Last checked at 23 Feb 2023 07:00
23 February 2023
Trident Royalties Plc
("Trident" or the "Company")
Completion of Gold Royalties sale delivering 2.4x Gross Return on Investment
Favourable Restructuring of Debt Facility
Trident Royalties Plc (AIM: TRR), the diversified mining royalty company, is pleased to announce the completion of the agreement with Franco-Nevada Corporation (TSX, NYSE: FNV) ("Franco-Nevada"), first announced on 9 December 2022, relating to the sale of several pre-production gold royalties (the "Royalties"); the sale will generate cash proceeds of up to US$15.55 million (the "Transaction")1. The Transaction has delivered to Trident a significant return on its initial investment, while balancing the gold exposure within its portfolio and further strengthening the Company's balance sheet for subsequent acquisitions.
Following completion of the Transaction, Trident has restructured its existing $40m debt facility with Macquarie Bank Limited, including:
· 2% reduction in coupon (dependant on maintaining leverage ratio), reducing debt service costs by up to US$800,000 per year.
o Extension of the loan term by one year, to December 2025.
o Deferral of scheduled quarterly payments until June 2024.
· In lieu of a cash restructuring fee, the Company has agreed to an extension of the term of the warrants held by Macquarie by 12 months.
HIGHLIGHTS
· Completion of the sale of pre-production gold royalties over Rebecca2, Spring Hill3, and three other projects acquired as a portfolio from Talga Resources4 to Franco-Nevada in exchange for cash proceeds of up to US$15.55 million.
o Note that a non-material royalty was removed from the Transaction by mutual agreement with Franco-Nevada, reducing the upfront consideration from the previously announced US$15.8 million to US$15.55 million1.
· The Royalties were acquired by Trident for approximately US$6.25 million5, representing a gross return on invested capital of over 140% in approximately two years.
· US$14.3 million of the consideration has now been paid by Franco-Nevada, with US$1.25 million to be paid upon first production from the Rebecca Gold Project6.
· Trident now holds estimated pro forma cash of approximately US$35 million7, placing the Company in a strong position to pursue new opportunities and capitalise on current weakness in traditional debt and equity markets, particularly in non-precious metals commodities.
Adam Davidson, Chief Executive Officer of Trident commented:
"The disposal of these gold royalties has delivered an impressive gross return of +140% on invested capital in two years, creating significant value for shareholders. The receipt of the proceeds and restructuring of our debt, creates an even stronger platform for future growth and value creation. We are encouraged by the recent performance of our paying royalties, with record quarterly receipts of US$3.5 million delivered in Q4 2022, and with approximately $35 million ready to be deployed on additional opportunities, Trident is in a strong position to expand its portfolio further with value accretive and strategically attractive opportunities in 2023."
References
1: Source: Trident Royalties announcement dated 9 December 2022
(https://polaris.brighterir.com/public/trident/news/rns/story/w31243x)
2: Source: Trident Royalties announcement dated 29 October 2020
(https://polaris.brighterir.com/public/trident/news/rns/story/rdz64pw)
3: Source: Trident Royalties announcement dated 17 November 2020
(https://polaris.brighterir.com/public/trident/news/rns/story/x5op59r)
4: Source: Trident Royalties announcement dated 30 March 2021
(https://polaris.brighterir.com/public/trident/news/rns/story/xeqjp2x)
5: Source: Reserve Bank of Australia foreign exchange rates used for AUD royalty acquisitions, with dates for completion being 30 March 2021, 17 November 2020, and 29 October 2020
6: Long-stop date of 31 December 2028 for commercial production at the Rebecca Gold Project, with US$1.25 million paid upon first royalty receipt by Franco-Nevada and commencement of commercial production at Rebecca.
7: Being the pro forma cash balance of US$21.8 million from announcement dated 30 January 2023, plus the upfront Transaction proceeds paid by Franco-Nevada of US$14.3 million (prior to fees and expenses associated with the Transaction).
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 |
Stifel Nicolaus Europe Limited (Joint Broker) Callum Stewart / Ashton Clanfield | www.stifelinstitutional.com +44 20 7710 7600 |
Liberum Capital Limited (Joint Broker) Scott Mathieson / Cara Murphy | www.liberum.com +44 20 3100 2184 |
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.
TRIDENT ROYALTIES PLC
Incorporated in England and Wales with Company Number 11328666
Registered Office at Floor 6, 60 Gracechurch Street, London, EC3V 0HR, UK