Trident Royalties - Acquisition of Advanced Stage Lithium Royalty

Trident Royalties

04/09/2023 07:01

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RNS Number : 1922L  Trident Royalties PLC  04 September 2023

4 September 2023

 

Trident Royalties Plc

("Trident" or the "Company")

 

Acquisition of Advanced Stage Lithium Royalty

Trident Royalties Plc (AIM: TRR, OTCQB: TDTRF), the diversified mining royalty
company, is pleased to announce that it has entered into a binding sale and
purchase agreement to acquire an existing lithium royalty (the "Royalty") from
Atherton Resources LLC over projects owned by Anson Resources Ltd. ("Anson",
ASX:ASN, market capitalisation of circa A$175 million), in the Paradox Basin
in Utah, USA. The Royalty notably covers Anson's flagship Paradox Lithium
Project ("Paradox").

The Royalty is a 2.50% net smelter return ("NSR") royalty tied to Anson's
ownership of the projects. Should Anson sell a property within the Paradox
Basin, Trident will be entitled to 2.00% of the net sales proceeds and the
royalty would no longer apply to the sold asset.

HIGHLIGHTS

Multi-project coverage, diversifying Trident's lithium extraction exposure

·      The Royalty covers all projects owned by Anson within the Paradox
Basin, which includes Anson's flagship Paradox Lithium Project. Paradox is an
advanced stage lithium brine project, targeting use of direct lithium
extraction ("DLE").

·      Anson released a Definitive Feasibility Study ("DFS") for Paradox
in September 2022 outlining a Phase 1 operation producing an initial 13,074
tonnes per annum of Lithium Carbonate (Li(2)CO(3)) for the first 10 years of a
23-year operation.(1) Anson is currently targeting a Final Investment Decision
at the end of 2023.(2)

·      At spot prices of approximately US$35,000 per tonne of lithium
carbonate equivalent ("LCE"), the Royalty would pay approximately US$11
million per annum for the first 10 years.

·      Anson further highlighted that the Phase 1 economics are based
solely on a JORC 2012 compliant Indicated Mineral Resource estimate ("MRE") of
239,000 tonnes LCE.(2) A subsequent MRE update significantly upgraded the
Indicated resource tonnage to 346,109 tonnes LCE(3) and the DFS economics are
expected to be updated based on future MRE upgrades.(1)

·      Additionally, Phase 2 development at Paradox is expected to
comprise a further substantial increase in lithium production capacity,
together with new bromine production capacity. (1)

·      Anson is well-funded to continue rapidly progressing Paradox,
with A$38.6 million in cash-on-hand as of 30 June 2023.(3) Anson has appointed
global engineering firm Worley Group Inc. ("Worley") for the Front-End
Engineering and Design ("FEED") Study for the proposed lithium carbonate
processing plant, which is expected to be completed in Q4 2023.(5)

·      The Paradox Basin hosts significant Mineral Resource expansion
potential. Anson has outlined an Exploration Target at Paradox containing
1,294,000 to 3,096,000 tonnes LCE(5); and an Exploration Target for the Green
River project area containing 1,064,600 to 2,075,900 tonnes of LCE.(6)

 

In consideration, Trident shall pay up to US$10 million in three tranches as
follows:

·      US$1.5 million in cash on closing;

·      Upon (i) commencement of commercial production by Anson at
Paradox, and (ii) receipt of the first payment under the Royalty, Trident
shall pay up to US$3.5 million ("First Contingent Payment"), up to 50% of
which may be paid in shares at the Company's election; and

·      On the second anniversary of the First Contingent Payment,
Trident shall pay up to US$5 million ("Second Contingent Payment"), up to 50%
of which may be paid in shares at the Company's election.

 

Adam Davidson, Chief Executive Officer of Trident commented:

"We are delighted to announce the acquisition of this royalty over the Paradox
Lithium Project. For a modest initial cash outlay, we have secured exposure
for shareholders to a well funded, highly attractive project with a pathway to
cash generation and significant growth potential. The Paradox project
reinforces our strong position in battery materials, and introduces exposure
to direct lithium extraction, which could play a significant role in future
lithium supply. The acquisition again demonstrates Trident's ability to source
innovative transactions to create shareholder value."

 

Paradox Lithium Project

Paradox is an advanced stage development project located in the Paradox Basin
in Utah, USA, which contemplates the extraction of lithium from brines
associated with past oil and gas operations.(1) Paradox consists of 2,434
placer claims, of which 87 are subject to an earn-in agreement. Upon
completion of the pending acquisition of the Green Energy Lithium Project from
Legacy Lithium Corp., Paradox will comprise a land holding of 231 square
kilometres.(2) Paradox has an Indicated Mineral Resource estimate for 346,109
tonnes LCE and an Inferred Resource 691,800 tonnes of LCE.(4)

Figure 1. Map showing the location of Legacy Lithium Corp. Green Energy
Lithium Project Claims Area(5)

 

On 8 September 2022, Anson announced the results of a DFS for Phase 1
operations at Paradox. The DFS contemplates the processing of lithium-bearing
brines utilising DLE techniques. The DFS outlined production of 13,074 tonnes
per annum of lithium carbonate for the first 10 years of a 23-year operation
at a C1 Operating Cost of US$4,368 per tonne of LCE. The DFS further notes an
initial capital expenditure of US$495 million, a post-tax NPV(7%) of US$922
million, and a post-tax IRR of 37%.(1)

Anson is rapidly advancing Paradox towards production. Worley, a global
engineering firm, has been appointed and has commenced the FEED study for the
proposed lithium carbonate processing plant, which is expected to be completed
in Q4 2023. Anson's chosen DLE process, developed by Sunresin New Materials
Co. Ltd ("Sunresin"), will be incorporated into the design and engineering
work, and the FEED team will work closely with Sunresin and its independently
appointed design and engineering consultants in the delivery of the FEED
Study. Sunresin is the process package owner and technology provider for the
proposed DLE plant at Paradox, processing raw brine into sellable product, and
will be responsible for the design and engineering work to applicable United
States standards. Worley will provide the engineering for the supporting
infrastructure and utilities for the broader site development.

Anson is in process of developing a suppliers list of components and equipment
required for the production plant. It is focused on sourcing as much of the
required equipment and components from North America as is possible, in order
to maximise the opportunity to secure debt financing from government agencies,
Export Credit Agencies and the United States Department of Energy - with whom
Anson reports it is in frequent consultation.(7)

The Royalty

The Royalty is a 2.50% net smelter return royalty that covers any projects
owned by Anson in the Paradox Basin.

Figure 2: Location of the Paradox Brine Site(1)

 

The Royalty is a perpetual royalty tied to Anson's ownership of the underlying
projects, such that if Anson were to sell a project, the royalty would no
longer apply to the asset. In this event, Trident would be entitled to receive
2.00% of the net sales proceeds upon the sale of a project within the Paradox
Basin by Anson. The Royalty does not include any buyback provisions for the
operator.

 

The Transaction

Pursuant to the sale and purchase agreement, Trident shall pay up to US$10
million in three tranches, the first being US$1.5 million in cash to Atherton
Resources LLC on closing.

Upon (i) the declaration of commercial production by Anson at Paradox, and
(ii) receipt of the first payment under the Royalty, Trident shall pay up to
US$3.5 million. The payment of US$3.5million is based on Anson retaining 100%
beneficial ownership (either directly or indirectly) of Paradox and will be
reduced by a proportionate percentage for any reduction in Anson's beneficial
ownership of Paradox at that time the payment is triggered. Should Trident
elect to settle any portion of the First Contingent Payment with Trident
shares (up to 50%, at Trident's election), such shares will be issued at a
20-day volume weighted average price prior to the date of the First Contingent
Payment.

On the second anniversary of the First Contingent Payment, Trident shall pay
US$5.0 million. The payment of US$5.0million is based on Anson retaining 100%
beneficial ownership (either directly or indirectly) of Paradox and will be
reduced by a proportionate percentage for any reduction in Anson's beneficial
ownership of Paradox at that time the payment is triggered. Should Trident
elect to settle any portion of the Second Contingent Payment with Trident
shares (up to 50%, at Trident's election), such shares will be issued at a
20-day volume weighted average price prior to the date of the Second
Contingent Payment.

 

References

1:             Source: Anson Press Release - Paradox Lithium
Project DFS confirms outstanding economics and ESG credentials for Phase 1
Lithium Development, dated 8 September 2022

 (https://wcsecure.weblink.com.au/pdf/ASN/02565661.pdf
(https://wcsecure.weblink.com.au/pdf/ASN/02565661.pdf) )

 

2:             Source: Anson Media Articles - Anson Resources
assessing debt and equity funding for US$495 million Paradox Lithium Project,
Utah Mining.com.au, dated 27 March 2023

                ( https://www.ansonresources.com/media/
(https://www.ansonresources.com/media/) )

Article - Anson Resources assessing debt and equity funding for US$495 million
Paradox Lithium Project, Utah Mining.com.au, dated 27 March 2023

(https://mining.com.au/anson-resources-assessing-debt-and-equity-funding-for-us495-million-paradox-lithium-project-utah/
(https://mining.com.au/anson-resources-assessing-debt-and-equity-funding-for-us495-million-paradox-lithium-project-utah/)
 )

 

3:             Source: Anson Press Release - Anson Reports Major
Resource Upgrade at Paradox Lithium Project, dated 22 August 2022

( https://wcsecure.weblink.com.au/pdf/ASN/02555773.pdf
(https://wcsecure.weblink.com.au/pdf/ASN/02555773.pdf) )

 

4:             Source: Anson Press Release - Anson Delivers 1Mt
LCE Mineral Resource at Paradox Lithium Project, dated 2 November 2023

                (
https://wcsecure.weblink.com.au/pdf/ASN/02592902.pdf
(https://wcsecure.weblink.com.au/pdf/ASN/02592902.pdf) )

 

Table 1: Paradox Lithium Project Total JORC 2012 Mineral Resource estimate,
dated 2 November 2022

 

 Category         Brine Volume  Brine Tonnes  Li (ppm)  Br (ppm)  Contained ('000t) *

(Ml(3))
(Mt)
                  LCE                         Br(2)
 Indicated        4,350         530           123       3,474     346         1,840
 Inferred         8,108         1,038         125       3,308     692         3,434
 Total Resources  12,458        1,568         124       3,364     1,038       5,275

Notes: * Lithium is converted to lithium carbonate (Li(2)CO(3)) using a
conversion factor of 5.32 and boron is converted to boric acid (H(3)BO(3))
using a conversion factor of 5.72. Rounding errors may occur. No cut-off
grades have been applied to the resource reporting. The model has been
classified by radius around sampled wells. Indicated resources have been
classified within 2 km of a sampled well and inferred resourced within 4 km of
a sampled well. Estimation by inverse distance squared interpolation. JORC
2012: 2012 edition of the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves.

 

 

5:             Source: Anson Financial Report- June 2023 Quarterly
Activities Report, dated 31 July 2023

                (
https://wcsecure.weblink.com.au/pdf/ASN/02691735.pdf
(https://wcsecure.weblink.com.au/pdf/ASN/02691735.pdf) )

 

                Table 2: Exploration Target estimation for the
combined Paradox Lithium Project and Legacy Lithium claims

 

 Exploration Target  Density  Brine (Mt)  Li (ppm)  "Li2CO3  Exploration Target  Density
 Minimum             1.27     310         108       1,294    2,000               4,811
 Maximum             1.27     350         200       3,096    3,000               8,734

Notes: The Exploration Target figure is conceptual in nature as there has been
insufficient exploration undertaken on the project to define a mineral
resource for the Clastic Zones and Mississippian units. It is uncertain that
future exploration will result in a mineral resource.

 

 

6:             Source: Anson Press Release - Exploration Target
Confirmed at Green River Lithium Project, dated 31 July 2023

                (
https://wcsecure.weblink.com.au/pdf/ASN/02631599.pdf
(https://wcsecure.weblink.com.au/pdf/ASN/02631599.pdf) )

 

Table 3: Exploration Target estimation for the Green River Lithium Project -
for the combined Mississippian Leadville and Pennsylvanian Paradox Units

 

 Lithological Unit                  Range    Brine Tonnes  Li Grade  Br Grade  Li       Li₂O₃      Br

(Mt)
(ppm)
(ppm)

(t)

                                                                               (t)                 (t)
 Mississippian & Clastic Zones      Minimum  2,000         100       2,000     200,000  1,064,600  3,200,000
                                    Maximum  2,600         150       3,000     390,000  2,075,900  7,800,000

Notes: The Exploration Target figure is conceptual in nature as there has been
insufficient exploration undertaken on the Project to define a mineral
resource for the Leadville units. It is uncertain that future exploration will
result in a mineral resource.

 

 

7:             Source: Anson Press Release - Anson Advances Lithium
Plant Front End Engineering & Design Study, May 25, 2023

                (
https://wcsecure.weblink.com.au/pdf/ASN/02669416.pdf
(https://wcsecure.weblink.com.au/pdf/ASN/02669416.pdf) )

 

 

 

Competent Person's Statement

The technical information contained in this disclosure has been read and
approved by Mr Nick O'Reilly (MSc, DIC, MAusIMM, MIMMM, FGS), who is a
qualified geologist and acts as the Competent Person under the AIM Rules -
Note for Mining and Oil & Gas Companies. Mr O'Reilly is a Principal
Consultant working for Mining Analyst Consulting Ltd which has been retained
by Trident to provide technical support.

 

The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (EU) No.
596/2014 which is part of UK law by virtue of the European Union (Withdrawal)
Act 2018. Upon the publication of this announcement, this inside information
is now considered to be in the public domain.

** Ends **

 

Contact details:

 

 Trident Royalties Plc                                 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 / Samuel Littler   +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 / Catherine Leftley                     +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.

 

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