Last checked at 1 Sep 2023 07:00
1 September 2023
Trident Royalties Plc
("Trident" or the "Company")
Portfolio Update: Sonora Lithium Royalty
Trident Royalties Plc (AIM: TRR, OTCQX: TDTRF), the diversified mining royalty company, notes the recent announcement by Ganfeng Lithium Co, Ltd ("Ganfeng") regarding the Sonora Lithium Project, in Mexico.
Ganfeng stated that the General Directorate of Mines ("DGM") in Mexico issued a formal decision notice to Ganfeng's Mexican subsidiaries in August 2023 indicating that nine lithium concessions, which comprise the Sonora Lithium Project, were cancelled.1 Ganfeng indicated that it believes that its Mexican subsidiaries have complied with their obligations as required by Mexican law, and further notes that the cancellations issued by the DGM are not final, but that the cancellation may result in an asset impairment loss.
Ganfeng's position is that the DGM resolutions cancelling the concessions violate both Mexican law and international law as they are arbitrary, unsubstantiated in both fact and law, and infringe upon Ganfeng's and its subsidiaries' fundamental due process rights. Therefore, Ganfeng and its Mexican subsidiaries have filed administrative review recourses before the Secretary of Economy against the aforementioned resolutions.
Transaction Background
On 27 January 2022, Trident announced that Sonoroy, a 50%-held joint venture between Trident and Marmottes Capital Limited, entered into an agreement to acquire a 3.0% Gross Revenue Royalty (1.5% attributable to Trident) over the Sonora Lithium Project. In accordance with the terms of the agreement, the long-stop date to complete the acquisition of the royalty is the earlier of 31 January 2025, or the date which is 6 months after the first Royalty payment.
The conditions requiring Trident to provide funding in respect of Sonoroy to enable it to complete the acquisition remain at Trident's discretion and includes a provision that, at the time of funding, no changes in Mexico's regulatory regime materially affects the Sonora project and that ongoing litigation regarding the royalty is favorably resolved. If Trident elects to exit the joint venture, the repayment date of an initial loan made by Trident to Sonoroy of $2.5 million is due six months from notification of termination of the Sale and Purchase Agreement or Joint Venture Agreement.
Adam Davidson, Chief Executive Officer of Trident commented:
"Trident is disappointed by the recent developments in Mexico announced by Ganfeng, which add risk to the transaction in addition to the ongoing litigation in Alberta, whereby the validity of the royalty is being challenged. We were cognizant of these risks at the time of the original transaction and structured the deal accordingly to protect against both political and litigation risk, such that we may recover our initial $2.5 million secured loan. We will continue to monitor the situation carefully and, at the present time, intend to maintain our rights in respect of the asset."
References
1: Source: Ganfeng Lithium 30 June 2023 Interim Results dated 29 August 2023
(https://www.ganfenglithium.com/ir_detail_en/id/2640.html )
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.
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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.