fasken Martineau DuMoulin LLP ("Fasken") and its worldwide affiliates. Fasken
is a legal firm in which Al Gourley is a senior partner.
During the year the Group paid US$0.05m (2022: US$0.01m) to Bacchus Capital
Advisers Limited, for the provision of office space and meeting facilities.
Bacchus Capital Advisers Limited is a company controlled by Peter Bacchus.
There are no other related party transactions, or transactions with Directors
that require disclosure except for the remuneration items disclosed in note 6.
The disclosures in note 6 include the compensation of key management personnel
as all employees are considered to be key. The Company's related parties
consist of its subsidiaries and the transactions and amounts due from them are
disclosed in note 15.
27. EVENTS OCCURRING AFTER THE REPORTING DATE
On 2 January 2024, 349,206 shares were issued at a price of 33 per Ordinary
Share to certain directors and members of the management team as part of the
2023 bonus awards.
In January 2024, the Company completed the acquisition of an additional gold
offtake contract over the Sugar Zone mine in Canada, owned and operated by
Silver Lake Resources. The offtake contract covers 30% of gold dore production
from the mine.
On 19 February 2024, the Company announced that, following the announcement on
29 November 2023, it had signed the facility agreement with BMO Capital
Markets and CIBC for a new fully secured US$40m revolving credit facility
with an option to increase the facility to US$60m via an accordion feature.
The proceeds are be to applied to retire the existing US$40m secured debt
facility provided by Macquarie Bank Limited.
28.ULTIMATE CONTROLLING PARTY
The company does not have a single controlling party.
** Ends **
Contact details:
Trident Royalties Plc www.tridentroyalties.com (http://www.tridentroyalties.com/)
Adam Davidson / Richard Hughes +1 (757) 208-5171 / +44 7967 589997
Grant Thornton (Nominated Adviser) www.grantthornton.co.uk (http://www.grantthornton.co.uk/)
Colin Aaronson / Samantha Harrison / Enzo Aliaj +44 020 7383 5100
Liberum Capital Limited (Joint Broker) www.liberum.com (http://www.liberum.com/)
Scott Mathieson / Cara Murphy +44 20 3100 2184
Stifel Nicolaus Europe Limited (Joint Broker) www.stifelinstitutional.com (http://www.stifelinstitutional.com/)
Callum Stewart / Ashton Clanfield +44 20 7710 7600
Tamesis Partners LLP (Joint Broker) www.tamesispartners.com (http://www.tamesispartners.com/)
Richard Greenfield +44 20 3882 2868
St Brides Partners Ltd (Financial PR & IR) www.stbridespartners.co.uk (http://www.stbridespartners.co.uk/)
Susie Geliher / Isabelle Morris / Charlotte Page +44 20 7236 1177
About Trident
Trident is a growth-focused diversified mining royalty and streaming company,
providing investors with exposure to a mix of base battery, precious, and bulk
metals.
Key highlights of Trident's strategy include:
· Building upon a royalty and streaming portfolio which broadly
mirrors the commodity exposure of the global mining sector (excluding fossil
fuels) with a bias towards production or near-production assets,
differentiating Trident from the majority of peers which are exclusively, or
heavily weighted, to precious metals;
· Acquiring royalties and streams in resource-friendly
jurisdictions worldwide, while most competitors have portfolios focused
on North and South America;
· Targeting attractive small-to-mid size transactions which are
often ignored in a sector dominated by large players;
· Active deal-sourcing which, in addition to writing new royalties
and streams, will focus on the acquisition of assets held by natural sellers
such as: closed-end funds, prospect generators, junior and mid-tier miners
holding royalties as non-core assets, and counterparties seeking to monetise
packages of royalties and streams which are otherwise undervalued by the
market;
· Maintaining a low-overhead model which is capable of supporting a
larger scale business without a commensurate increase in operating costs; and
· Leveraging the experience of management, the board of directors,
and Trident's adviser team, all of whom have deep industry connections and
strong transactional experience across multiple commodities and jurisdictions.
The acquisition and aggregation of individual royalties and streams is
expected to deliver strong returns for shareholders as assets are acquired on
terms reflective of single asset risk compared with the lower risk profile of
a diversified, larger scale portfolio. Further value is expected to be
delivered by the introduction of conservative levels of leverage through debt.
Once scale has been achieved, strong cash generation is expected to support an
attractive dividend policy, providing investors with a desirable mix of
inflation protection, growth and income.
Forward-looking Statements
This news release contains forward‐looking information. The statements are
based on reasonable assumptions and expectations of management and Trident
provides no assurance that actual events will meet management's expectations.
In certain cases, forward‐looking information may be identified by such
terms as "anticipates", "believes", "could", "estimates", "expects", "may",
"shall", "will", or "would". Although Trident believes the expectations
expressed in such forward‐looking statements are based on reasonable
assumptions, such statements are not guarantees of future performance and
actual results or developments may differ materially from those projected.
Mining exploration and development is an inherently risky business. In
addition, factors that could cause actual events to differ materially from the
forward-looking information stated herein include any factors which affect
decisions to pursue mineral exploration on the relevant property and the
ultimate exercise of option rights, which may include changes in market
conditions, changes in metal prices, general economic and political
conditions, environmental risks, and community and non-governmental actions.
Such factors will also affect whether Trident will ultimately receive the
benefits anticipated pursuant to relevant agreements. This list is not
exhaustive of the factors that may affect any of the forward‐looking
statements. These and other factors should be considered carefully and readers
should not place undue reliance on forward-looking information.
Third Party Information
As a royalty and streaming company, Trident often has limited, if any, access
to non-public scientific and technical information in respect of the
properties underlying its portfolio of royalties and investments, or such
information is subject to confidentiality provisions. As such, in preparing
this announcement, the Company often largely relies upon information provided
by or the public disclosures of the owners and operators of the properties
underlying its portfolio of royalties, as available at the date of this
announcement.
1 (#_ftnref1) Wood MacKenzie, "Red metal, green demand Copper's critical
role in achieving net zero", October 2022
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. END FR EAPSFEDKLEFA
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