Trident Royalties. - Q1 2023 Activities Update

Trident Royalties

03/05/2023 07:00

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RNS Number : 1870Y  Trident Royalties PLC.  03 May 2023

3 May 2023

 

Trident Royalties Plc

("Trident" or the "Company")

 

Q1 2023 Activities Update

Trident Royalties Plc (AIM: TRR, OTCQX: TDTRF), the diversified mining royalty
company, is pleased to provide an update on its activities during the quarter
ended 31 March 2023.

 

HIGHLIGHTS

Q1 royalty receipts & cash position

·      Record quarterly receipts of US$3.6 million from exposure to
gold, copper, and iron ore. A year-on-year increase of 63% over Q1 2022.

·      The gold offtakes portfolio saw particularly strong performance
with a 48% increase over Q1 2022 when compared on a like-for-like basis
(accounting for the disposal of the Mercedes mine from the Premier Offtake, on
14 April 2022(1)), while the Koolyanobbing iron ore royalty delivered its
highest quarterly payment to-date.

·      Trident holds cash of c. US$37 million as at 28 April 2023,
providing a strong platform for further acquisitions. This cash balance
includes proceeds from the gold offtakes but excludes Q1 royalty receipts.

 

 Royalty / Stream                 Q1 2023 (US$M)  Q1 2022 (US$M)  % Change
 Koolyanobbing iron ore royalty*  0.86            0.16            438%
 Mimbula copper royalty           0.75            0.50            50%
 Lincoln gold royalty             0.15            -               -
 Gold offtakes portfolio          1.88            1.58            19%
 Total                            3.64            2.23            63%

*Reserve Bank of Australia for 31 March 2023 (0.6712) and 31 March 2022
(0.7482)

 

Adam Davidson, Chief Executive Officer of Trident commented:

"It has been a positive quarter for the existing portfolio, with significant
updates at the Thacker Pass Lithium Project, the Mimbula Copper Project
continuing to ramp production, and the gold offtake portfolio delivering
strong growth and cashflows.

 

Our pipeline of prospective transactions is attractive. Following the highly
profitable disposal of several gold royalties in February, coupled with a
further reduction of our cost of debt, we have put our balance sheet in an
excellent position to take advantage of current market conditions. We look
forward to providing updates as the year progresses."

 

Portfolio Update:

Gold Royalties Sale Transaction (2)

·      Following a competitive sales process, Trident sold its
pre-production gold royalties over Rebecca, Spring Hill, and three other
projects acquired as a portfolio from Talga Group to Franco-Nevada Corporation
in exchange for cash proceeds of up to US$15.55 million.

o  The Royalties were acquired by Trident for approximately US$6.25 million,
representing a return on invested capital of over 140% in approximately two
years.

o  US$14.3 million of the consideration has been received, with US$1.25
million to be paid upon first production from the Rebecca Gold Project.

·      Reflecting the value unlocked by the transaction, Macquarie
agreed to restructure Trident's existing US$40 million debt facility, to
include a 2% reduction in coupon (reducing debt service costs by up to
US$800,000 per year), deferral of scheduled quarterly payments, and a one-year
extension of the loan term.

 

Thacker Pass Lithium Project (3,4)

·      Lithium Americas Corp., operator of Thacker Pass, announced the
commencement of construction following the receipt of notice to proceed from
the US Bureau of Land Management.

·      General Motors is investing US$650 million toward project
development and has entered into a 10-year offtake agreement to purchase Phase
1 production to support production of up to 1 million electric vehicles per
year.

·      Thacker Pass is targeting 80,000 tonnes per annum ("tpa") of
battery-quality lithium carbonate production capacity in two phases of 40,000
tpa. Phase 1 production is expected to commence in the second half of 2026.

 

Koolyanobbing Iron Ore Project (5)

·      Trident's quarterly royalty payment saw a marginal decrease in
production tonnage from the royalty zone, offset by materially higher iron ore
prices and realisations associated with the recent shift to production of a
higher proportion of lump product from Koolyanobbing.

 

Offtakes Gold Portfolio

·      Gold deliveries decreased by 16% during the quarter, from 74,085
gold ounces in Q4 to 62,335 in Q1. This was largely anticipated as production
tends to spike in Q4 as operators seek to maximize calendar year production.
Year-over-year deliveries increased by 31% over Q1 2022 when compared on a
like-for-like basis, while the gold spot price also increased by c. US$166 per
ounce over the course of Q1, positively impacting margins.

·      Allied Gold Corp Limited ("Allied"), operator of the Bonikro gold
mine over which Trident holds an uncapped gold offtake, announced its public
listing plans.(9) Allied highlighted drilling focused on extending the mine
life to over 10 years, well in excess of Trident's initial estimate.

 

Sonora Lithium Project (6,7,8)

·      In its 2022 Annual Results, Ganfeng Lithium, operator of the
Sonora Lithium Project, confirmed that the project is under construction while
noting that planned Stage 2 production increased by 43% to 50,000 tpa of
lithium hydroxide.(6)

·      After the period end, the Alberta Court of Appeal overturned, on
appeal, a judgment which had summarily dismissed an action brought by Bacanora
Minerals Ltd. ("Bacanora") against the Estate of Ian Colin Orr-Ewing
("Estate"). The lower Court of Queen's Bench of Alberta had held that the
dispute by Bacanora was time barred; on appeal, this was overturned for
technical reasons. Now the matter will be resolved on the merits, which, if
determined in the Estate's favour, will definitively affirm the validity of
the royalty. Bacanora must now argue the merits of its case and persuade the
Alberta court that the royalty is invalid as a result of it being created
without consideration or by way of fraudulent or other misrepresentation.(7)

·      The conditions requiring Trident to provide funding in respect of
the 50% Trident joint venture company Sonoroy Holdings Ltd ("Sonoroy"), to
facilitate completion of the acquisition of the Sonora Gross Revenue Royalty,
by Sonoroy remain at Trident's discretion. If Trident elects to exit the joint
venture, the initial loan made by Trident to Sonoroy of US$2.5 million is due
six months of such election.(8) At the present time, Trident has no intention
of exiting the joint venture.

 

 

 

References

1:             Source: Trident Royalties announcement dated 14
April 2022

                ( (http://www.ganfenglithium.com/ir_en.html)
https://polaris.brighterir.com/public/trident/news/rns/story/rmzg65w
(https://polaris.brighterir.com/public/trident/news/rns/story/rmzg65w)
(https://polaris.brighterir.com/public/trident/news/rns/story/xo1pnmr) )

 

2:             Source: Trident Royalties announcement dated 23
February 2023

                (
https://polaris.brighterir.com/public/trident/news/rns/story/rye8j8w
(https://polaris.brighterir.com/public/trident/news/rns/story/rye8j8w) )

 

3:             Source: Trident Royalties announcement dated 8
February 2023

                (
https://polaris.brighterir.com/public/trident/news/rns/story/xzj2y7w
(https://polaris.brighterir.com/public/trident/news/rns/story/xzj2y7w) )

 

4:             Source: Trident Royalties announcement dated 3
March 2023

                (
https://polaris.brighterir.com/public/trident/news/rns/story/r773q1r
(https://polaris.brighterir.com/public/trident/news/rns/story/r773q1r) )

 

5.             Source: Mineral Resources announcement dated 26
April 2023

(
https://clients3.weblink.com.au/clients/mineralresources/v2/headline.aspx?headlineid=61146475
(https://clients3.weblink.com.au/clients/mineralresources/v2/headline.aspx?headlineid=61146475)
)

 

6.             Source: Ganfeng Lithium announcement dated 29 March
2023

                (
http://www.ganfenglithium.com/ir_detail_en/id/2598.html
(http://www.ganfenglithium.com/ir_detail_en/id/2598.html) )

 

7.             Source: Trident Royalties announcement dated 28
April 2023

 
(https://polaris.brighterir.com/public/trident/news/rns/story/xel1zjr
(https://polaris.brighterir.com/public/trident/news/rns/story/xel1zjr) )

 

8.             Source: Trident Royalties announcement dated 27
January 2022

                (
https://polaris.brighterir.com/public/trident/news/rns/story/x2kjzlx
(https://polaris.brighterir.com/public/trident/news/rns/story/x2kjzlx) )

 

9.             Source: Allied Gold Corp, 27 April 2023

                ( https://www.newsfilecorp.com/release/163921
(https://www.newsfilecorp.com/release/163921) )

 

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

                                                     (file:///C:/Users/afdav/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/GCSQ6WT9/www.grantthornton.com)
 Colin Aaronson / Samantha Harrison / Samuel Littler

                                                       +44 020 7383 5100
 Stifel Nicolaus Europe Limited (Joint Broker)         www.stifelinstitutional.com (http://www.stifelinstitutional.com)

 Callum Stewart / Ashton Clanfield                     +44 20 7710 7600
 Liberum Capital Limited (Joint Broker)                www.liberum.com (http://www.liberum.com)

 Scott Mathieson / Cara Murphy                         +44 20 3100 2184
 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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