TIDMTRR
RNS Number : 4552N
Trident Royalties PLC.
01 February 2021
1 February 2021
Trident Royalties Plc
("Trident" or the "Company")
Q4 2020 Activities Update
Strengthening Iron Ore & Copper Markets, Additional Base
Metals Exposure
Trident Royalties Plc (AIM: TRR, FSX: 5KV), is pleased to
provide an update on its activities undertaken during the fourth
quarter ended 31 December 2020, including Q4 royalty receipts.
HIGHLIGHTS
Q4 caps off a transformative year for Trident
-- A total of six transactions agreed over 11 royalties in 2020,
including the acquisition of the Pukaqaqa copper royalties in Q4
from Orion Resource Partners ("Orion"), Trident's first all-equity
deal;
-- Strengthened the board and management team in 2020, most
recently in Q4 with the addition of Martin Page as CFO and Julien
Bosché as Vice President of Investments, completing the team by
filling previously outsourced positions;
-- With a portfolio inclusive of copper, iron ore, and gold,
Trident is increasingly reflective of the broader global mining
sector, providing investors with an inflation hedge in the face of
loose global monetary policy; and
-- A number of pipeline transactions continuing to advance across multiple commodities.
Q4 royalty payments totalling approximately US$291,832 from
royalties over producing assets
-- Koolyanobbing iron ore Q4 royalty payment of A$305,770
(US$235,092(1)), a decrease over Q3 on higher received price, but
lower volumes from the royalty area as production from the broader
Koolyanobbing Iron Ore Operation was more heavily weighted toward
other pits;
-- Koolyanobbing cumulative 2020 royalty payments of A$2,400,368
(approximately US$1.7 million at the historical FX rates for each
payment), which equates to more than 35% of the A$6.65 million
royalty purchase price recovered in the first full year alone,
representing an exceptional return on invested capital;
-- Mimbula copper royalty Q4 payment of US$56,740 on 633 tonnes
of copper sold, an increase over Q3 of 158% on revenue and 146% on
production as the project continues to ramp up;
-- The Minimum Payment Schedule ("MPS") on the Mimbula copper
royalty commences in Q1 2021 (US$375,000 per quarter in 2021, less
any excess payments made above the MPS from previous quarters)(2) ;
and
-- Commodity prices underlying Trident's royalties remained
strong throughout Q4 with iron ore averaging $131/tonne, copper
averaging $7,173/tonne, and gold averaging $1,876/oz.(3) Current
spot prices for iron ore and copper are well in excess of the Q4
average, presently at $157.4/tonne and $7,778/tonne
respectively.(3)
Q4 royalty portfolio growth, coupled with positive asset-level
progress by project operators
-- On 18 December 2020, Trident announced that it entered into a
conditional agreement to acquire three royalties over the Pukaqaqa
Copper Project ("Pukaqaqa") from Orion in an all-equity
transaction(4) . Highlights include:
-- Royalties over a large-scale copper project being actively
advanced by an established South America-focused mid-tier base
metals producer Nexa Resources (TSX: NEXA) ("Nexa");
-- Nexa has allocated a total of US$16 million towards advancing
the project over the last three years, with the project status
noted as "ongoing pre-feasibility study" with "a new phase of
metallurgical tests" scheduled to be completed in 2020(5 & 6)
;
-- The 2017, CIM compliant(7) Mineral Resource Estimate includes
a Measured and Indicated Resource of 309 million tonnes at 0.41% Cu
(approximately 1.26 million tonnes of contained copper), with an
additional Inferred Resource of 40.1 million tonnes at 0.34% Cu for
136,340 tonnes contained copper(6) ;
-- The pending acquisition is Trident's first all-equity
transaction, demonstrating an ability to continue to build the
portfolio while preserving balance sheet cash and also seeing
Orion, a leader in the royalty and streaming space, become a
significant shareholder in Trident. Completion of the proposed
acquisition remains conditional amongst other things upon the issue
or deemed issue of a tax certificate by the Peruvian tax
authorities in respect of the transaction.
-- Trident has noted positive asset-level progress by project operators, including:
-- Lake Rebecca: As noted in the recent Royalty Portfolio Update
announcement dated 14 January 2021(8) , since completion of the
Lake Rebecca gold royalty acquisition, operator Apollo Consolidated
(ASX: AOP) has released technical and drilling updates which are
considered very positive and see the potential for increased
Resources (updated Mineral Resource Estimate expected in Q2 2021),
as well as de-risking of future mining studies. Trident holds a
1.5% NSR royalty over the entirety of the current Lake Rebecca
Resource.
-- Warrawoona: As noted in the Royalty Portfolio Update
announcement dated 17 December 2020(9) , in September, Calidus
Resources Limited (ASX: CAI) ("Calidus") submitted an application
to convert part of the royalty tenement to a Mining Lease. In
addition, in Q4 Calidus announced that the Warrawoona Gold Project
is now fully funded to production, with construction early works
having already commenced.
-- Koolyanobbing: In its 2020 Annual General Meeting and third
quarter update(10) , Mineral Resources Limited stated that 7.4
million tonnes of iron ore were shipped from Koolyanobbing, with
FY21 guidance of 12-12.7 million tonnes and a year-end run rate
target of 13 million tonnes. Trident holds a 1.5% FOB revenue
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.
-- Mimbula: Production continues to ramp up at Mimbula and, with
the copper price recently surging to nearly 8-year highs, is well
positioned to capitalise on positive market sentiment;
-- Spring Hill: Permitting activities for the Spring Hill Gold
Project continue to progress successfully with the final
recommendation report completed by Australian permitting
authorities on 23 December 2020.
Strong balance sheet to support future acquisitions
-- Unaudited cash balance of US$6.9 million as of 31 December
2020 (not inclusive of Q4 royalty revenue);
-- This substantial cash balance - coupled with ongoing
projected revenues from two cash generative royalties and an
ability to offer vendors publicly tradeable equity in Trident -
supports capacity for future acquisitions;
-- In addition, Trident continues to engage with debt providers
in order 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;
-- Indicative of the strength of the pipeline, Trident currently
has 12 active NDAs under which it is reviewing a range of
opportunities in nickel, copper, zinc, gold, silver, iron ore,
mineral sands and lithium; 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:
"The significant progress Trident made during 2020 has meant
that it has rapidly positioned itself as a go-to investment vehicle
in which investors can gain exposure to an increasingly diversified
portfolio of mining royalties. Our strategy of targeting attractive
small to mid-size transactions, which are often ignored by larger
players across assets in premier mining jurisdictions, has already
proved successful in a short period of time. Having gained exposure
to a portfolio which includes copper, iron ore and gold, all of
which are forecast to continue their strong performance, we
anticipate seeing increasing returns from our existing paying
royalties.
"Looking forward to 2021, with our strengthened board and
management team now fully integrated, we will continue to execute
on the strategy and are currently evaluating and making positive
progress on a number of potential transactions. We maintain a
strong cash position which is continually added to with our two
cash generative royalties, and along with the ability to fund
future acquisitions using debt or equity, we have significant
capacity to aggressively pursue future acquisitions. Our pipeline
is strong and covers a broad range of commodities.
"We are very pleased with the opportunity set available to
Trident and look forward with confidence to our progress during the
year as we continue to build a diversified portfolio of mining
royalties and streams."
References
(1) AUD = 0.7688 USD (29 Jan 2021)
(2) Source: Trident Royalties announcement dated 29 June 2020
https://polaris.brighterir.com/public/trident/news/rns/story/r73y4gx/export
(3) Source: Factset, 62% Fe (CFR), Copper (LME), Gold (LBMA).
Spot prices sourced dated 29 January 2021, sourced from LME for
copper, and Financial Times for 62% Fe CFR China (TSI)
(4) Source: Trident Royalties announcement dated 18 December
2020
https://polaris.brighterir.com/public/trident/news/rns/story/rmqp7vw/export
(5) Source: Nexa Resources 2019 Annual Report
https://riperu.nexaresources.com/list.aspx?idCanal=tPFcom1XqQxIhf5L4ifI+A==
(6) Source: "Technical Report on the Pukaqaqa Project,
Huancavelica Region, Peru" (4 August 2017), available under Nexa's
SEDAR profile at www.sedar.com
(7) Source: Compliant with Canadian Institute of Mining,
Metallurgy and Petroleum (CIM) Definition Standards for Mineral
Resources and Mineral Reserves dated 10 May 2014.
(8) Source: Trident Royalties announcement dated 14 January
2021
https://polaris.brighterir.com/public/trident/news/rns/story/rg4eg3r/export
(9) Source: Trident Royalties announcement dated 17 December
2020
https://polaris.brighterir.com/public/trident/news/rns/story/w3mozjx/export
(10) Source: Mineral Resource Limited ASX Announcements
https://www.mineralresources.com.au/investorresources/latest-asx-announcements/all/
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 www.tridentroyalties.com
Adam Davidson +1 (757) 208-5171
Grant Thornton (Nominated Adviser) www.grantthornton.co.uk
Colin Aaronson / Samantha Harrison +44 020 7383 5100
/ Seamus Fricker
----------------------------------------------------------
Tamesis Partners LLP (Financial www.tamesispartners.com
Adviser and Joint Broker) +44 203 882 2868
Richard Greenfield
----------------------------------------------------------
Shard Capital Partners LLP (Joint www.shardcapital.com
Broker) +44 207 186 9927
Erik Woolgar / Isabella Pierre
----------------------------------------------------------
St Brides Partners Ltd (Financial www.stbridespartners.co.uk
PR & IR) +44 20 7236 1177
Susie Geliher / Catherine Leftley
/ Charlotte Hollinshead
----------------------------------------------------------
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.
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END
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