Thacker Pass Lithium Resource Upgrade
8 October 2021
Trident Royalties Plc
("Trident" or the "Company")
Royalty Portfolio Update: Thacker Pass Lithium Resource Upgrade
Trident Royalties Plc (AIM:TRR, FSX:5KV), the growth-focused mining royalty and streaming company, is pleased to note the recent announcement1 by Lithium Americas Corp. ("Lithium Americas" or "LAC") regarding positive progress at the Thacker Pass Lithium Project ("Thacker Pass" or the "Project"), in Nevada, USA. Trident holds a 60% interest in a gross revenue royalty ("GRR")2 over the entirety of the Project, further details of which are set out below (the "Thacker Pass Royalty" or the "Royalty").
Lithium Americas has released a significant update to the Thacker Pass Mineral Resource Estimate ("MRE") - more than doubling the size of the MRE - and set out technical inputs to the ongoing Feasibility Study and Project timelines.
The Thacker Pass MRE has increased to 13.7Mt of lithium carbonate equivalent ("LCE") grading 2,231 parts per million lithium ("ppm Li") of Measured and Indicated ("M&I") Resources and 4.4Mt of LCE grading 2,112ppm Li of Inferred Resources. The Feasibility Study is now considering an optimised mine plan targeting Phase 1 capacity of 40,000 tonnes per annum ("tpa") lithium carbonate (+30% increase over the 30,000tpa LCE targeted for Phase 1 in the original Pre-Feasibility Study ("PFS")) and a Phase 2 total capacity of 80,000tpa LCE (+30% increase over the 60,000tpa LCE targeted for Phase 2 in the original PFS).
Adam Davidson, Chief Executive Officer of Trident commented:
"This latest update from Lithium Americas more than doubles to the lithium Resource estimate for Thacker Pass which has a very positive read through for Trident's potential future earnings from this project, which is the largest lithium reserve in the United States. The ongoing Feasibility Study is now considering an optimised mine plan targeting an initial Phase 1 of 40,000tpa lithium carbonate with a potential Phase 2 expansion to target total capacity of 80,000tpa lithium carbonate - a significant increase over the Pre-Feasibility targets of 30,000tpa and 60,000tpa for Phases 1 and 2 respectively. This comes at a time when LCE prices have more than doubled over the course of 2021. In addition, Lithium Americas reports the permitting process to be on track, with a final decision expected in Q1/2022 and with the planned pilot plant expected to become operational during H1/2022.
"Under the revised production profile targets announced by LAC (but retaining the PFS LCE price of US$12,000/tonne), Phase 1 royalty revenue attributable to Trident would increase from approximately US$3.8 million per annum to +US$5 million, with Phase 2 royalty revenue increasing from approximately US$7.6 million per annum to +US$10 million; noting that the current LCE price is now >US$25,000 per tonne."
THACKER PASS UPDATE SUMMARY
The ongoing Thacker Pass Feasibility study considers an optimised mine plan and the following key variables. Lithium Americas expects to provide an update on timing of the Feasibility Study by early 2022.
· Updated Mineral Resource Estimate : Expanded M&I Resource estimate to 13.7Mt LCE at 2,231ppm Li (see Table 1 and comparison3 Table 2). The updated MRE incorporates the Southwest Basin, a change in cut-off grade, and additional drilling since the 2018 M&I Resource of 6.0Mt LCE at 2,917ppm Li3.
Figure 1: Thacker Pass Location and Mineral Resource Model Compared to the Boundary of 2018 Resource Model: to view the image, please click on the following link http://www.rns-pdf.londonstockexchange.com/rns/4299O_1-2021-10-7.pdf
Table 1: Mineral Resource Estimate for the Thacker Pass Project, announced 7 October 2021 (CIM NI43-101 compliant)
|
Resource Classification |
Tonnage (million tonnes) Mt |
Ave. Li Grade (ppm) |
Lithium Carbonate Equivalent (million tonnes) Mt |
|
Measured |
654.2 |
2,356 |
8.2 |
|
Indicated |
499.4 |
2,067 |
5.5 |
|
Measured and Indicated |
1,153.6 |
2,231 |
13.7 |
|
Inferred |
391.6 |
2,112 |
4.4 |
See Resource Mineral Estimate notes 2
· Phase 1 capacity increased to target 40,000tpa lithium carbonate : Initial Phase 1 targeted capacity increased to reflect the optimized mine plan and leaching efficiencies. Optimisation work is focused on maximising lithium carbonate production in Phase 1 without increasing the size of the proposed 3,000 tonnes per day ("tpd") sulphuric acid plant or water usage. Improvements include a mine plan focused on the illite clay and processing technologies to increase yield.
· Phase 2 to target additional 40,000tpa capacity for total capacity of 80,000tpa lithium carbonate: Plans to include an expansion scenario to target total capacity of 80,000tpa of lithium carbonate. The addition of a 40,000tpa expansion ("Phase 2"), is designed to demonstrate Thacker Pass' ability to scale production and align with potential customer and partner longer-term demands. The Phase 2 expansion scenario would entail additional time required to amend and meet permitting requirements beyond Phase 1. To meet potential customer and partner needs, LAC continues to also advance engineering to consider an option for a 20,000tpa lithium hydroxide chemical conversion plant.
· Permitting process on track with final decision expected in Q1 2022 : All key State permits2 are expected to be released for public comment in Q4/2021. At the Federal level, a court hearing on the appeal of the Record of Decision3 is expected to take place in February 2022, with the ruling to follow shortly thereafter.
· Developing integrated pilot plant to support increased scale: Working on an integrated pilot plant, expected to be operational in H1/2022, to support ongoing optimisation work, confirm certain assumptions in the design and operational parameters and provide product samples for potential customers. The existing process testing facility will be relocated to a new facility in Reno and expanded to run the full Thacker Pass flowsheet to produce lithium carbonate samples.
· Early-works construction expected to commence in H1/2022: Early-works includes roads, site preparation, water line and additional infrastructure to condense and de-risk the overall construction schedule.
· Discussions continue with potential strategic partners and customers: LAC has retained Greenhill & Co. to act as financial advisor for the Thacker Pass strategic partnership process.
· Designed to minimise environmental footprint: Thacker Pass is being designed to incorporate carbon-free power as its primary energy source, state-of-the-art air emissions control technologies, a zero-water discharge process, water recycling technologies to reduce water consumption and adopt active reclamation to maintain low footprint. Environmental impact analysis is underway by Golder Associates to align with the proposed Feasibility Study design.
The technical details summarised in this announcement are based on technical information compiled by the Qualified Persons in compliance with Canadian National Instrument 43-101 as set out in the referenced Lithium Americas announcements and reports.
Thacker Pass Royalty Information
Trident holds a 60% interest in the Thacker Pass GRR. The key terms of the GRR are as follows:
· A gross revenue royalty on all mineral products generated at the mine of 8% (4.8% attributable to Trident) reducing to 4% (2.4% attributable to Trident) after US$22 million is paid.
· The right to reduce the GRR to 1.75% (1.05% attributable to Trident) by the operator making a Buyback payment of US$22 million at any time (US$13.2 million attributable to Trident).
· Trident notes that the Prefeasibility Study ("PFS")6 assumes the Buyback is completed within the first year of operation and, as such, Trident has assumed that it would benefit from a 1.75% GRR (1.05% attributable to Trident) through the life cycle of the project.
· Based on the PFS parameters and assuming the Buyback is exercised before the commencement of production, the anticipated Phase 1 steady-state royalty revenue attributable to Trident is expected to be approximately US$3.8 million per annum, increasing to approximately US$7.6 million per annum at Phase 2 steady-state7. Under the revised production profile targets announced by LAC (but retaining the PFS LCE price of US$12,000/tonne), Phase 1 royalty revenue attributable to Trident would increase to +US$5 million per annum, with Phase 2 royalty revenue increasing to +US$10 million per annum; noting that the current LCE price is now >US$25,000 per tonne.
Notes & References
All of the technical information in this release has been extracted from the publicly available source documents identified below, the reader is advised that the appropriate CIM tables and Qualified Persons Statements may be found in those documents.
1 Source: Lithium Americas Corp. (TSX: LAC, NYSE: LAC) announcement. Lithium Americas Expands Resource at Thacker Pass and Increases Phase 1 Capacity to Target 40,000 tpa Lithium Carbonate, 7 October 2021
2 Mineral Resource Estimate Notes for the 7 October 2021 update produced in accordance with CIM Definition Standards along with Mineral Resource and Mineral Reserve Estimation Best Practice Guidelines (2019):
· The Qualified Person who supervised the preparation of and approved disclosure for the estimate is Randal Burns, B.Sc.Geology and SME, VP Exploration at Lithium Nevada Corp., a wholly owned subsidiary of Lithium Americas.
· Mineral Resources are reported using an economic break-even calculation formula: "Operating Cost per Resource Tonne"/"Price per Recovered Tonne Lithium" * 10^6 = ppm Li Cut-off. "Operating Cost per Resource Tonne" = US$58.58, "Price per Recovered Tonne Lithium" is calculated: ("LCE Price" * 5.32 * (1 - "Royalties") * "Recovery". Variables are "LCE Price" = US$12,000/tonne Li2CO3, "Royalties" = 1.75% and "Recovery" = 70%.
· A resource economical pit shell has been derived from performing a pit optimization calculation using Vulcan software.
· The conversion factor for lithium metal (100%) to LCE is 5.323.
· Applied density is 1.79 tonnes/m3.
· Measured Mineral Resources are in blocks estimated using at least six drill holes and eighteen samples within a 262 m × 262 m search radius in the horizontal plane and 5 m in the vertical direction; Indicated Mineral Resources are in blocks estimated using at least two drill holes and six to eighteen samples within a 483 m × 483 m search radius in the horizontal plane and 5 m in the vertical direction; and Inferred Mineral Resources are blocks estimated with at least one drill hole and three to six samples within a search radius of 722 m × 722 m in the horizontal plane and 5 m in the vertical plane.
· Rounding errors may exist.
3 Mineral Resource Estimate comparison between 7 October 2021 MRE update and previous 5 April 2018 MRE. See referenced PFS for 5 April 2018 MRE assumptions.
Table 2: Comparison between 7 October 2021 MRE and 5 April 2018 MRE.
|
Category |
EFFECTIVE DATE OF 7 OCTOBER 2021 |
EFFECTIVE DATE OF 5 APRIL 2018 |
|
Measured |
654.2 Mt |
242.2 Mt |
|
Indicated |
499.4 Mt |
143.1 Mt |
|
Total Measured and Indicated |
1,153.6 Mt |
385.3 Mt |
|
Inferred |
391.6 Mt |
147.4 Mt |
4 State Permits: Three key state-level permits are expected to be published in draft form by the Nevada Department of Environmental Protection ("NDEP") for public comment in Q4 2021: (1) Water Pollution Control Permit, (2) Mine Reclamation Permit and (3) Class II Air Permit. LAC expects to have final versions of these permits in December 2021. LAC expects that early-works on the water line could begin as early as February 2022, once permits are received. Other early-works are expected to begin in H1 2022, including roads, site preparation and additional infrastructure, to condense and de-risk overall construction schedule. A decision on the water rights transfer application is anticipated by Q1 2022.
5 The Record of Decision ("ROD") was received in January 2021 from the Bureau of Land Management ("BLM"). In February 2021, claims were filed against the BLM to appeal the issuance of the ROD. Injunction requests over the Company's plan to begin pre-construction work were denied in Q3 2021. A court hearing on the appeal is expected to take place in February 2022, with the ruling to follow shortly thereafter.
6 Technical Report on the Pre-Feasibility Study for the Thacker Pass Project, Humboldt County, Nevada, USA, Effective Date 1 August 2018 , results announced 21 June 2018 Study link : https://www.lithiumamericas.com/staging/lithiumamericas.com/_resources/pdf/investors/technical-reports/thacker-pass/Technical-Report-Thacker-Pass.pdf?v=0.228
7 Assuming that the Buyback of US$13.2 million attributable to Trident is exercised to reduce the GRR rate. Note that the steady-state cash flows exclude the Buyback payment.
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.
** Ends **
Contact details:
|
Trident Royalties Plc Adam Davidson |
www.tridentroyalties.com +1 (757) 208-5171 |
|
Grant Thornton (Nominated Adviser) Colin Aaronson / Samantha Harrison / Lukas Girzadas |
+44 020 7383 5100 |
|
Tamesis Partners LLP (Joint Broker) Richard Greenfield |
+44 20 3882 2868 |
|
Shard Capital Partners LLP (Joint Broker) Erik Woolgar / Isabella Pierre |
www.shardcapital.com +44 20 7186 9927 |
|
St Brides Partners Ltd (Financial PR & IR) Susie Geliher / Catherine Leftley |
+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 and precious metals, bulk materials (excluding thermal coal) and battery metals.
Key highlights of Trident's strategy include:
· Expanding on a royalty and streaming portfolio which broadly mirrors 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 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.
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