London South East spoke to Adam Davidson, CEO of Trident Royalties (LSE:TRR), after the mining royalty company announced a major lithium deal in the US.
Trident has raised $28 million from shareholders to acquire a royalty on revenue from the Thacker Pass Lithium project in Nevada. Most electric car batteries use lithium so demand for the metal looks set to rise over the next decade.
Production at Thacker Pass is expected to start in 2024 and Davidson told London South East:
“The Thacker Pass Lithium Project is a big global asset with nearly half a century of reserve life in the current plans. It’s a pretty substantive big royalty.”
The deal means that TRR's metals portfolio is further diversified. It now comprises gold, copper, iron ore and lithium. Davidson wants to diversify Trident's metals portfolio further so that investors get “almost an index-fund like exposure…to the full suite of mining commodities.”
Buying into Thacker Pass is a much larger transaction than any of Trident’s 12 previous royalty deals, and with the company bulking out, it should now be easier to borrow. The company is close to agreeing a $10 million debt facility which should help to fund further royalty deals.
“As you build size and scale and a diversified stream of revenue, that’s something banks can lend against. As you continue to grow, that facility can also expand and get larger as well as costs decreasing over time.”