TIDMTRR
RNS Number : 3345Z
Trident Royalties PLC
15 May 2023
15 May 2023
Trident Royalties Plc
("Trident" or the "Company")
Acquisition of Near-Production Silver Royalty
Trident Royalties Plc (AIM: TRR, OTCQX: TDTRF), the diversified
mining royalty company, is pleased to announce that it has entered
into a binding sale and purchase agreement ("SPA") with Coeur
Mining, Inc. ("Coeur", NYSE: CDE) to acquire royalties and a
milestone payment (the "Royalty Assets", and the acquisition
thereof, the "Transaction") over the La Preciosa Silver Project
("La Preciosa" or the "Project"), owned by Avino Silver & Gold
Mines Ltd. ("Avino", TSX: ASM, NYSEAMERICAN: ASM), in Mexico.
The Royalty Assets comprise:
-- 1.25% net smelter return royalty (the "NSR Royalty") covering
the Gloria and Abundancia veins;
-- 2.00% gross value return royalty (the "GVR Royalty") covering
all other areas of La Preciosa; and
-- US$8.75 million milestone payment (the "Milestone Payment"),
payable within 12 months of first silver production at La
Preciosa.
In consideration, Trident shall pay US$7 million in cash on
closing, and a further US$1 million, in cash or shares at Trident's
election, upon receipt of the Milestone Payment or other
circumstances as set out in the SPA.
HIGHLIGHTS
Near term cash flow over an attractive asset & new commodity
exposure
-- La Preciosa is one of the largest undeveloped primary silver
resources in Mexico, originally acquired by Coeur in 2013 for
approximately C$350 million. In March 2022, Coeur sold the asset to
Avino for cash, shares, and the Royalty Assets.
-- Avino operates the Avino silver mine and mill 19km from La
Preciosa, producing concentrates which are sold to Samsung C&T
U.K. Ltd. Avino intends to begin processing stockpiled material
from La Preciosa in late H2 2023 at its mill, before commencing
production from fresh ore in 2024.(1)
-- Avino intends to ramp annual silver production from La
Preciosa to circa 3 million ounces ("Moz") by 2027, increasing to
3.5Moz in 2028.(2) With a current total Mineral Resource estimate
of 120Moz of silver and 224,000 ounces of gold(3) , La Preciosa is
expected to be a long-life asset with further expansion
potential.
-- The Transaction introduces a new commodity to Trident's
portfolio, which currently contains exposure to gold, lithium,
copper, iron ore, and mineral sands. In addition to being a
tangible store of value and an inflation hedge, with over 50% of
silver use for industrial purposes, it is increasingly important
due to its conductivity and corrosion resistance, making it a
critical component of both solar panels and electric vehicles.
Adam Davidson, Chief Executive Officer of Trident commented:
"This transaction with Coeur again demonstrates our ability to
add value for shareholders. The generation of cash earlier this
year from the highly profitable disposal of several exploration
stage gold royalties has enabled us to complete a speedy and
efficient transaction that provides Coeur with a meaningful cash
consideration while delivering an attractive return for our
investors.
"The Trident portfolio is developing and maturing. La Preciosa
is expected to start generating cash for Trident in the near-term,
further adding to the rising cash profile that we see over the
coming years. La Preciosa is a highly attractive, long-life asset.
We are delighted to add silver to our portfolio, combining aspects
of precious metals along with significant potential within
electrification and transition materials."
La Preciosa Silver-Gold Project
The Project, an advanced stage development project located in
the State of Durango in Mexico, is 100% owned and operated by
Avino. Avino currently operates the Avino silver mine and mill 19km
away from La Preciosa and has indicated it intends to leverage the
infrastructure at Avino to begin producing silver from La Preciosa
in H2 2023. (1)
F igure 1. Map Highlighting the Distance from the Avino Mine to
the La Preciosa Deposit (Avino Silver & Gold Mines Ltd., April
2023 Corporate Presentation)
Avino notes that La Preciosa is one of Mexico's largest
undeveloped primary silver resources. The October 2021 Mineral
Resource Estimate (3) comprises a Total Indicated Mineral Resource
of 17Mt @ 176 g/t Ag & 0.34g/t Au, for 99Moz Ag and 189Koz Au;
and an Inferred Resource of 4Mt @ 151 g/t Ag & 0.25g/t Au, for
21Moz Ag and 35Koz Au.
Avino is currently developing underground mining plans to
initially mine the Gloria and Abundancia veins at La Preciosa.
Additionally, Avino is engaging with local communities and
advancing permitting to allow it to open a portal for the
underground mine, which is expected to be completed in early 2024.
Avino notes that it expects little economic impact in the short
term from the recent changes to Mexican mining laws, with its
concessions in good standing for the long term.(4) In parallel to
developing the underground mine, Avino has indicated it expects to
begin processing existing surface stockpiles from La Preciosa in H2
2023.
Royalty Assets
Pursuant to the Transaction, Trident is acquiring two royalties
and the associated Milestone Payment.
The NSR Royalty is a 1.25% net smelter returns royalty and
covers the Gloria and Abundancia veins at La Preciosa as outlined
in Figure 2 below.
Figure 2. Map of La Preciosa Project Showing Named Veins and
Licence Areas Subject to the NSR Royalty, GVR Royalty and the
Contingent New Reserve Discovery Payment
The NSR royalty is a perpetual royalty and does not include any
buyback provisions for the operator. Additionally, the royalty
entitles Trident a right of first refusal on any future additional
royalties over the NSR Royalty coverage area.
The GVR Royalty is a 2.00% gross value returns royalty and
covers the entirety of the La Preciosa Project, excluding areas
covered by the NSR Royalty (see Figure 2). The GVR Royalty further
covers any areas within a two-mile radius of La Preciosa.
Additionally, the royalty entitles Trident a right of first refusal
on any future additional royalties over the GVR Royalty coverage
area and provides Avino with a right of first offer on any
potential sale of the GVR Royalty.
The GVR Royalty also provides for a New Reserve Discovery
Payment over certain areas of La Preciosa, entitling the royalty
holder to receive US$0.25 / silver equivalent ("AgEq") ounce,
adjusted for inflation, for any new reserves reported. Any New
Reserve Discovery Payment would offset future royalty payments
under the GVR Royalty, subject to a US$50 million cap.
The Milestone Payment comprises a US$8,750,000 payment due and
payable within twelve months of first silver production from La
Preciosa. The Milestone Payment may be paid, at Avino's election,
up to 50% in Avino shares priced at a 20-day volume weighted
average price two days before the issuance of the shares.
The Transaction
Pursuant to a legally binding sale and purchase agreement (the
"Sale and Purchase Agreement"), Trident has paid US$7,000,000 in
cash to Coeur.
Upon receipt of the Milestone Payment or other circumstances as
set out in the SPA, Trident must pay a further US$1,000,000 (the
"Contingent Payment") in cash or Trident shares to Coeur. Should
Trident elect to settle the Contingent Payment with Trident shares,
such shares will be issued at a 20-day volume weighted average
price prior to the date of the Contingent Payment.
References
1: Source: Webcast - Fourth Quarter and Year End 2022 Financial
Results Webcast and Call, March 29, 2023
(
https://avino.com/site/assets/files/5422/avino20230329_archive.mp4
)
2: Source: Avino Silver & Gold Mines Corporate Presentation, April 2023
( https://avino.com/investors/presentations/ )
3: Source: Resource Estimate Update for the Proposed Acquisition
of the La Preciosa Property, Durango, Mexico, Effective Date
October 27, 2021
(
https://avino.com/site/assets/files/5327/la_preciosa_technical_report.pdf
)
La Preciosa Property Mineral Resource Summary (Total, All
Veins), Effective Date 27 October 2021
Resource Classification Tonnage Grade Metal Contents
(kt)
Ag Au AgEq Ag Au AgEq
(g/t) (g/t) (g/t) (Moz) (koz) (Moz)
------- ------- ------- ------- ------- -------
Indicated 17,441 176 0.34 202 99 189 113
-------- ------- ------- ------- ------- ------- -------
Inferred 4,397 151 0.25 170 21 35 24
-------- ------- ------- ------- ------- ------- -------
Notes: kt=thousands of tonnes, Cu=Silver, Au=gold, koz.=
thousands of troy ounces, Moz millions of troy ounces
Mineral Resources are reported using CIM Definition Standards
for Mineral Resources and Mineral Reserves (May 2014) and CIM
Estimation
of Mineral Resources and Mineral Reserves Best Practice
Guidelines (November 2019).
The QP for the estimate is Mr. Michael F O'Brien, P.Geo., Red
Pennant Resources. Geoscience.
The Mineral Resources have an effective date of July 23,
2021.
Mineral Resources are reported using a silver equivalent (AgEq)
cut-off of 120 g//t, using metal prices of Ag 19 US$/oz and Au 1750
US$/oz.
Totals may not sum due to rounding.
Areas of uncertainty that may materially impact the MREs
include:
-- Changes to long-term metal price assumptions;
-- Changes in local interpretations of mineralization geometry,
fault geometry and continuity of mineralized zones;
-- Changes to metallurgical recovery assumptions;
-- Changes to resource classification approach
-- Variations in geotechnical, hydrogeological, and mining
assumptions;
-- Changes to environmental, permitting, and social license
assumptions.
The Mineral Resource was estimated in October 2021 and
restricted to continuous regions amenable to underground
exploitation using costs derived from the nearby Avino Mine to
provide reasonable prospects for eventual extraction.
4: Source: Webcast - First Quarter 2023 Results Webcast and Call, May 12, 2023
( https://avino.com/investors/quarterly-results-calls/ )
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 www.tridentroyalties.com
Adam Davidson / Richard Hughes +1 (757) 208-5171 / +44 7967
589997
Grant Thornton (Nominated Adviser) www.grantthornton.co.uk
Colin Aaronson / Samantha Harrison +44 020 7383 5100
/ Samuel Littler
------------------------------
Stifel Nicolaus Europe Limited (Joint www.stifelinstitutional.com
Broker) +44 20 7710 7600
Callum Stewart / Ashton Clanfield
------------------------------
Liberum Capital Limited (Joint Broker) www.liberum.com
Scott Mathieson / Cara Murphy +44 20 3100 2184
------------------------------
Tamesis Partners LLP (Joint Broker) www.tamesispartners.com
Richard Greenfield / Charlie Bendon +44 20 3882 2868
------------------------------
St Brides Partners Ltd (Financial www.stbridespartners.co.uk
PR & IR) +44 20 7236 1177
Susie Geliher / Catherine Leftley
------------------------------
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.
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END
ACQNKNBQCBKDNPD
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