Q3 2020 Activities Update
2 November 2020
Trident Royalties Plc
Q3 2020 Activities Update
First Payment on Copper Royalty, Continued Strength in Iron Ore, Rapid Development of Gold Portfolio
Trident Royalties Plc ("Trident" or the "Company") (AIM: TRR, FSX: 5KV), is pleased to provide an update on its activities undertaken during the quarter ended 30 September 2020, including the Q3 Koolyanobbing iron ore royalty and Mimbula copper royalty payments.
HIGHLIGHTS
Trident rapidly building critical mass of its royalty portfolio
· Three transactions announced over a total of six royalties in Q3, executing on Trident's strategy to rapidly build critical mass;
· The Q3 transactions add significant precious metals exposure to Trident's existing portfolio of base metals and bulk commodities, providing investors with a commodity allocation largely in-line with that of the global mining sector; and
· Several pipeline transactions materially advanced over the course of Q3 to further build on Trident's momentum.
Q3 royalty payments totalling approximately US$480,247 from royalties over producing assets
· Koolyanobbing iron ore royalty payment of A$652,073 (US$458,280¹) on lower production volume from the royalty area vs. Q2 but higher received price, with cumulative payments of A$2,094,598 (US$1,487,165¹) received over the first three quarters of 2020;
· The total royalty revenue from Koolyanobbing over the first three quarters alone represents more than 30% of the royalty purchase price recovered, representing an exceptional return on invested capital;
· Mimbula copper royalty inaugural payment of US$21,967 in the early stages of the project's ramp up, albeit with Q3 production punctuated by outages at the Konkola Copper Mines ("KCM") processing plant due to a pit slough at KCM's Nchanga mine;
· The Q3 Mimbula payment was on approximately 270 tonnes of copper sold. As the project's ramp up accelerates, October copper sales alone have already significantly exceeded the entirety of Q3 sales; and
· Commodity prices remained strong throughout Q3 with iron ore averaging $117.30/tonne, copper averaging $6,525.90/tonne, and gold averaging $1,911.40/oz.²
Q3 royalty acquisitions add significant precious metals exposure
· On 24 September 2020, Trident announced that it entered into an agreement to acquire an existing 1.5% Net Smelter Return ("NSR") royalty over the development-stage Lake Rebecca project in Australia, a significant gold asset actively progressing towards production;
· Lake Rebecca represents a key cornerstone asset for Trident and is anticipated to provide material cashflow once in operation;
· Maiden Resource of +1Moz announced in February 2020³ with recent drilling returning multiple significant intercepts outside of the current Resource;
· Drilling remains ongoing at Lake Rebecca with a focus on extending gold mineralisation in and around the current pit-shells, increasing confidence levels at the existing Resource, and to test further prospective locations at the project;
· On 28 August 2020, Trident announced that it entered into an agreement to acquire a total of four attractive exploration and development-stage gold royalties located in Western Australia from Talga Resources Limited, including;
· 1.5% NSR royalty over tenement E45/3381 (currently being converted to mining lease M45/1289) which forms part of the Warrawoona Project. The Warrawoona Project is owned and operated by Calidus Resources Limited ("Calidus") which recently released a Feasibility Study outlining an operation with average gold production of 90koz per year. Construction has commenced at Warrawoona, with "orders placed for long lead items, including SAG mill, in preparation for the commencement of the main Project construction in the March Quarter of next year."4 The royalty covers the eastern strike extension of the Klondyke Resource, including a proportion of the JORC (2012) Compliant Resources drilled in 2019;
· 1.5% NSR royalty over tenement M45/618 which forms the entirety of the Talga Talga Project owned and operated by Novo Resources, which recently acquired Millennium Minerals' nearby gold mill and is pursuing "fast-track planned Pilbara conglomerate gold production"5;
· On 14 July 2020, Trident announced that it entered into an agreement to acquire a variable price royalty over the Spring Hill gold project (equivalent to approximately 0.5% gross revenue royalty at the Australian dollar gold price at the time of announcement6). Spring Hill is owned and operated by private group PC Gold Ltd, which is actively advancing the project.
Positive asset-level progress and performance by project operators
· Warrawoona: In September, Calidus applied to have part of the E45/3381 tenement converted into a mining lease. The lease forms part of the Warrawoona Gold Project, which has now commenced early-stage construction activities. Trident owns a 1.5% NSR over E45/3381;
· Koolyanobbing: In its 2020 Annual Report, Mineral Resources Limited stated that "both the Deception and Jackson pits successfully transitioned to lower-strip ore delivery phases." Trident holds a 1.5% FOB revenue royalty over the M77/1259 tenement which covers a substantial part of the Deception pit and which is part of the Koolyanobbing iron ore operation in Western Australia;
· Mimbula: The Mimbula Copper Mine continues to ramp up production, with the in situ orebody now being actively mined in addition to the stockpiles; and
· Spring Hill: The operator of the Spring Hill Gold Project continues to actively move the project towards development with key permitting processes advancing.
Strong balance sheet to support future acquisitions
· Trident agreed to the early payment of the second tranche of the purchase price for the Koolyanobbing royalty acquisition in exchange for a A$350,000 discount, resulting in an effective annualised 17.5% risk free return on capital whilst removing the future payment obligation;
· Cash balance of US$12.68 million as of 30 September 2020;
· Even when accounting for subsequent transactions, this substantial cash balance - coupled with projected revenues from two cash generative royalties and an ability to offer vendors publicly tradeable equity in Trident - supports significant capacity for future acquisitions;
· In addition, Trident continues to advance debt discussions as a means to unlock additional funding capacity and provide shareholders with levered returns. Trident expects any debt facility would be agreed and drawn in conjunction with a future potential transaction or transactions;
· Indicative of the strength of the pipeline, Trident currently has 6 active NDAs under which it is reviewing a range of opportunities in nickel, copper, zinc, gold and battery minerals; and
· Trident continues to prioritise production or near-production assets, with an increased emphasis on larger, more substantive transactions to materially build Trident's revenue profile.
Adam Davidson, Chief Executive Officer of Trident commented:
"We are very pleased with Trident's progress over the third quarter of 2020. In a short period of time, we have added an additional six royalties to the portfolio - providing investors with precious metals exposure spread across a number of assets in one of the world's premier mining jurisdictions.
"Meanwhile, both copper and iron ore prices remain strong, providing a positive outlook for Trident's existing paying royalties. In addition, gold prices remain near all-time highs, supporting the continued advancement of Trident's precious metals exploration and development-stage royalties. The addition of Helen Pein, a highly experienced economic geologist, as a Non-Executive Director will further support Trident as we continue to execute on the strategy into the fourth quarter. I look forward to reporting on our progress as we continue to assemble a strong portfolio of mining royalties and streams."
1 AUD = 0.7028 USD (30 Oct 2020)
2 Source: Factset, 62% Fe (CFR), Copper (LME), Gold (LBMA)
3 Indicated Resources: 11.7 Mt @ 1.5 g/t Au (550koz Au), Inferred Resources: 15.4 Mt @ 1.0 g/t Au (485koz Au)
Source: Apollo Consolidated ASX announcement 10th Feb 2020.
https://www.asx.com.au/asxpdf/20200210/pdf/44dyphpx3pl45r.pdf
4 Source: Calidus Resources Limited announcement dated 22 October 2020 https://www.investi.com.au/api/announcements/cai/990b8373-b25.pdf
5 Source: Novo Resources press release dated 4 August 2020
https://www.novoresources.com/news-media/news/display/index.php?content_id=402
6 AUD = 0.70 USD (13th July 2020) and USD Gold = $1,817/oz (13th July 2020)
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. 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 |
+1 (757) 208-5171 |
|
Grant Thornton (Nominated Adviser) Colin Aaronson / Seamus Fricker |
+44 020 7383 5100 |
|
Tamesis Partners LLP (Financial Adviser and Joint Broker) Richard Greenfield |
+44 203 882 2868 |
|
Shard Capital Partners LLP (Joint Broker) Erik Woolgar / Isabella Pierre |
+44 207 186 9927 |
|
Yellow Jersey (Public Relations) Charles Goodwin |
+44 203 004 9512 |
About Trident
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.
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 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.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
Latest directors dealings
- 7 hours ago Luceco
- 7 hours ago Helios Towers
- 7 hours ago Wise Class A
- 7 hours ago EDX Medical Group Plc
- 8 hours ago Naked Wines