Trident Royalties. - Q4 2022 Activities Update

Trident Royalties

30/01/2023 07:00

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RNS Number : 1736O  Trident Royalties PLC.  30 January 2023

30 January 2023

 

Trident Royalties Plc

("Trident" or the "Company")

 

Q4 2022 Activities Update

Trident Royalties Plc (AIM: TRR), the diversified mining royalty company, is
pleased to provide an update on its activities during the quarter ended 31
December 2022.

 

HIGHLIGHTS

Q4 royalty receipts & cash position

·      Record quarterly receipts of US$3.5 million from exposure to
gold, copper, mineral sands, and iron ore. A quarter-on-quarter increase of
46% and ninefold increase over Q4 2021.

·      Total 2022 royalty receipts of US$13.8 million, a nearly
eightfold increase over 2021.

 Royalty / Stream                Q4 2022 (US$)  Q3 2022 (US$)  Q4 2021 (US$)
 Koolyanobbing iron ore royalty  532,573        406,963        -
 Mimbula copper royalty          500,000        500,000        375,000
 Lincoln gold royalty            173,500        173,500        -
 Gold offtakes portfolio         2,228,886      1,308,176      -
 Kwale mineral sands royalty     61,074         -              -
 Total*                          3,496,033      2,388,639      375,000

*Reserve Bank of Australia for 30 December 2022 (0.6775) and 30 September 2022
(0.6502)

·    Cash of US$21.8 million as of 27 January 2023, providing a strong
platform for further acquisitions. This cash balance includes revenue from the
gold offtake streams, but does not include Q4 royalty receipts.

·     Cash position will increase further upon completion of the sale of
a portfolio of pre-production gold royalties to Franco-Nevada Corporation for
cash proceeds of up to US$15.8 million.(1) The transaction crystallised a
return on invested capital of 143%, while bringing Trident's portfolio gold
allocation in line with longer term expectations and providing additional
capital for redeployment.

 

Transactions & portfolio asset-level progress

·     Post-quarter end, Trident acquired a 0.25% Free On Board ("FOB")
royalty over the Kwale mineral sands project in Kenya, with an effective date
of 1 October 2022. Kwale commenced production in 2013, with operator Base
Resources recently extending the scheduled mine life to the end of 2024.
Though a non-material purchase consideration and limited remaining mine life
on the current schedule, Trident considers the prospects of further mine life
extensions to be positive.

·    Following an oral hearing held by the US District Court of Nevada on
5 January 2023 for the appeal of the issuance of the Record of Decision for
the Thacker Pass Lithium Project, the Court reaffirmed no additional hearings
or briefings are required and it expects to issue a decision in the "next
couple of months".(2)

·     Ganfeng Lithium confirmed that the Sonora Lithium Project is under
construction while noting that planned Stage 2 production increased by 43% to
50,000 tonnes per annum of lithium hydroxide.(3) The final appeal challenging
the validity of the royalty was held on 13 January 2023, with a decision
expected in the coming months.

 

Adam Davidson, Chief Executive Officer of Trident commented:

"Trident has continued to generate good momentum over the past 12 months, and
we finished 2022 with our best operational quarter since inception. Q4 2022
saw record royalty receipts of $3.5 million, 46% higher than the previous
quarter and a ninefold year-on-year increase.

 

There has also been significant progress across the portfolio. Mimbula
continues to develop into a meaningful copper operation, recently producing
first cathode and with the operator raising in excess of US$135m across 2022
to support development and future expansion plans. Legal hearings for appeals
at both Thacker Pass and Sonora were held in early January, with decisions
expected in the coming months. We remain encouraged by progress at both, which
moves us towards achieving meaningful battery metal exposure and transforming
the portfolio and future cashflows.

 

The disposal of several pre-production gold royalties to Franco-Nevada
crystallises significant value for our shareholders and by further
strengthening the balance sheet, enables us to take advantage of opportunities
as they arise. Commodity demand requires capital investment, and with
traditional equity and debt markets currently unfavourable to many operators,
royalties are likely to fill part of this funding gap.  Having built a very
strong balance sheet over the past year, Trident is well placed to be part of
this. We have a solid core portfolio and are assessing a wide range of
opportunities.  We look forward to reporting on progress during what is
likely to be a key year for the Company."

 

Royalty Portfolio Update:

Gold Royalties Sale Transaction(1)

·     Following completion of a competitive sales process, Trident
agreed to sell its pre-production gold royalties over Rebecca, Spring Hill,
and four other projects acquired as a portfolio from Talga Group to
Franco-Nevada Corporation in exchange for cash proceeds of up to US$15.8
million.

·    The Royalties were acquired by Trident for approximately US$6.5
million, representing a return on invested capital of 143% in approximately
two years.

·      US$14.55 million of the consideration is payable immediately upon
completion and US$1.25 million is to be paid upon first production from the
Rebecca Gold Project.

·   Reflecting the value unlocked by the transaction, and subject to its
completion, Macquarie has 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. Trident expects to
complete the transaction in Q1 2023.

 

Mimbula Copper Project(4)

·     Moxico Resources PLC successfully produced first copper cathode
from the Mimbula Copper Project in Zambia at its 10,000 tonne per annum
("tpa") copper cathode Phase 1 operation. In H2 2022, a Bankable Feasibility
Study was completed contemplating an expansion to 56,000 tpa copper cathode
production (Phase 2). Moxico raised total gross proceeds of US$135 million in
2022 to progress development of the project.

 

Thacker Pass Lithium Project(6)

·      Pending confirmation of the Record of Decision, Lithium Americas
Corp. noted during the quarter: "As we await a ruling by the Federal Court, we
are moving ahead with all areas required to support construction, including
final selection of an EPCM contractor, evaluating partnership and supply
agreements, as well as progressing our application with the US Department of
Energy loan program." Subsequent to quarter end, Lithium Americas Corp.
announced that it has awarded the Engineering, Procurement and Construction
Management ("EPCM") contract for construction of Thacker Pass to Bechtel, an
industry-leading construction and engineering firm.

 

Sonora Lithium Project(3,5)

·      Ganfeng Lithium, operator of the Sonora Lithium Project,
highlighted that the project is under construction, which it intends to
accelerate. In addition, Ganfeng increased the planned production rate by 43%
relative to the previous Feasibility Study published by Bacanora Lithium, with
potential Stage 2 production increasing to 50,000 tpa of lithium hydroxide.

·     The final appeal challenging the validity of the royalty occurred
on 13 January 2023, following a 2021 judgement by the Court of Queen's Bench
of Alberta which ruled in the royalty holder's favour on the basis that the
challenge was time-barred. Trident expects a decision in the coming months and
retains the right and option to crystalise its 50% interest in the royalty
(equal to a 1.5% gross revenue royalty attributable to Trident) in
consideration of a further US$23.5 million.

 

Koolyanobbing Iron Ore Project

·     Trident's quarterly royalty payment benefited from a 19% increase
in production tonnage from the royalty zone, coupled with higher iron ore
prices, but this was somewhat offset by a decrease in the Australian dollar
exchange rate.

 

Offtakes Portfolio Update:

Gold Deliveries

·      Gold deliveries increased by 12% during the quarter, from 65,865
ounces in Q3 to 74,085 ounces in Q4 on strong year-end volumes, while the gold
spot price also increased by US$152 per ounce over the course of Q4,
positively impacting margins. Gold volatility, as measured by the average
7-day volatility of the LBMA PM Gold Fix(7) over the quarter, increased by 20%
relative to the previous quarter, further improving revenue.

 

Equinox Gold Santa Luz Offtake(8)

·      Equinox Gold Corp., operator of the Santa Luz gold mine,
announced that commercial production was achieved on 1 October 2022, with
production to grow to 100,000 ounces of average annual gold production.

 

Equinox Gold Los Filos Offtake(9,10)

·   Equinox Gold, operator of the Los Filos gold mine complex, announced
an updated Feasibility Study for a production expansion. While Equinox has not
yet approved the expansion, the study noted peak gold production averaging
360,000 ounces per year from 2025-2030. By comparison, 2022 gold production at
Los Filos was 133,723 ounces.

 

 

 

References

1:             Source: Trident Royalties announcement dated 9
December 2022

                ( (http://www.ganfenglithium.com/ir_en.html)
https://polaris.brighterir.com/public/trident/news/rns/story/w31243x
(https://polaris.brighterir.com/public/trident/news/rns/story/w31243x)
(https://polaris.brighterir.com/public/trident/news/rns/story/xo1pnmr) )

 

2:             Source: Trident Royalties announcement dated 9
January 2023

                (
https://polaris.brighterir.com/public/trident/news/rns/story/xel0mjr
(https://polaris.brighterir.com/public/trident/news/rns/story/xel0mjr) )

 

3:             Source: Trident Royalties announcement dated 24
October 2022

                (
https://polaris.brighterir.com/public/trident/news/rns/story/xo1pnmr
(https://polaris.brighterir.com/public/trident/news/rns/story/xo1pnmr) )

 

4:             Source: Trident Royalties announcement dated 27
October 2022

                (
https://polaris.brighterir.com/public/trident/news/rns/story/r79pyjx
(https://polaris.brighterir.com/public/trident/news/rns/story/r79pyjx) )

 

5.             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) )

 

6.             Source: Trident Royalties announcement dated 10
October 2022

                (
https://polaris.brighterir.com/public/trident/news/rns/story/xegl62w
(https://polaris.brighterir.com/public/trident/news/rns/story/xegl62w) )

 

7.             London Bullion Market Association

( https://www.lbma.org.uk/prices-and-data/precious-metal-prices#/
(https://www.lbma.org.uk/prices-and-data/precious-metal-prices#/) )

 

8.             Source: Equinox Gold announcement dated 4 October
2022

                (
https://equinoxgold.com/news/equinox-gold-announces-commercial-production-at-the-santa-luz-gold-mine
(https://equinoxgold.com/news/equinox-gold-announces-commercial-production-at-the-santa-luz-gold-mine)
)

 

9.             Source: Trident Royalties announcement dated 21
October 2022

                (
https://polaris.brighterir.com/public/trident/news/rns/story/x87125w
(https://polaris.brighterir.com/public/trident/news/rns/story/x87125w) )

 

10.           Source: Equinox Gold announcement dated 11 January
2023

                (
https://equinoxgold.com/news/equinox-gold-reports-150439-ounces-of-gold-produced-in-fourth-quarter-532319-ounces-of-gold-produced-in-2022
(https://equinoxgold.com/news/equinox-gold-reports-150439-ounces-of-gold-produced-in-fourth-quarter-532319-ounces-of-gold-produced-in-2022)
)

 

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%3A/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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