Last checked at 4 Sep 2023 07:01
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 (Li2CO3) 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 LCE3 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 LCE5; 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 Area5
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 NPV7% 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 Site1
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)
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/ )
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/ )
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 )
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 )
Table 1: Paradox Lithium Project Total JORC 2012 Mineral Resource estimate, dated 2 November 2022
Category | Brine Volume(Ml3) | Brine Tonnes(Mt) | Li (ppm) | Br (ppm) | Contained ('000t) * | |
LCE | Br2 | |||||
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 (Li2CO3) using a conversion factor of 5.32 and boron is converted to boric acid (H3BO3) 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 )
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 )
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(Mt) | Li Grade(ppm) | Br Grade(ppm) | Li (t) | Li₂O₃(t) | Br (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 )
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 Adam Davidson / Richard Hughes | www.tridentroyalties.com +1 (757) 208-5171 / +44 7967 589997 |
Grant Thornton (Nominated Adviser) Colin Aaronson / Samantha Harrison / Samuel Littler | 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 / Catherine Leftley | 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;
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· | Acquiring royalties and streams in resource-friendly jurisdictions worldwide, while most competitors have portfolios focused on North and South America;
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· | Targeting attractive small-to-mid size transactions which are often ignored in a sector dominated by large players;
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· | 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;
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· | Maintaining a low-overhead model which is capable of supporting a larger scale business without a commensurate increase in operating costs; and
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· | 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.