7 May 2024
Trident Royalties
Plc
("Trident" or the
"Company")
Q1 2024 Activities
Update
Trident Royalties Plc (AIM: TRR, OTC: TDTRF), the diversified
mining royalty company, is pleased to provide an update on its
activities during the quarter ended 31 March 2024.
HIGHLIGHTS
· Quarterly receipts of US$2.98 million, a 6% decrease from Q4
2023, driven by seasonally lower deliveries from the gold offtake
portfolio, partially offset by exceptionally strong
margin-per-ounce resulting from positive movements in gold
volatility and price.
· Lower
receipts at Mimbula again reflect the conclusion of a minimum
payment schedule in Q2 2023 following full recovery of Trident's
initial investment. Trident retains a 0.3% gross revenue royalty
over Mimbula, which is continuing its expansion from 10,000 tonnes
per annum to full Phase 2 production of 56,000 tonnes per annum in
mid-2025.
· The
Company notes several key asset level events during the quarter,
including:
§ Thacker
Pass lithium royalty advancing towards cash-flow, as U.S. Department of Energy makes a
conditional commitment for a US$2.26 billion loan to fund
construction of the processing facilities. Mechanical completion of
Phase 1 production is targeted for 20271.
§ Exceptionally strong margins realised from Trident's gold
offtake portfolio during Q1, which have continued in Q2 with net
gold offtake revenues of over US$1 million thus far. Further
increases in gold deliveries are expected as production seasonally
increases following Q1, imminent first gold production from the
Greenstone Project (May 2024), and Blyvoor Gold's recently
announced go-public process to support funding of organic
production growth up to 150k gold ounces per year in the medium
term (from current 30koz).
§ Trident
completed the acquisition of an incremental interest in an offtake
over the Sugar Zone mine during Q1, increasing Trident's interest
to 80% of gold doré production. The project operator, Silver Lake
Resources, announced a merger with ASX-listed Red 5 Ltd to create a
mid-tier gold company with a sector leading balance sheet. Silver
Lake also confirmed the continuation of a 93km drill program, along
with infrastructure improvements. Trident expects a restart of
operations to follow completion of this program.
§ New World
Resources, operator of the Antler Copper Project, received firm
commitments for a placing to raise A$20.4 million, providing
substantial funding to advance Antler towards first copper
production.
· As of
3 May 2024, the Company had an unaudited net debt position of US$22
million.
Royalty / Stream
(US$M)
|
Q1 2024
|
Q4 2023
|
% Change
|
Q1 2023
|
Gold
offtake portfolio
|
1.52
|
2.39
|
-36%
|
1.88
|
Koolyanobbing iron ore royalty*
|
0.47
|
0.57
|
-18%
|
0.86
|
Mimbula
copper royalty**
|
0.06
|
0.06
|
-
|
0.75
|
Lincoln
gold royalty***
|
0.15
|
0.15
|
-
|
0.15
|
Lincoln
gold royalty - partial sale****
|
0.78
|
-
|
-
|
-
|
Total
|
2.98
|
3.17
|
-6%
|
3.64
|
* Calculated using Reserve Bank of
Australia FX rates: 31 March 2023 (0.6712), 28 March 2024 (0.6532),
and 28 December 2023 (0.6840)
** Reflects the step-down in royalty
rate and conclusion of the minimum payment schedule as US$5M has
been received
*** Partial payment received, with
the balance expected by the 10 May 2024 extension date
**** See details below
Adam Davidson, Chief Executive Officer of Trident
commented:
"Since listing just over three years ago, we have created a
portfolio of 21 assets, many at development stage. In recent months
we have seen important developments across a number of our assets.
As these assets expand or move to first production, it reflects the
growing maturity of our initial portfolio and the return on our
initial investment. It also shows the clear path to future
significant cash generation.
"The important asset level developments during the period
include the imminent delivery of first gold from the Greenstone
Project, the completion of funding for Phase 1 at Thacker Pass
Lithium - including a U.S. Department of
Energy's US$2.26 billion loan and a $275 million
public offering - and commencement of stockpile processing at the
Preciosa Silver Project.
"Trident has a diverse and exceptionally high-quality
portfolio of royalties, which provide existing cash flow and the
opportunity for substantial revenue growth. The revenue will enable
shareholder returns and further investment and expansion of the
portfolio. We look forward to updating investors over the rest of
2024."
Key
Portfolio Updates:
Thacker Pass Lithium Project 1
· Lithium Americas Corporation ("LAC") received a conditional
commitment from the U.S. Department of Energy ("DOE") for
a $2.26 billion loan under the Advanced Technology Vehicles
Manufacturing Loan
Program (the "Loan") for financing the construction of the
processing facilities at Thacker Pass.
· Post
quarter-end, LAC announced completion of a $275 million
underwritten public offering which is for the full funding of
Thacker Pass Phase 1 construction.
· General Motors released $320 million in funding
in February 2023 in the largest investment publicly
disclosed to date by an automaker in a company to produce battery
raw materials, with the second tranche of $330
million expected before or in connection with closing of
the DOE Loan.
· Mechanical completion of Thacker Pass Phase 1 is targeted for
2027 following a three-year construction period, with full capacity
production targeted for 2028. Major construction is expected to
commence in the second half of 2024 following closing of the DOE
Loan.
Gold Offtake Portfolio 2,3,4
· Net
revenue decreased 19% relative to Q1 2023, driven by a 24% decrease
in gold deliveries from 62,335 gold ounces in Q1 2023, to 47,253 oz
in Q1 2024. This was partially offset by very strong positive
movements in both spot gold prices and volatility in the latter
part of the quarter.
· Trident expects margins-per-ounce to remain strong given the
current gold market environment, with deliveries expected to
increase, due in part to:
§ Aurous
Resources, operator of the Blyvoor Gold Mine, recently announced it
will go public via a business combination with Rigel Resources
Acquisition Corp, a special purpose acquisition company sponsored
by a fund managed by Orion Resource Partners. The transaction will
help fund organic production growth at Blyvoor from the current
30koz gold per year run-rate, to an average of 150koz gold per year
at an all-in-sustaining-cost of circa
$815/oz.2
§ Equinox
Gold recently announced that, after 2.5 years, construction of the
Greenstone Gold Project remains on schedule and is anticipated to
commence production in the first half of the year, with first gold
expected in May 2024. Trident holds a gold offtake
with an annual cap of 58,500 ounces on Greenstone, and previously
secured a guarantee that any shortfall in deliveries for 2024 and
2025 will be compensated at a rate of $23.50 per
ounce.3
§ Through a
non-material purchase consideration, Trident acquired two further
offtakes on the Sugar Zone Mine to increase exposure from 50% of
gold doré production, to 80%. The second offtake is for 11.5% of
gold doré production up to 86,250 ounces. The third offtake is for
18.5% of gold doré production up to 500,000 ounces. The total ounce
cap associated with the offtakes has also increased from 375koz, to
approximately 961koz gold (approximately 891koz remaining). The
project operator Silver Lake Resources announced a board-supported
merger with ASX listed Red 5 Ltd to create a leading mid-tier gold
company with a sector leading balance sheet. Silver Lake confirmed
that it is approximately 47km through a planned 93km drill program,
along with infrastructure improvements. Trident expects a restart
of operations to follow completion of this
program.4
Antler Copper Project 5
· The
project operator, New World Resources, received firm commitments
for a placing to raise approximately A$20.4 million, providing
substantial funding to advance the Antler Copper Project. Near-term
work will include expediting exploration drilling to continue to
expand the resource base while "rapidly advancing Antler to
production".
· The
longest lead-time mine permit application was submitted in January
2024, with the Pre-Feasibility study expected to be completed in
H1-2024 and pre-construction development of the underground decline
targeted for Q3-2025.
· Against a backdrop of strong spot copper prices
(>$9,500/tonne), the Antler project offers compelling project
economics per its 2023 Scoping Study, with a 13-year mine life and
average annual production of 32,700 tonnes copper-equivalent at a
C1 production cost of $3,703/tonne (negative cost-per-tonne of
$1,102 when including biproduct credits).
Sonora Lithium Project 6
· In
accordance with the terms of the agreement to acquire the royalty over the
Sonora Lithium Project, Trident announced that the long-stop date
to complete the acquisition has been extended to 31 December
2026. Trident has also agreed that other than in limited
circumstances, the repayment date for its loan to Sonoroy is
extended until the earlier of: (i) 31 December 2026; or (ii)
completion of the Transaction.
· In
Trident's view, the Sonora royalty has the potential to become a
Tier 1 royalty, providing exposure to a long-life lithium project
with expansion optionality and operated by a world class lithium
specialist. The revised transaction structure provides Trident with
the ability to participate in the potential significant upside
associated with the project from a low-cost and protected position,
while allowing sufficient time to resolve the ongoing Alberta
litigation, as well as the administrative review filed by Ganfeng
Lithium against the Mexican government regarding the cancellation
of nine lithium concessions.
Lincoln Gold Project 7
· Seduli
Gold recently noted that it is progressing toward an IPO on the
Australian Stock Exchange, targeting H1 2024, with an associated
capital raise to accelerate activities at the Lincoln Gold
Project.
· Trident successfully executed a strategic sell down of 50% of
its existing royalty to a high-net-worth family office in line with
Trident's focus on accelerating and de-risking cashflow. The
acquirer brings access to capital and significant relevant mining
experience, making an attractive partner for Trident.
· Between the consideration for the partial royalty sale and
payments received to-date under the Minimum Payment Schedule,
Trident has seen a return of nearly $1.9 million on an initial $2.5
million investment and looks forward to continued progress at the
Lincoln Project, buoyed by a favourable gold price
environment.
References
1:
Source: Trident Royalties announcement dated 15 March 2024 &
LAC announcement dated 22 April 2024
(
https://polaris.brighterir.com/public/trident/news/rns/story/x81yjjw
)
(
https://lithiumamericas.com/news/news-details/2024/Lithium-Americas-Closes-US275-Million-Underwritten-Public-Offering/default.aspx
)
2:
Source: SEC filings dated 11 & 12 March 2024
(
https://www.sec.gov/Archives/edgar/data/1860879/000182912624001510/rigelresource_ex99-1.htm
)
(
https://www.sec.gov/Archives/edgar/data/1860879/000182912624001535/rigelresource_425.htm
)
3:
Source: Equinox Gold announcement dated 9 April 2024
(
https://www.equinoxgold.com/news/equinox-gold-commences-processing-ore-at-greenstone-project-first-gold-pour-on-track-for-q2-2024/
)
4:
Source: Silver Lake Resources presentation dated 5 February
2024
(
https://www.silverlakeresources.com.au/investors/asx-announcements
)
5:
Source: New World Resources presentation dated 26 March 2024 and
announcement dated 16 April 2024
( https://newworldres.com/investors/
)
6:
Source: Trident Royalties announcement dated 19 February
2024
(
https://polaris.brighterir.com/public/trident/news/rns/story/w9nemgr
)
7:
Source: Seduli Gold release dated 29 February 2024 & Trident
Royalties announcement dated 2 September 2022
(
https://seduli.com.au/february-2024-seduli-sets-sights-on-asx-listing-ipo-application-imminent/
)
(
https://polaris.brighterir.com/public/trident/news/rns/story/wkoqdyx
)
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. In relation to the mineral
resource estimates, the company confirms that the
material assumptions and technical parameters
underpinning the estimates in the relevant market announcements
continue to apply and have not materially changed, and
it is not aware of any new information or data
that materially affects the estimates.
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
Adam Davidson / Richard
Hughes
|
www.tridentroyalties.com
+1 (757)
208-5171 / +44 7967 589997
|
Grant Thornton (Nominated
Adviser)
Colin Aaronson / Samantha Harrison /
Enzo Aliaj
|
www.grantthornton.co.uk
+44 020
7383 5100
|
Liberum Capital Limited (Joint
Broker)
Scott Mathieson / Cara
Murphy
|
www.liberum.com
+44 20
3100 2184
|
Stifel Nicolaus Europe Limited
(Joint Broker)
Callum Stewart / Ashton
Clanfield
|
www.stifelinstitutional.com
+44 20
7710 7600
|
Tamesis Partners LLP (Joint
Broker)
Richard Greenfield
|
www.tamesispartners.com
+44 20
3882 2868
|
St Brides Partners Ltd (Financial PR
& IR)
Susie Geliher / Charlotte
Page
|
www.stbridespartners.co.uk
+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.