3 August 2021
Trident Royalties Plc
("Trident" or the "Company")
Q2 2021 Activities Update
Change of registered office
Trident Royalties Plc (AIM: TRR, FSX: 5KV), is pleased to provide an update on its activities undertaken during the quarter ended 30 June 2021, including Q2 2021 royalty receipts.
Q2 saw substantial asset level progress, significant Board changes, and strengthening of the balance sheet
· Trident noted significant asset level progress at a number of projects over which it holds royalties; including:
§ commencement of pre-stripping of a new deposit in the royalty zone at Koolyanobbing;
§ a 50% increase in Indicated resources at the Lake Rebecca Gold Project with total resources now in excess of 1.1Moz;
§ continued construction activities at the Warrawoona Gold Project;
§ positive indications for the forthcoming Feasibility Study for the Thacker Pass Lithium Project; and
§ a successful $73 million equity fundraise to fast track the development of a standalone processing operation at the Mimbula Copper Project.
· Trident welcomed Paul Smith to the board as Non-Executive Chair, coupled with a placement to Mr Smith of £1 million at 40p per share. Mr Smith worked for Glencore Plc from 2011 until 2020, most recently as Head of Strategy with a focus on capital markets, mergers and acquisitions and capital allocation.
· Post-period end, Trident also welcomed Peter Bacchus to the board as a Non-Executive Director. Mr Bacchus brings 25 years of experience as a leading global M&A advisor having held senior roles at Morgan Stanley and Jefferies prior to his current role as Chairman and Chief Executive of Bacchus Capital.
· Trident finalised all documentation and, together with its subsidiary companies, entered into a $10 million secured loan facility agreement to facilitate further growth and diversification of the portfolio, as well as to begin offering investors levered returns.
· Commodity prices underlying Trident's royalty portfolio remained strong throughout Q2 2021 underpinned by concerns around inflation as the global economy continues to recover from the COVID-19 pandemic.
Q2 royalty payments totalling approximately US$381,808 from royalties over producing assets
Royalty / Stream
Q2 2021 Payment
Cumulative Payments since Acquisition
Koolyanobbing iron ore royalty
Mimbula copper royalty
· Mimbula copper royalty payment of $375,000 based on the Minimum Payment Schedule ("MPS") under the royalty agreement. The MPS on the Mimbula copper royalty continues in 2021 ($375,000 per quarter in 2021, increasing to $500,000 per quarter in 2022 and $750,000 per quarter for the first two quarters of 2023)1.
· Moxico Resources recently executed a $73 million equity financing to ramp up production to an annual run-rate of 30,000 tonnes of copper by late-2022 which, at current copper prices, would see royalty payments in excess of the MPS.
· Koolyanobbing iron ore royalty payment of A$9,063 (US$6,8142), a decrease over Q1 2021 on lower volumes from the royalty zone as the operator is currently mining from an adjacent tenement at Deception.
· The broader Deception deposit contains 9.3Mt of Koolyanobbing's 40.8Mt Reserve3 and is expected to remain a material contributor to the ongoing production at the operation.
Pre-Stripping of The Claw deposit at Koolyanobbing indicates potential for significant additional near-term royalty payments, previously excluded from Trident's economic evaluation
· Trident notes the commencement of pre-stripping activities at Koolyanobbing which appear to be associated with 'The Claw' deposit ("Claw"), located entirely within the royalty zone. Satellite imagery shows clearing of an area which corresponds to the previously disclosed location of Claw by the former owner of Koolyanobbing.
· Trident anticipates Claw will begin to be included in the Koolyanobbing blend over the coming quarters. The Company views the potential development of Claw as a significant advancement for the royalty as it introduces a large, unpublished JORC (2004) Indicated Resource of 3.5M tonnes at 55.4% Fe4, which was previously excluded from Trident's economic evaluation.
· Trident holds a 1.5% free-on-board royalty over the M77/1259 tenement which includes the entire Claw deposit.
· The new activity at Claw reinforces one of the key benefits of royalty investments being ongoing exposure to the continued development of assets as operators seek to exploit positive price environments without any capital contribution from royalty holders.
Positive asset-level progress by project operators
· Thacker Pass Lithium Royalty5: In its most recent results, the project operator Lithium Americas Corp. ("LAC") highlighted several key milestones at Thacker Pass.
§ Results of a Feasibility Study targeting an initial 30,000-35,000 tonnes per annum lithium carbonate equivalent ("LCE") of capacity ("Phase 1") is expected by year end. Note that this is an increase on the 2018 Pre-Feasibility Study which originally contemplated up to 30,000 tonnes of Phase 1 LCE capacity6.
§ In addition, LAC is advancing engineering to consider a 20,000 tonnes per annum lithium hydroxide chemical conversion plant to have flexibility to meet potential customer and partner needs. Lithium hydroxide typically commands a price premium over lithium carbonate and is an increasingly prevalent component in rechargeable battery designs.
§ LAC continues to expand the engineering and technical team at Thacker Pass, with over 30 professionals focusing on start of construction, expected to begin in early 2022. As of 31 March 2021, LAC had US$514 million in cash and cash equivalents.
§ Trident acquired a 60% interest in a Gross Revenue Royalty over the Thacker Pass Project for US$28m (with US$13.2 million expected to be returned to Trident under an operator buy-back right) and, based on the Pre-Feasibility Study, would anticipate life-of-mine royalty revenues attributable to Trident over the 46-year mine life of US$341.2 million (inclusive of the operator buy-back)7.
§ Trident notes media reporting indicating that an injunction request by environmental groups to prevent excavation has been denied by a Nevada court8.
· Lake Rebecca Gold Project: Apollo Consolidated Ltd ("Apollo"), the project operator, has continued to advance exploration and add value to the Rebecca Gold Project ("Lake Rebecca"), with a Mineral Resource Estimate ("MRE") update and significant new drilling results. Trident holds a 1.5% net smelter royalty over the entire Lake Rebecca Resource.
§ MRE update for Lake Rebecca builds on the February 2020 JORC (2012) compliant MRE9, providing a 50% increase in Indicated Mineral Resources to 815,000 oz Au to a total combined optimised and pit-constrained 1.105 Moz gold Mineral Resource (Total Indicated & Inferred Mineral Resources of 29.1 Mt @ 1.2g/t Au). The Resource update provides scope for Apollo to consider a potential +8yr mining and processing operation as part of the planned technical evaluation studies.
§ Subsequent drilling results continue to build the potential of Lake Rebecca and, consequently, value to the Trident royalty:
§ Drilling within the eastern, footwall, side of the Rebecca optimised pit has identified additional shallow high-grade gold mineralisation including 7m @ 12.15g/t Au from 78m, 23m @ 2.36g/t Au from 42m, 10m @ 4.07g/t Au from 120m (announced 12 May 2021)10 and 27m @ 2.78g/t Au from 55m (announced 18 June 2021)11. Apollo expects these to add more near-surface material at a higher average gold grade than the MRE, potentially improving project economics.
§ Step-down drilling results show strong potential for Resource growth outside the current Rebecca pit shell with the footwall mineralisation found to continue into and below the eastern pit-shell wall; and confirmed mineralisation up to 120m down-plunge of the Jennifer structure, and below the current pit floor (drill hole RCLR0820 gave intercepts of 7m @ 3.71g/t Au from 185m and 8m @ 7.81g/t Au from 210m12).
§ Resource drilling results at the Cleo deposit, 1.5km west of Rebecca, continue to support the prospect of defining a maiden Resource for this discovery with recent significant intersections including 10m @ 3.66g/t Au from 95m, 5m @ 6.75g/t Au from 65m and 10m @ 1.5g/t Au from 85m11.
§ Exploration in the wider Lake Rebecca royalty area continues to provide further targets for follow-up. In addition, hydrological, metallurgical and permitting activities are currently on-going and Apollo reported that it remains in a strong financial position to fund the ongoing works with consolidated cash of A$36.6M as of 30 June 202112.
· Mimbula Copper Project: Moxico Resources Plc ("Moxico") recently completed a US$73 million equity financing, the proceeds of which will be used to fast track the development of a standalone processing operation at the Mimbula Copper Mine in Zambia ("Mimbula").
§ Copper production to date has been from the processing of ore from the Mimbula surface stockpiles via toll treatment at the nearby KCM Tailings Leach Plant.
§ Moxico intends to significantly increase production by commencing construction of a self-operated solvent extraction and electrowinning processing facility to produce copper at an anticipated annual run-rate of 30,000 tonnes by late-2022.
§ Reuters recently reported that Moxico is planning an initial public offering of its shares in London within the next 12 months13, while also currently seeking to raise $65-70 million in debt. A successful debt fundraise and/or public offering would further improve access to capital and the overall financial robustness of the project.
· Pukaqaqa Copper Project: In its most recent results, the project operator, Nexa Resources ("Nexa") noted that the first phase (of five phases) of metallurgical testing at Pukaqaqa was concluded in Q1 2021 with good results. Currently, Nexa is updating the block models to initiate phase 2 (variability tests) in Q3 2021. Trident completed the Pukaqaqa royalties transaction on 19 March 2021. Trident has a sliding scale NSR royalty over three project areas.
· Warrawoona Gold Project: Calidus Resources Ltd ("Calidus"), the project operator, reports that the construction of the Warrawoona Gold Project ("Warrawoona") in the East Pilbara of Western Australia continues to advance in line with budget and schedule. Trident holds a 1.5% NSR royalty which covers the eastward strike extensions of Warrawoona's main Resource 'Klondyke'.
§ Gold production is expected to commence the first half of Q2 2022, with Calidus having received the first A$25M tranche of a A$110M debt facility being provided by Macquarie Bank in order to fund construction the project14.
§ Warrawoona is fully permitted with the receipt of Works Approval and Water Abstraction Licence15 and a Power Purchase Agreement has been signed for the provision of 8MW of power through the installation of a 10.74MW liquid natural gas fuelled generation facility16.
· Talga Talga Project: Novo Resources Corp ("Novo"), the project operator, has reported encouraging results of recent surface sampling and mapping, testing lode quartz vein hosted gold, which has defined a 3km long mineralised corridor at Talga Talga:
§ Rock samples include encouraging gold assay results of 81.4 g/t Au, 46.9 g/t Au, 35.1 g/t Au and 30.0 g/t Au. Of a total of 149 samples, 68 returned gold grades greater than 0.5 g/t Au and 33 returned grades greater than 5.0 g/t Au (these results are not necessarily representative of mineralisation at Talga Talga).
§ Gold bearing quartz veins at Talga Talga are hosted by Warrawoona Supergroup metamorphosed volcanic and sedimentary rocks, the same rocks that host the Warrawoona Gold Project approximately 35km to the south.
§ Novo reports they are planning drill testing and bulk samples for mechanical sorter trials, with all relevant approvals in place17.
§ Trident notes that as part of the previously announced transaction with Calidus to sell Blue Spec, Novo received prospecting licence 45/3065, adjacent to Talga Talga, which is also included in the royalty area18.
§ Trident holds a 1.5% net smelter royalty over the Talga Talga Project.
· Bullfinch Gold Project: Torque Metals Limited ("Torque") is the project operator and owner of the Bullfinch Gold Project ("Bullfinch") and the Paris Gold Project, both located in Western Australia.
§ Trident holds a 1% net smelter royalty over the Bullfinch Gold Project, which can be repurchased by the operator for A$1,700,000 once production of 5,000oz of gold from the tenements has been achieved.
§ Torque successfully listed on the Australian Stock Exchange on 25 June 2021 raising a total of A$5.5M19. Torque has proposed to allocate a portion of funds raised to progress the evaluation and exploration of the Bullfinch Gold Project.
§ A drill programme is currently being planned for high grade drill ready targets at Bullfinch following completion of an existing drill programme at another tenement20.
· Koolyanobbing Iron Ore Project: In its Q4 FY2021 quarterly results, Mineral Resources Limited stated that 3.0 million tonnes of iron ore were shipped from the Yilgarn Hub for the quarter21.
§ Trident holds a 1.5% free-on-board royalty over the M77/1259 tenement which covers a substantial part of the Deception pit, which forms part of the broader Koolyanobbing iron ore operation in Western Australia.
§ Trident also notes the recent strategy overview presentation by Mineral Resources Limited, the project operator, which highlighted the impending finalisation of a 10-year plan for the Yilgarn Hub, of which Koolyanobbing and its associated infrastructure is the central component. Additionally, Mineral Resources flagged the expansion of the Yilgarn Hub to 12Mtpa as a further growth opportunity.
Strong balance sheet to support future acquisitions
· As announced on 1 July 2021, Trident finalised a secured debt facility for $10 million with a syndicate managed by Tribeca Investment Partners. The Company has now drawn down the full amount and the related 3,500,000 options have been granted. This facility supports an already strong balance sheet and provides capital to enable the Company to transact on its growing pipeline and begin to provide shareholders with leveraged returns.
· As of 30 June 2021, Trident's unaudited cash balance was US$8 million. This cash balance does not include Q2 royalty receipts or drawdown of the US$10 million debt facility.
· Trident is currently evaluating numerous royalty and stream opportunities, with 9 active NDAs covering a breadth of commodities including gold, iron ore, zinc, nickel, lead and a number of battery and industrial minerals.
Change of Registered Office and Company Secretary
· The Company has appointed Ben Harber of Shakespeare Martineau LLP as company secretary. In addition, effective today, the Company changed its registered office to 6th Floor, 60 Gracechurch Street, London, EC3V 0HR.
Adam Davidson, Chief Executive Officer of Trident commented:
"Trident continues to make strong progress towards building the critical mass required to realise our strategy to offer investors an increasing source of revenue through a diversified portfolio of mining royalties. This diversification is perhaps the key differentiator for Trident, as we look to broadly mirror the commodity exposure of the global mining sector, providing access not only to precious metals, but also base metals, bulk commodities and battery/technology metals.
"We are well on our way to achieving this and are building on our two existing paying royalties, the Koolyanobbing iron ore royalty and Mimbula copper royalty, with further projects now moving closer to the commencement of production. Importantly, both Koolyanobbing and Mimbula also represent considerable growth opportunities for Trident. The commencement of pre-stripping of a new deposit in the royalty zone at Koolyanobbing is a particularly interesting development which has the potential to materially enhance our royalty payments in future quarters.
"From a corporate perspective, the Board was further strengthened with the appointment of ex-Glencore Head of Strategy, Paul Smith, as Non-Executive Chair and Peter Bacchus as a Non-Executive Director. Paul and Peter join us at a pivotal time as we look to use our strong balance sheet to transact on a growing pipeline of opportunities to support material revenue growth and a progressive dividend policy. We look forward to working closely with Paul over the coming months to drive this strategy forward and maximise the value of this unique opportunity for our shareholders."
1: Source: Trident Royalties announcement dated 29 June 2020
2: AUD = 0.7518 USD (30 June 2021)
3: Source: Mineral Resources announcement 20 November 2019
4: Source: Government of Western Australia Department of Mines, Industry Regulation and Safety (DMIRS), Mines and Mineral Deposits (MINEDEX) online system record for 'The Claw'
5: Source: Lithium Americas Corp Consolidated Interim Financial Statements for three months ended March 31, 2021
6: Source: Trident Royalties Plc announcement dated 19 March 2021
7: Source: Technical Report on the Pre-Feasibility Study for the Thacker Pass Project, Humboldt County, Nevada, USA
8: Source: Reuters article published 24 July 2021
9: Source: Apollo Consolidated ASX announcement 20 April 2021
10: Source: Apollo Consolidated ASX announcement 12 May 2021
11: Source: Apollo Consolidated ASX announcement 18 June 2021
12: Source: Apollo Consolidated ASX announcement 7 July 2021
13: Source: Reuters article published 13 July 2021
14: Source: Calidus Resources Ltd ASX announcement 3 June 2021
15: Source: Calidus Resources Ltd ASX announcement 4 May 2021
16: Source: Calidus Resources Ltd ASX announcement 6 April 2021
17: Source: Novo Resources Corp TSX announcement 3 June 2021
18: Source: Novo Resources Corp media release 23 March 2021
19: Source: Torque Metals Ltd ASX announcement 25 June 2021
20: Source: Torque Metals Ltd ASX announcement 14 July 2021
21: Source: Mineral Resources announcement 30 July 2021
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 **
Trident Royalties Plc
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Trident is a growth-focused, diversified mining royalty and streaming company, providing investors with exposure to a mix of base and precious metals, bulk materials (excluding thermal coal) and battery metals.
Key highlights of Trident's strategy include:
· Building a royalty and streaming portfolio to broadly mirror the commodity exposure of the global mining sector (excluding thermal coal) 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.
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 has relied 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.