Trident Royalties Regulatory News (TRR)

31 August 2021

Trident Royalties Plc

("Trident" or the "Company")

Acquisition of Near-Term Producing Gold Royalty

Trident Royalties Plc (AIM:TRR, FSX:5KV), the growth-focused mining royalty and streaming company, is pleased to announce that it has entered into a binding agreement with Seduli Sutter Operations Corporation ("Seduli") to acquire a Net Smelter Return ("NSR") royalty (the "Royalty") over production from the Lincoln Gold Mine ("Lincoln", or the "Project"), located in California, USA. Seduli intends to utilise the royalty sale proceeds to finalise the restart of Stage 1 production at the Lincoln underground gold mine.

HIGHLIGHTS

A compelling asset targeting commencement of Stage 1 production in 2021

· A near term cash-generative royalty over a low-cost, high-grade asset which plans to commence Stage 1 production of 220 tonnes-per-day in 2021, targeting approximately 20,000+ ounces of gold per year1

· The Project is permitted for Stage 2 production of up to 1,000 tonnes-per-day (80,000+ ounces per year), which is anticipated to commence, subject to funding, immediately following successful completion of Stage 1

· Prior to the stepdown in royalty rate, Stage 1 is expected to generate over US$0.5 million per year in pre-tax royalty revenue, increasing to over US$2 million per year in Stage 22

A high-grade asset located in a Tier-1 jurisdiction, with significant exploration potential

· Lincoln is a high-grade gold deposit with an existing NI 43-101 Mineral Resource Estimate of over 286,000 gold ounces at an average grade of 9.3 grams per metric tonne3

· Lincoln is situated at the centre of the California "Mother Lode", which has historically produced approximately 13.6Moz of gold, with 3.4Moz of gold reported from the Lincoln Project area 3

· Exploration potential is open at depth, with Lincoln having had no drilling below 150m from surface, while historic mines immediately along strike of Lincoln reached 500m to 1,800m below surface

· Trident's internal review of the geology and Seduli's most recent deposit re-modelling outlines the potential opportunity for Seduli to build on the current Mineral Resource Estimate and significantly increase the stated Lincoln gold inventory through infill drilling and additional exploration drilling below 150m from surface, subject to the necessary technical work in line with Mineral Resource reporting standards

· As a restart of a previous underground operation, Lincoln benefits from significant existing infrastructure, including a fully refurbished 220 tonne-per-day processing plant with associated workshop and offices, a pre-existing 880m long haulage decline from surface and 900m of production stope development in place

An attractive transaction structure, enhancing Trident's portfolio

· Structured as a 1.5% NSR royalty on all production from Lincoln (and associated claims which cover approximately 6.25km of Mother Lode strike length), plus any future mineral holdings acquired by Seduli within a 5-mile radius of the current claim boundaries

· The royalty rate decreases to 0.75% upon aggregate royalty payments of $3 million being paid to Trident, remaining at this rate in perpetuity

· Until certain conditions are met, the Royalty retains senior ranking security over all key assets of the Project, including a substantial land package recently appraised at $1.9 million

· The Royalty is structured such that Trident is paid on gold doré and gold contained-in-concentrate, removing the risk of refining penalties adversely impacting royalty revenue

Adam Davidson, Chief Executive Officer of Trident commented:

"The Lincoln Gold Mine represents a highly compelling investment opportunity for Trident, and we are delighted to be supporting Seduli as it restarts mining and gold production in the coming months. The Mother Lode is a mineralised zone of international fame and the discovery of an orebody with an average grade of 9.3g/t, which has not been drilled beyond 150m, offers exceptional upside once in production. With this in mind, we believe that Lincoln will reveal gold ounces orders of magnitude larger than the existing NI 43-101 MRE, subject to the required exploration work and technical studies."

"Acquiring a new near-term cash generative gold royalty also aligns well with our over-arching strategy to assemble a diversified royalty portfolio, and this new addition is expected to contribute to our two existing paying royalties, in iron ore and copper, in the near-term."

The Transaction

The Net Smelter Return Royalty is being acquired for a cash consideration of US$2.5 million, payable immediately by Trident. Seduli has indicated that it will utilise the proceeds to commission the refurbished processing plant and commence mining operations, as well as for general working capital purposes. Royalty payments will be made to Trident on a quarterly basis.

The NSR royalty rate will be 1.50%, decreasing to 0.75% upon US$3 million being paid on the Royalty.

The Royalty has senior ranking security over all key assets of the Project. The security package falls away upon the earlier of 1) US$3 million received by Trident in royalty payments, or 2) confirmation of bona fide Stage 2 funding to Trident's satisfaction.

Post-transaction, Trident has an unaudited cash balance of over US$15.0 million to deploy for future transactions and general working capital purposes, and currently has seven active NDAs, with negotiations for potential transactions over two producing royalties under exclusivity.

Lincoln Mine

The Royalty is applicable to production from the Lincoln Gold Mine located in California, USA, comprising 100% of production from 47 mining claims totalling 863 acres of leased or owned mineral rights. In addition, the Royalty will be applicable to any production from any future acquired mining claims within 5 miles of the outer boundaries of the current Seduli claims.

The Project has a NI 43-101 and 2014 CIM Definition Standards4 compliant Mineral Resource Estimate as set out in Table 1 below.

Table 1: Mineral Resource Estimate for Lincoln Mine Project 5

The resource is open at depth, indicating strong exploration potential. Seduli has a highly experienced board and management team led by Toby Davis, who has extensive experience in multi commodity mining and exploration and holds a PhD in structural geology.

Notes & References

1 Source: Seduli Holdings website

https://seduli.com.au/ 

2 Reference: Spot Gold Price of $1,792 per ounce, multiplied by Stage 1 steady-state production of 20,000 ounces per year, multiplied by the 1.5% Royalty rate, with Stage 2 increasing to 80,000 ounces per year. Note that the royalty rate steps down to 0.75% upon receipt by Trident of an aggregate US$3 million in royalty revenue.

3 Source: Updated Technical Report on the Lincoln Mine Project, Amador County, California (2 July 2015) prepared for Sutter Gold Mining Inc. available on www.sedar.com 

4 Canadian Institute of Mining Metallurgy and Petroleum ("CIM") Definition Standards for Mineral Resources and Mineral Reserves. The CIM Definition Standards on Mineral Resources and Reserves ("CIM Definition Standards") establish definitions and guidance on the definitions for mineral resources, mineral reserves, and mining studies used in Canada. The Mineral Resource, Mineral Reserve, and Mining Study definitions are incorporated, by reference, into Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-10"1). https://mrmr.cim.org/en/standards/canadian-mineral-resource-and-mineral-reserve-definitions/  

5 Mineral Resource Estimate table in imperial units as stated in the Updated Technical Report on the Lincoln Mine Project, Amador County, California dated July 2nd, 2015.

# Lincoln-Comet Mineral Resource Estimate dated 14 December 2010 based on 15 February 2010 data

* Keystone Mineral Resource Estimate dated 22 June 2015 based on 15 June 2010 drill data.

Units: oz Au/ton defined as troy ounces of gold per short ton. 1 short ton = 0.90719 tonnes

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.

** Ends **

Contact details:

About Trident

Trident is a growth-focused diversified mining royalty and streaming company, providing investors with exposure to a mix of base and precious metals, bulk materials (excluding thermal coal) and battery metals.

Key highlights of Trident's strategy include:

· Expanding on a royalty and streaming portfolio which broadly mirrors the commodity exposure of the global mining sector (excluding thermal coal) 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.