HIGHLIGHTS
Quarterly receipts of US$2.98 million, a 6% decrease from Q4 2023, driven by seasonally lower deliveries from the gold offtake portfolio, partially offset by exceptionally strong margin-per-ounce resulting from positive movements in gold volatility and price.
Lower receipts at Mimbula again reflect the conclusion of a minimum payment schedule in Q2 2023 following full recovery of Trident's initial investment. Trident retains a 0.3% gross revenue royalty over Mimbula, which is continuing its expansion from 10,000 tonnes per annum to full Phase 2 production of 56,000 tonnes per annum in mid-2025.
The Company notes several key asset level events during the quarter, including:
Thacker Pass lithium royalty advancing towards cash-flow, as U.S. Department of Energy makes a conditional commitment for a US$2.26 billion loan to fund construction of the processing facilities. Mechanical completion of Phase 1 production is targeted for 20271.
Exceptionally strong margins realised from Trident's gold offtake portfolio during Q1, which have continued in Q2 with net gold offtake revenues of over US$1 million thus far. Further increases in gold deliveries are expected as production seasonally increases following Q1, imminent first gold production from the Greenstone Project (May 2024), and Blyvoor Gold's recently announced go-public process to support funding of organic production growth up to 150k gold ounces per year in the medium term (from current 30koz).
Trident completed the acquisition of an incremental interest in an offtake over the Sugar Zone mine during Q1, increasing Trident's interest to 80% of gold doré production. The project operator, Silver Lake Resources, announced a merger with ASX-listed Red 5 Ltd to create a mid-tier gold company with a sector leading balance sheet. Silver Lake also confirmed the continuation of a 93km drill program, along with infrastructure improvements. Trident expects a restart of operations to follow completion of this program.
New World Resources, operator of the Antler Copper Project, received firm commitments for a placing to raise A$20.4 million, providing substantial funding to advance Antler towards first copper production.
As of 3 May 2024, the Company had an unaudited net debt position of US$22 million.
Royalty / Stream (US$M) | Q1 2024 | Q4 2023 | % Change | Q1 2023 |
Gold offtake portfolio | 1.52 | 2.39 | -36% | 1.88 |
Koolyanobbing iron ore royalty* | 0.47 | 0.57 | -18% | 0.86 |
Mimbula copper royalty** | 0.06 | 0.06 | - | 0.75 |
Lincoln gold royalty*** | 0.15 | 0.15 | - | 0.15 |
Lincoln gold royalty - partial sale**** | 0.78 | - | - | - |
Total | 2.98 | 3.17 | -6% | 3.64 |
* Calculated using Reserve Bank of Australia FX rates: 31 March 2023 (0.6712), 28 March 2024 (0.6532), and 28 December 2023 (0.6840)
** Reflects the step-down in royalty rate and conclusion of the minimum payment schedule as US$5M has been received
*** Partial payment received, with the balance expected by the 10 May 2024 extension date
**** See details below
Adam Davidson, Chief Executive Officer of Trident commented:
"Since listing just over three years ago, we have created a portfolio of 21 assets, many at development stage. In recent months we have seen important developments across a number of our assets. As these assets expand or move to first production, it reflects the growing maturity of our initial portfolio and the return on our initial investment. It also shows the clear path to future significant cash generation.
"The important asset level developments during the period include the imminent delivery of first gold from the Greenstone Project, the completion of funding for Phase 1 at Thacker Pass Lithium - including a U.S. Department of Energy's US$2.26 billion loan and a $275 million public offering - and commencement of stockpile processing at the Preciosa Silver Project.
"Trident has a diverse and exceptionally high-quality portfolio of royalties, which provide existing cash flow and the opportunity for substantial revenue growth. The revenue will enable shareholder returns and further investment and expansion of the portfolio. We look forward to updating investors over the rest of 2024."
Key Portfolio Updates:
Thacker Pass Lithium Project 1
Lithium Americas Corporation ("LAC") received a conditional commitment from the U.S. Department of Energy ("DOE") for a $2.26 billion loan under the Advanced Technology Vehicles ManufacturingLoan Program (the "Loan") for financing the construction of the processing facilities at Thacker Pass.
Post quarter-end, LAC announced completion of a $275 million underwritten public offering which is for the full funding of Thacker Pass Phase 1 construction.
General Motors released $320 million in funding in February 2023 in the largest investment publicly disclosed to date by an automaker in a company to produce battery raw materials, with the second tranche of $330 million expected before or in connection with closing of the DOE Loan.
Mechanical completion of Thacker Pass Phase 1 is targeted for 2027 following a three-year construction period, with full capacity production targeted for 2028. Major construction is expected to commence in the second half of 2024 following closing of the DOE Loan.
Gold Offtake Portfolio 2,3,4
Net revenue decreased 19% relative to Q1 2023, driven by a 24% decrease in gold deliveries from 62,335 gold ounces in Q1 2023, to 47,253 oz in Q1 2024. This was partially offset by very strong positive movements in both spot gold prices and volatility in the latter part of the quarter.
Trident expects margins-per-ounce to remain strong given the current gold market environment, with deliveries expected to increase, due in part to:
Aurous Resources, operator of the Blyvoor Gold Mine, recently announced it will go public via a business combination with Rigel Resources Acquisition Corp, a special purpose acquisition company sponsored by a fund managed by Orion Resource Partners. The transaction will help fund organic production growth at Blyvoor from the current 30koz gold per year run-rate, to an average of 150koz gold per year at an all-in-sustaining-cost of circa $815/oz.2
Equinox Gold recently announced that, after 2.5 years, construction of the Greenstone Gold Project remains on schedule and is anticipated to commence production in the first half of the year, with first gold expected in May 2024. Trident holds a gold offtake with an annual cap of 58,500 ounces on Greenstone, and previously secured a guarantee that any shortfall in deliveries for 2024 and 2025 will be compensated at a rate of $23.50 per ounce.3
Through a non-material purchase consideration, Trident acquired two further offtakes on the Sugar Zone Mine to increase exposure from 50% of gold doré production, to 80%. The second offtake is for 11.5% of gold doré production up to 86,250 ounces. The third offtake is for 18.5% of gold doré production up to 500,000 ounces. The total ounce cap associated with the offtakes has also increased from 375koz, to approximately 961koz gold (approximately 891koz remaining). The project operator Silver Lake Resources announced a board-supported merger with ASX listed Red 5 Ltd to create a leading mid-tier gold company with a sector leading balance sheet. Silver Lake confirmed that it is approximately 47km through a planned 93km drill program, along with infrastructure improvements. Trident expects a restart of operations to follow completion of this program.4
Antler Copper Project 5
The project operator, New World Resources, received firm commitments for a placing to raise approximately A$20.4 million, providing substantial funding to advance the Antler Copper Project. Near-term work will include expediting exploration drilling to continue to expand the resource base while "rapidly advancing Antler to production".
The longest lead-time mine permit application was submitted in January 2024, with the Pre-Feasibility study expected to be completed in H1-2024 and pre-construction development of the underground decline targeted for Q3-2025.
Against a backdrop of strong spot copper prices (>$9,500/tonne), the Antler project offers compelling project economics per its 2023 Scoping Study, with a 13-year mine life and average annual production of 32,700 tonnes copper-equivalent at a C1 production cost of $3,703/tonne (negative cost-per-tonne of $1,102 when including biproduct credits).
Sonora Lithium Project 6
In accordance with the terms of the agreement to acquire the royalty over the Sonora Lithium Project, Trident announced that the long-stop date to complete the acquisition has been extended to 31 December 2026. Trident has also agreed that other than in limited circumstances, the repayment date for its loan to Sonoroy is extended until the earlier of: (i) 31 December 2026; or (ii) completion of the Transaction.
In Trident's view, the Sonora royalty has the potential to become a Tier 1 royalty, providing exposure to a long-life lithium project with expansion optionality and operated by a world class lithium specialist. The revised transaction structure provides Trident with the ability to participate in the potential significant upside associated with the project from a low-cost and protected position, while allowing sufficient time to resolve the ongoing Alberta litigation, as well as the administrative review filed by Ganfeng Lithium against the Mexican government regarding the cancellation of nine lithium concessions.
Lincoln Gold Project 7
Seduli Gold recently noted that it is progressing toward an IPO on the Australian Stock Exchange, targeting H1 2024, with an associated capital raise to accelerate activities at the Lincoln Gold Project.
Trident successfully executed a strategic sell down of 50% of its existing royalty to a high-net-worth family office in line with Trident's focus on accelerating and de-risking cashflow. The acquirer brings access to capital and significant relevant mining experience, making an attractive partner for Trident.
Between the consideration for the partial royalty sale and payments received to-date under the Minimum Payment Schedule, Trident has seen a return of nearly $1.9 million on an initial $2.5 million investment and looks forward to continued progress at the Lincoln Project, buoyed by a favourable gold price environment.
References
1: Source: Trident Royalties announcement dated 15 March 2024 & LAC announcement dated 22 April 2024
(https://polaris.brighterir.com/public/trident/news/rns/story/x81yjjw)
(https://lithiumamericas.com/news/news-details/2024/Lithium-Americas-Closes-US275-Million-Underwritten-Public-Offering/default.aspx)
2: Source: SEC filings dated 11 & 12 March 2024
(https://www.sec.gov/Archives/edgar/data/1860879/000182912624001510/rigelresource_ex99-1.htm)
(https://www.sec.gov/Archives/edgar/data/1860879/000182912624001535/rigelresource_425.htm)
3: Source: Equinox Gold announcement dated 9 April 2024
(https://www.equinoxgold.com/news/equinox-gold-commences-processing-ore-at-greenstone-project-first-gold-pour-on-track-for-q2-2024/)
4: Source: Silver Lake Resources presentation dated 5 February 2024
(https://www.silverlakeresources.com.au/investors/asx-announcements)
5: Source: New World Resources presentation dated 26 March 2024 and announcement dated 16 April 2024
(https://newworldres.com/investors/)
6: Source: Trident Royalties announcement dated 19 February 2024
(https://polaris.brighterir.com/public/trident/news/rns/story/w9nemgr)
7: Source: Seduli Gold release dated 29 February 2024 & Trident Royalties announcement dated 2 September 2022
(https://seduli.com.au/february-2024-seduli-sets-sights-on-asx-listing-ipo-application-imminent/)
(https://polaris.brighterir.com/public/trident/news/rns/story/wkoqdyx)
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. In relation to the mineral resource estimates, the company confirms that the material assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to apply and have not materially changed, and it is not aware of any new information or data that materially affects the estimates.
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:
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; |
| 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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
SOURCE: Trident Royalties Plc
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