Last checked at 1 Nov 2022 07:00
1 November 2022
Trident Royalties Plc
("Trident" or the "Company")
Q3 2022 Activities Update
Trident Royalties Plc (AIM: TRR), the diversified mining royalty company, is pleased to provide an update on its activities during the quarter ended 30 September 2022.
HIGHLIGHTS
Significant growth in Q3 royalty receipts, building a strong cash position
· Q3 2022 receipts of US$2.4 million from exposure to gold, copper, and iron ore. A quarter-on-quarter increase of over 20% (when adjusted for one-off events) and a sixfold increase over Q3 2021.
Royalty / Stream | Q3 2022 (US$) | Q2 2022 (US$) | Q3 2021 (US$) |
Koolyanobbing iron ore royalty | 406,963 | 448,847 | - |
Mimbula copper royalty | 500,000 | 500,000 | 375,000 |
Lincoln gold royalty | 173,500 | - | - |
Gold offtakes portfolio | 1,308,176 | 1,033,145 | - |
Total* | 2,388,639 | 1,981,992 | 375,000 |
Premier Gold Offtake amendment | - | 3,705,715 | - |
*Reserve Bank of Australia for 30 September 2022 (0.6502) and 30 June 2022 (0.6889)
· The royalty payment from the Koolyanobbing Iron Ore Project benefitted from a 26% increase in production from Trident's royalty area and stronger iron ore prices, offset by a weaker A$ and routine pricing adjustments from previous quarters.
· Production is imminent at the Mimbula Copper Project via a 10,000tpa Phase 1 operation, with a Bankable Feasibility study completed for an expansion to 56,000tpa (Phase 2) and gross proceeds totalling US$235 million raised by the operator in 2022 via private placement and offtake financing.
· 27% higher income from gold offtakes in the quarter from a 35% increase in gold deliveries, notwithstanding lower gold prices and volatility over the period.
· Cash of US$21.5 million as of 28 October 2022, providing a strong platform for further acquisitions to continue to grow the portfolio.
Positive asset-level progress by project operators
· Ganfeng Lithium Co. Ltd, the operator of the Sonora Lithium Project, noted its intent to accelerate construction of the project while also flagging a significant increase in the planned production rate, with Stage 2 increasing by 43% to 50kt per annum.1
o In addition, during the quarter, Trident secured a favourable amendment of its right-to-fund the acquisition of the Sonora Lithium Royalty.2
· Lithium Americas Corp., the operator of the Thacker Pass Lithium Project, announced that the oral hearing for finalisation of the Record of Decision has been scheduled for 5 January 2023. With a date now set, Trident expects a resolution in early-2023, with construction expected to commence thereafter.3
· Ramelius Resources Ltd, the operator of the Rebecca Gold Project, released an updated and increased Mineral Resource estimate of 1.2Moz, based on only 9,070 meters from an ongoing 75,000 meter drilling campaign.4
· Seduli Sutter Operations Corp., the operator of the Lincoln Gold Project, has shifted its near-term focus to prioritise Mineral Resource expansion. Trident is supportive of this position and has provided waivers in exchange for the implementation of a quarterly minimum payment schedule which effectively replicates the expected income from Stage 1 production, which was deferred.5
Adam Davidson, Chief Executive Officer of Trident commented:
"In Q3 2022 we saw a +20% increase in quarter-over-quarter revenue to $2.4 million. This represents a sixfold increase from the same period last year, demonstrating the growth potential of our business.
We have seen positive updates at many of our assets, including several of our key investments. The setting of a date for the Thacker Pass appeal process creates a clearer timetable for this major lithium project. Mimbula, Sonora, and Los Filos have all announced encouraging progress regarding future expansions and development. This is testament to our ability to access good assets, and we are delivering on our strategy of providing diversified exposure, including battery, base, and precious metals, as well as bulk commodities.
We look forward with confidence. We have a solid core portfolio and an exciting pipeline of opportunities. Our balance sheet is strong which, combined with rising internal cash generation, makes us well placed to create further value for our shareholders."
Royalty Portfolio Update:
Thacker Pass Lithium Project
· Post quarter-end, Lithium Americas Corp., operator of the Thacker Pass Lithium Project, confirmed that the oral hearing regarding the appeal of the issuance of the Record of Decision has been scheduled for 5 January 2023.6 Trident expects construction to commence following a positive resolution.
· Lithium Americas announced that it has signed a Community Benefits Agreement with the largest Native American community within the vicinity of the Thacker Pass project and is moving ahead with final selection of an engineering, procurement, and construction management contractor for project construction, as well as progressing their application to the U.S. Department of Energy Advanced Technology Vehicles Manufacturing loan programme.7
Sonora Lithium Project
· Ganfeng Co Ltd, operator of the Sonora Lithium Project, highlighted that the project is under construction, which it intends to accelerate. In addition, Ganfeng highlighted an increase in the planned production rate relative to the previous Feasibility Study published by Bacanora Lithium8, with potential Stage 2 production increasing by 43% to 50,000 tonnes per annum of lithium hydroxide.1
· Trident secured a favourable amendment of the right-to-fund the acquisition of the Sonora Lithium Royalty, with the long-stop date to complete the acquisition extended to the earlier date of 31 January 2025, or the date which is 6 months after the first Royalty payment. In addition, the agreement has been amended to include a provision that, at the time of Trident's funding, no material changes in Mexico's regulatory regime affect Sonora.1 The Mexican government has subsequently confirmed that existing lithium concessions - including those at Sonora - will be respected as long as licences are kept in good order.9
Lincoln Gold Project
· Seduli Sutter Operations Corp., operator of the Lincoln Gold Project, has shifted its near-term focus to prioritise mineral resource expansion. Trident is supportive of this position and provided waivers in exchange for the implementation of a quarterly minimum payment schedule, first payment of which was received in the quarter. The minimum payment schedule was structured such that it will replace the revenue expected from deferred Stage 1 production, which was deferred.5
Rebecca Gold Project
· Ramelius Resources Ltd, operator of the Rebecca Gold Project, announced an increased JORC 2012 compliant Mineral Resources estimate to 31Mt @ 1.2g/t from 1.2Moz Au (Indicated: 26.0Mt @ 1.2 g/t Au; Inferred: 5.7Mt @ 1.0g/t Au).4 In addition, Ramelius announced that work is underway to generate Ore Reserves and that further drilling for Resource definition, geotechnical studies and waste-dump sterilisation work has been scheduled towards the end of 2022.11
Warrawoona Gold Project
· Calidus Resources, operator of the Warrawoona Gold Project, noted that it achieved nameplate production capacity of 2.4Mtpa in the quarter and intends to expand the mine's gold production to 130koz per annum.12, 15 Trident anticipates that this could potentially pull forward expected gold production from the tenements covered by its royalty.
Mimbula Copper Project
· Moxico Resources PLC anticipates first copper cathode production imminently from the Mimbula Copper Project in Zambia from its 10,000tpa Phase 1 operation. In addition, a Bankable Feasibility study was completed in August 2022 contemplating an expansion to 56,000tpa (Phase 2). Moxico raised gross proceeds of US$85.0 million via a private placement in H1-22, and subsequently secured a further US$150.0 million via an offtake agreement with US$50 million immediately available.10
Offtakes Portfolio Update:
Gold Deliveries
· Gold deliveries increased by 35% during the quarter, from 48,657 gold ounces in Q2 to 65,865 in Q3. Gold spot price declined by $145 per ounce over the course of Q3 impacting margins. Gold volatility, as measured by the average 7-day volatility of the LBMA PM Gold Fix over the quarter, increased by 10% relative to the previous quarter, however, price volatility remains below recent and historical averages.
· Trident anticipates gold deliveries to continue to increase over the coming quarters in line with operator guidance.
Equinox Gold Santa Luz Offtake
· Equinox Gold Corp., operator of the Santa Luz gold mine, announced that commercial production was achieved on 1 October 2022, with production expected to continue to increase through the fourth quarter of 2022.13
Equinox Gold Los Filos Offtake
· After quarter end, Equinox Gold, operator of the Los Filos gold mine complex, announced an updated Feasibility Study for a production expansion. While Equinox has not yet approved the expansion, the study noted peak gold production averaging 360,000 ounces per year from 2025-2030. By comparison, Equinox's latest guidance for 2022 gold production at Los Filos is 155,000 to 170,000 ounces.14
Cash Position
As of 28 October 2022, Trident's unaudited pro forma cash balance was US$21.5 million, providing a strong platform from which to complete future transactions. This balance includes all revenue from the gold offtakes during the quarter but excludes Q3 royalty receipts. Net debt stands at US$18.5 million.
References
1: Source: Trident Royalties announcement dated 24 October 2022
( https://polaris.brighterir.com/public/trident/news/rns/story/xo1pnmr )
2: Source: Trident Royalties announcement dated 13 July 2022
(https://polaris.brighterir.com/public/trident/news/rns/story/wkoyevx)
3: Source: Trident Royalties announcement dated 10 October 2022
(https://polaris.brighterir.com/public/trident/news/rns/story/xegl62w)
4: Source: Trident Royalties announcement dated 1 August 2022
(https://polaris.brighterir.com/public/trident/news/rns/story/w3130dx)
5. Source: Trident Royalties announcement dated 2 September 2022
( https://polaris.brighterir.com/public/trident/news/rns/story/wkoqdyx )
6. Source: Lithium Americas announcement dated 7 October 2022
( https://www.lithiumamericas.com/news/lithium-americas-confirms-oral-hearing-schedule-for-the-thacker-pass-record-of-decision-appeal )
7. Source: Lithium Americas announcement dated 20 October 2022
( https://www.lithiumamericas.com/news/lithium-americas-signs-community-benefits-agreement-with-fort-mcdermitt-paiute-and-shoshone-tribe )
8. Source: Bacanora Lithium Project Overview
( https://bacanoralithium.com/sonora_lithium_project/default.aspx )
9. Source: Bnamericas
( https://www.bnamericas.com/en/features/lithium-a-us600bn-opportunity-for-mexico )
10. Source: Trident Royalties announcement dated 27 October 2022
( https://polaris.brighterir.com/public/trident/news/rns/story/r79pyjx )
11. Source: Trident Royalties announcement dated 21 September 2022
( https://polaris.brighterir.com/public/trident/news/rns/story/x2lkgmr )
12. Source: Calidus Resources announcement dated 10 October 2022
( https://www.investi.com.au/api/announcements/cai/1d5f061a-6b3.pdf )
13. Source: Equinox Gold announcement dated 4 October 2022
( https://equinoxgold.com/news/equinox-gold-announces-commercial-production-at-the-santa-luz-gold-mine )
14. Source: Trident Royalties announcement dated 21 October 2022
( https://polaris.brighterir.com/public/trident/news/rns/story/x87125w )
15. Source: Calidus Resources announcement dated 29 September 2022
( https://www.investi.com.au/api/announcements/cai/622f3964-50a.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 |
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.