Last checked at 14 Apr 2022 07:00
14 April 2022
Trident Royalties Plc
("Trident" or the "Company")
Portfolio Update: Mercedes Gold Mine
Trident Royalties Plc (AIM:TRR), the diversified mining royalty and streaming company, is pleased to announce that it has reached an agreement with Equinox Gold Corp. ("Equinox") regarding the sale of the Mercedes Gold-Silver Mine in Sonora, Mexico ("Mercedes Mine") pursuant to which Bear Creek Mining Corporation is acquiring a 100% interest in the Mercedes Mine from Equinox ("Mercedes Sale"). The Mercedes Sale is expected to close in April 2022. Trident acquired the Premier Gold Mines Limited Offtake Agreement (the "Premier Offtake"), which covers both the Mercedes Mine and the Greenstone Project in Ontario, Canada ("Greenstone"), in January 2022 as part of a broader transaction to acquire a portfolio of gold offtakes first announced on 13 December 2021.1
Highlights
· The Mercedes Sale will trigger an approx. US$3.75 million payment from Equinox to Trident, significantly improving upon Trident's modelled returns for the Premier Offtake at the time of acquisition. Following this payment, the Mercedes Mine will be removed from the Premier Offtake.
· This payment is in addition to revenues received since the original acquisition, amounting to US$307,604 from ounces delivered from the Mercedes Mine to date.
· Following the sale of the Mercedes Mine, the Premier Offtake will remain in place over Greenstone, which has commenced construction with the first gold pour targeted for H1 2024.2
· Trident has also secured a guarantee from Premier Gold Mines Limited (a subsidiary of Equinox) that the original annual offtake cap of 58,500 ounces will be delivered in full in 2024 and 2025, when Greenstone is expected to be operating. Any shortfall in deliveries will be compensated at a rate of US$23.50 per ounce.
· The tenure of the Premier Offtake remains unchanged, through to March 1st, 2027.
Adam Davidson, Chief Executive Officer and Executive Director of Trident commented:
"While the Mercedes Mine was only a small part of the gold offtake portfolio acquisition in January 2022, this agreement represents excellent value for Trident shareholders on the proposed sale of the Mercedes Mine. Within a few months, we will have more than recovered our initial investment for the entire Premier Offtake whilst retaining exposure to the world class Greenstone asset, coupled with increased certainty over future revenue. This agreement highlights the value which can be unlocked by holding a diversified portfolio and the importance of entering well-structured agreements with reliable partners.
The transaction therefore increases our expected returns from the Premier Offtake, increases the certainty of those returns, and significantly accelerates the expected cash generation with the Mercedes Sale payment of approximately US$3.75 million soon to be added to our already strong treasury, available for future acquisitions."
Details of the Premier Gold Offtake
The Premier Offtake entitles Trident to purchase 100% of refined gold production up to an annual cap of 58,500 ounces per year, through to March 2027 from the two properties covered by the Offtake (the Mercedes Mine and the Greenstone Project). Provided that the Mercedes Sale closes and US$3.75 million is paid to Trident on or before such closing, the Offtake will only cover Greenstone, in which Equinox Gold holds a 60% interest, which is in construction and not part of the proposed transaction with Bear Creek Mining Corporation. The annual ounce cap under the Premier Offtake will remain unchanged at 58,500 ounces per year.
Greenstone is an advanced mine development project with Total Reserves of 5.54Moz @ 1.27g/t Au, located in the Province of Ontario, Canada. The conventional open-pit mining and carbon-in-leach plant operation has an initial mine life of 14 years, producing over 5Moz gold, with average gold production of over 400koz per year during the first 5 years and an average of 360koz per year over the life of mine.3 Construction is currently underway with the first gold targeted for H1 2024.2
References
1. Source: Trident Royalties PLC, company announcement, dated 13 December 2021
( https://polaris.brighterir.com/public/trident/news/rns/story/x52139x )
2. Source: Equinox Gold Corp., company announcement dated 27 October 2021( https://www.equinoxgold.com/news/equinox-gold-announces-groundbreaking-for-full-scale-construction-of-greenstone-mine-in-ontario-canada )
3. Source: Premier Gold Mines Limited, NI 43-101 Technical Report Hardrock Project, Ontario, Canada, dated effective 16 December 2020 ( https://www.equinoxgold.com/_resources/projects/technical_reports/2021-Hardrock.pdf )
Greenstone Mine Reserve and Resource Estimates - Effective Date August 8, 2019 - Shown on 100% Basis
Category | Tonnes(kt) | Gold Grade(g/t) | Contained Gold(koz) |
Proven | 5,623 | 1.28 | 232 |
Probable | 129,700 | 1.27 | 5,307 |
Total Proven & Probable | 135,323 | 1.27 | 5,539 |
Measured Resources | 5,700 | 1.30 | 237 |
Indicated Resources | 141,800 | 1.51 | 6,868 |
Total Measured & Indicated Resources | 147,500 | 1.50 | 7,105 |
Inferred | 25,500 | 3.78 | 3,095 |
Table Notes: Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards on Mineral Resources and Mineral Reserves adopted by the CIM Council on May 10, 2014, were followed when calculating Mineral Reserves. Mineral Reserves are estimated at a cut-off grade of 0.35 g gold/t, a long-term gold price of $1,250/oz and an exchange rate of C$/US$ of 1.30. Additional information about Greenstone Mine Mineral Reserves and Mineral Resources is available in the technical report entitled "NI 43-101 Technical Report, Hardrock Project, Ontario, Canada"
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Contact details:
Trident Royalties Plc Adam Davidson / Paul Smith | www.tridentroyalties.com +1 (757) 208-5171 / +41 79 947 1348 |
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 |
Tamesis Partners LLP (Joint Broker) Richard Greenfield | www.tamesispartners.com +44 20 3882 2868 |
Hudson Sandler Investor Relations: John Smelt Public Relations: Charlie Jack / Harry Griffiths | Trident@hudsonsandler.com +44 207 796 4133 |
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.