Trident Royalties: Final Results

13th April 2021 | Trident Royalties plc

Trident Royalties Plc (AIM:TRR, FSX:5KV), the growth-focused mining royalty and streaming company, is pleased to announce its audited final results for the year ended 31 December 2020.

The Annual Report for the period ended 31 December 2020 is set out in full below.

Chairman’s Statement

It gives me great pleasure to deliver my inaugural Chairman’s Statement for Trident Royalties, in its new guise, following its successful evolution from a cash shell to diversified mining royalty company. Trident is a company which, over the past 12 months, has formulated and executed its new business model and strategy thus enabling investors to capitalise on the new commodities ‘supercycle’ being forecast by many analysts and commentators.

Our business model has not simply evolved by being in the right place at the right time; its strength lies in careful and considered value-building through the acquisition of royalties and streams to deliver exposure to commodity prices as a percentage of mining turnover, with multiple upside opportunities.

Mining investors often quote the phrase that “everything is either mined or grown”. Whilst simplistic, there is a certain wisdom to this statement as it clearly demonstrates our continued reliance on raw materials for every element of our modern lives.

However, the mining industry, and perhaps more importantly, global demand dynamics, have changed fundamentally in the past 20 years. This evolution is accelerating, driven by broader recognition across the globe, by policy makers, governmental bodies, and capital markets, that electrification is happening on a scale that was not anticipated even 10 years ago. Accordingly, it is fuelling a market for key commodities such as lithium, graphite, and cobalt, and also renewing demand for other technology metals including copper and nickel. This changing dynamic has also had a profound impact on commodities such as iron ore, the price of which soared in 2020, as companies and governments internationally look to recalibrate their infrastructure to support this new age of electrification.

Similarly, precious metals continue to deliver high returns for investors; the gold price was certainly one of the winners in 2020 and despite a retrace in early 2021, we are comfortable in our exposure to quality gold assets and may look to expand our portfolio of gold royalties in the future.

Commodities across the spectrum have been impacted by improved market sentiment, with the likes of Goldman Sachs declaring its expectation for long-term growth and strong commodity prices. Encouraged by comments such as these, investors have been flocking to FTSE mining giants, some of which have presented new and attractive dividend policies in recent weeks. However, previous supercycles have also taught us that alongside increasing metal spot prices, operating costs can also surge putting pressure on margins, essentially denying investors the full advantage of positive commodity movements.

With this in mind, a key benefit of the royalties and streaming business model becomes apparent, as royalties provide an alternative way to gain exposure to commodity prices – whilst being largely insulated from the issues associated with direct equity ownership. These issues, which are often aggravated during commodity bull runs, include operating cost increases, capital cost overruns, equity dilution and misguided M&A as businesses look to expand near term production notwithstanding potential long term value destruction.

Royalties and streams also provide additional tangible benefits to retail and institutional investors alike, as they are considered high yielding investments ranking senior in the capital structure and often secured and traded at attractive valuation multiples. Furthermore, the scale and commodity diversity which a royalty and streaming model can offer, inherently enhances value, with the opportunity to receive long term returns whilst retaining the optionality and agility to flex in line with market trends and demand fundamentals.

Portfolio diversification is a key pillar of our growth strategy as we look to broadly mirror the commodity exposure of the global mining sector, while competitors are predominately precious metals focused. As well as providing a key differential compared to our peers, this portfolio diversification also seeks to lower risk and mitigate revenue volatility.

During the year under review, and in the first months of 2021, we have made significant progress to this end and now have royalties spanning copper, iron ore, gold and most recently, lithium, a key battery metal. This adds an enormously valuable and strategically important dimension to our business as we ultimately look to establish a balanced, diversified portfolio to represent the exposure of the global mining sector.

Our ability to build this portfolio, over a relatively short space of time, is attributable to the active deal sourcing model that we have developed: acquiring existing assets from natural sellers as well as writing new royalties and streams. We have a global mandate, targeting royalties in resource-friendly jurisdictions worldwide, while competitors are heavily weighted to the Americas, which has also resonated with investors and generated interest in our business across the equity capital market.

This was most recently demonstrated through the approximately £20.67m fundraising, which was supported by new and existing shareholders, in conjunction with the Thacker Pass Lithium Project royalty acquisition. This fundraising, together with the equity placing conducted in May 2020 in conjunction with our admission on AIM, provided Trident with the ability to execute multiple value accretive transactions which have laid the foundations for this period of rapid growth for our business.

Indeed, the Thacker Pass transaction should be seen as a significant step change for Trident and one which represents a major milestone on the path to achieving critical mass, more than doubling the capital deployed by Trident to date. Once this scale and critical mass have been achieved, we expect strong cash generation to support an attractive dividend policy, providing investors with a desirable mix of inflation protection (through exposure to commodities), capital growth and income. I believe that we are well on our way to achieving this after delivering a commendable performance in 2020 and into Q1 2021, despite the significant headwinds of the COVID-19 pandemic.

The strength of our business model is now clear to see: led by our CEO Adam Davidson, alongside his highly skilled and professional team, with a foundation of high-quality royalties that we believe will bear fruit for our investors over the short, medium, and long-term, Trident is positioned for rapid growth with minimal expansion to our cost base.

I would like to take this opportunity to thank our shareholders, both long-standing and loyal backers and those new to the register, along with my fellow Board members and our executive team for their support and look forward to reporting on our progress over the coming months as we embark on this next truly exciting period in our development.

James Kelly

12 April 2021

Chief Executive Officer’s Statement

2020 was a landmark year which saw the genesis of Trident Royalties as a new London listed mining royalty and streaming company. As an experienced resources investor myself, I have watched numerous TSX-listed royalty companies consistently outperform mining equities over the past decade. The market awareness for the compelling investment proposition offered by royalty companies is therefore not a new phenomenon; however, until recently, there has been a clear gap in the royalty universe.

This was the driving force behind our decision to establish a mining royalty business which differentiates itself through:

  • a listing in London and a global investment mandate targeting attractive assets in resource-friendly jurisdictions worldwide – while most listed mining royalty and streaming companies have a primary listing on the TSX, with heavy focus on assets in the Americas;
  • a strategy to build a balanced, diversified portfolio reflecting the global mining sector (excluding thermal coal) – while the royalty and streaming industry is otherwise dominated by peers which are predominately precious metals focused; and
  • a broad and flexible approach to transaction quantum, initially targeting attractive small-to-mid sized transactions thus capitalising on opportunities which may be overlooked by larger royalty companies.

With this investment philosophy in place, we announced our maiden royalty acquisition in March 2020 alongside our intention to move our listing to AIM and change of name to ‘Trident Royalties’.

Our decision to move to AIM, which is frequently cited as the world’s most successful growth market, was preceded by a £16.0m fundraise (before expenses) completed at the end of May 2020. At the time this was the largest equity placing associated with a new listing in any sector across the London markets following the beginning of the COVID-19 pandemic, which had decimated global markets in late February and early March. This was, I believe, a truly outstanding achievement and served as a measure of the appetite that investors had for our strategy and their confidence in our ability to execute.

Recent coverage has highlighted that AIM has weathered the market volatility better than many other exchanges. The value of the AIM all-share index grew by 22% in the year to 31 January 2021, whereas the FTSE all-share index fell by 10%. Investors have clearly identified AIM as an incubator for ambitious companies such as Trident, and the Board recognises that AIM is a more suitable market and regulatory environment for our business, particularly during this high growth phase of our development.

Within a space of weeks from its admission to AIM, Trident secured its second royalty agreement, a staged Gross Revenue Royalty over production from the operating Mimbula copper mine and associated stockpiles (the “Mimbula Mine”) located in Zambia’s prolific Copperbelt Province. Through this royalty, Trident is entitled to royalty payments on production from 1 July 2020 and extending in perpetuity. The asset is currently ramping-up production, having sold its first LME registered Grade A copper with a 99.99% purity in June 2020. The Mimbula Mine has a large, well-defined JORC (2012) compliant total Mineral Resource of 84m tonnes of ore grading 0.95% copper for a total of 798,000 tonnes of contained copper at a 0.3% cut-off and significant exploration upside potential.

The Mimbula Mine royalty represented Trident’s second cash generative royalty, building on the acquisition of a 1.5% free on board revenue royalty over part of the Koolyanobbing Iron Ore Operation in Western Australia, which completed in June 2020. The royalty covers part of the Deception Pit at Koolyanobbing, which is owned and operated by Mineral Resources Limited, and which contains a JORC compliant Reserve of 9.3Mt @ 59.9% Fe and Resource (inclusive of Reserves) of 19.5Mt @ 59.9% Fe.

Diversifying our burgeoning royalty portfolio was an early objective for the Board, and in July 2020 Trident completed its first precious metals royalty through an opportunistic acquisition of a royalty over the Spring Hill Gold Project in Australia’s Northern Territory. This royalty provides for a fixed payment of A$13.30 per ounce of gold produced from Spring Hill. Trident structured the transaction to minimise full payment of consideration until particular production milestones are achieved, whilst retaining uncapped exposure to the growth of the asset.

Australia is a jurisdiction which remains appealing to Trident, with Western Australia ranked as the top jurisdiction in the world for mining investment, based on the Investment Attractiveness Index, in the 2019 Fraser Institute Annual Survey of Mining Companies.

Further Australian gold exposure was achieved with the acquisition of a portfolio of four gold royalties over the Talga Project (operated by Novo Resources), the Warrawoona Project (operated by Calidus Resources), the Mosquito Creek Project (operated by Nimble Resources) and the Bullfinch Project (operated by Torque Metals). These projects, which are at various stages of development from exploration to in-construction, are important elements of Trident’s disciplined and targeted acquisition strategy of straddling both early-stage royalty assets, which have been proven to generate significant equity value for stakeholders of royalty companies, together with cash generative royalties providing immediate revenue.

Building on Trident’s precious metals exposure in Australia, the Company acquired a significant 1.5% Net Smelter Return (“NSR”) over the Lake Rebecca Gold Project, a high-quality resource stage asset which has demonstrated the potential for fast-track development by a highly credible operator, Apollo Consolidated. The Lake Rebecca royalty is expected to provide material and long-term revenue commencing in 2023 with significant upside potential to both scale and mine life. Trident believes that Lake Rebecca is on track to support a circa 90-100koz/a operation and will become a key element of Trident’s growth. Lake Rebecca demonstrates Trident’s ability to not just source attractive deals, but also to pay the right price when compared to some of the more expensive royalty deals concluded by our peers.

The last royalty acquired during the financial year (which was completed on 9 April) truly diversified Trident’s geographic reach, with the acquisition of a portfolio of three royalties over the Pukaqaqa Copper Project in Peru, which is majority-owned and operated by NYSE- and TSX-listed Nexa Resources. Pukaqaqa is a cornerstone project within Nexa´s growth pipeline and comprises 34 concessions covering 11,125.87 ha located in the Huancavelica region of Peru, an established mining district. Pukaqaqa is an advanced stage project with a Mineral Resource Estimate including a Measured and Indicated Resource of 309m tonnes at 0.41% Cu (approximately 1.26m tonnes of contained copper), with an additional Inferred Resource of 40.1m tonnes at 0.34% Cu for 136,340 tonnes contained copper. The most recent technical report contemplates an open-pit mining operation to feed a 30,000 tonne-per-day processing plant to produce copper and molybdenum concentrates over a 19-year mine life highlighting the significant scale anticipated once in production.

Two of the Pukaqaqa royalties are to be acquired from a wholly-owned subsidiary of Orion Resource Partners (“Orion”) while the third is via the acquisition of the Peruvian holding company. Orion is the same firm from which Trident acquired its largest royalty to date over the Thacker Pass Lithium Project and which is now a significant shareholder in the Company. The Thacker Pass transaction, which was agreed post period end on 19 March 2021, alongside a £20.67m fundraise, was Trident’s seventh and most substantial transaction.

As well as significant scale, being the largest lithium reserve and resource in the United States with a conceptual mine life of 46 years, it also brought commodity diversity to our portfolio as lithium is a key battery mineral. This transaction comprised the acquisition of a 60% interest in a gross revenue royalty (“GRR”) over Thacker Pass for US$28.0m, which is subject to a partial buy-back which Trident expects to be exercised by the operator during the first year of operation, for proceeds to Trident of US$13.2m, resulting in a net cost to Trident of US$14.8m. The key permits are now in place at Thacker Pass and construction is targeted to commence in late 2021 or early 2022, with Phase 1 production expected to start ramping up in 2024. Further details of these acquisitions are set out in the operational review below.

This royalty acquisition added an important new dimension to the Trident portfolio in terms of commodity, geography and scale, but perhaps more critically, it has demonstrated that Trident is now establishing critical mass. This critical mass is vital as it will deliver improved access to capital, material revenue growth with fixed overheads and will support accretive initiatives such as a progressive dividend policy and access to lower-cost leverage. Thacker Pass can therefore be viewed as a catalyst for a period of rapid growth and that is exactly what the Trident Board is looking to achieve. We have a small and motivated group of executives dedicated to executing Trident’s growth strategy and have a healthy pipeline of potential additional acquisitions currently under consideration. 2021 will be a highly active phase for our company as we capitalise on the positive momentum that we have generated, carefully deploy the capital that we have raised, and direct it towards opportunities which will deliver the long-term capital growth, dividend income and an inflation hedge for our investors.

On behalf of the executive team, I would like to extend my thanks to our shareholders, partners and the Board for their vision, support and commitment as we look to a period of high impact news flow and delivery.

Adam Davidson

12 April 2021

Operational Review

Producing Assets

KOOLYANOBBING IRON ORE PROJECT

Location: Western Australia

Operator: Mineral Resources (ASX: MIN)

Commodity: Iron ore

Mine Type: Open pit

Stage: Production

Royalty: 1.5% free on board

Total Resource: 9.3Mt @ 59.9% Fe reserve and 19.5Mt @59.9% Fe

Trident owns a 1.5% free on board revenue royalty covering part of the producing Koolyanobbing Iron Ore Operation in Western Australia. The royalty is over tenement ML77/1259 which covers part of the Deception Pit at Koolyanobbing. Trident estimates up to 75% of the Deception Pit may contain mineralisation over which payment would be made under the Koolyanobbing royalty.

Koolyanobbing is operated by Mineral Resources which acquired the asset from Cliffs Natural Resources in 2018. Since its acquisition, Mineral Resources has materially increased production at Koolyanobbing from 6Mtpa in 2018 to an annualised rate of 11Mtpa as of Feb 2020. Additional capital expenditure is anticipated to further increase production. Mineral Resources has previously announced its intention to build a long-life iron ore export business in the Yilgarn region utilising the company’s industry innovative approach to mine development.

The royalty provides Trident with attractive exposure to a significant and growing iron ore asset, operated by an innovative and renowned operator with a strong balance sheet in a world-class jurisdiction. As a royalty over an operating asset, the royalty provides access to material cashflow which assists in bringing scale and diversification to Trident’s growing royalty portfolio.

During the year Trident received US$1.67m in royalty income which represents a 35% return on the cash invested to date.

MIMBULA COPPER PROJECT

Location: Zambia

Operator: Moxico Resources Plc (private)

Commodity: Copper

Mine Type: Open Pit

Stage: Production

Royalty: Gross Revenue Royalty 1.25%

Total Resources: 93.7Mt @ 0.97% TCu

Trident owns a 1.25% GRR over all copper produced from the Mimbula Mine in Zambia, which is operated by Moxico Resources Plc. The GRR will decrease to 0.3% upon US$5.0m being paid on the royalty, with a subsequent decrease to 0.2% once the royalty has been paid on 575,000 tonnes of copper. In addition, the GRR is subject to a Minimum Payment Schedule in which the higher of the minimum amount, or the GRR amount, are due; specifically:

No required minimum payments on production in 2020 (GRR rate still applies);

Minimum payments of US$375,000 per quarter in 2021;

Minimum payments of US$500,000 per quarter in 2022; and

Minimum payments of US$750,000 in each of the first two quarters of 2023.

At current copper prices, Moxico’s long-term production profile is expected to exceed that required for the Minimum Payment Schedule. The GRR is applicable to production from the Mimbula Mine, comprising of 100% of production from licences 21816-HQ-LML (Mimbula), 8440-HQ-SML (Zuka), and on 50% of the production from licence 8514-HQ-SML (OB18). The licences collectively cover 1,271 ha. Mimbula is located adjacent to the Konkola Copper mining complex and has excellent access to infrastructure.

Mimbula has JORC (2012) in-situ Measured and Indicated Resources of 69.8Mt grading 0.96% total copper (“TCu”) for approximately 668,000 tonnes of contained copper and an Inferred Resources of 14.2Mt grading 0.92% TCu for approximately 130,000 as at August 2019. In addition, the Company has a non-compliant Resource on the Zuka licence of 7.3Mt grading 1.1% TCu for 80,400 tonnes of contained copper. A 0.3% cut-off has been used to calculate all mineral resources. The Company has a strategic, life-of-mine tolling agreement with Konkola Copper Mines (“KCM”) in which the oxide ores are currently being processed through the Nchanga Tailings Leach Plant (“TLP”), producing LME Grade A copper cathode.

Pre-development Assets

LAKE REBECCA GOLD PROJECT

Location: Western Australia

Operator: Apollo Consolidated (ASX: AOP)

Commodity: Gold

Mine Type: Open pit

Stage: Pre-development

Royalty: 1.5% net smelter royalty

Total Resource: 27.1Mt @ 1.2g/t Au for 1.035Moz

Trident acquired an existing 1.5% NSR gold royalty over the production of the Lake Rebecca Gold Project located in Western Australia.

Lake Rebecca has a JORC (2012) compliant published Resource of over 1Moz at a cut-off grade of 0.5g/t across 3 deposits within wholly contained pit shells, and is being actively progressed towards development by Apollo Consolidated Limited (“Apollo”) – a well-funded, ASX listed mining company. Lake Rebecca provides Trident with an uncapped precious metal royalty, in an attractive jurisdiction with material upside beyond the maiden resource announced in early 2020.

The Royalty covers E28/1610 which hosts the entirety of the plus million-ounce Maiden JORC (2012) Mineral Resource Estimate (MRE) announced by Apollo on 10th February 2020. The Lake Rebecca Gold Project comprises three distinct deposits: Rebecca, Duchess and Duke. Rebecca is hosted on the north- eastern periphery of the E28/1610 tenement with Duchess and Duke nearer to the centre of the tenement area and located approximately 4km from Rebecca. Apollo has identified the 4km corridor between Rebecca & Duchess/Duke as highly prospective and has been the target of recent step-out drill programmes. Apollo has also commenced the process of converting this to a mining lease. The royalty also covers the newly discovered Cleo mineralised zone which is located 1.5km west of the Rebecca deposit. This recently drilled zone has intercepted some significant gold intercepts and remains open at depth.

The Lake Rebecca deposits are located on the eastern margin of the Norseman-Wiluna Greenstone Belt at the southern end of the Laverton Tectonic Zone. Broadly defined as structurally associated orogenic gold deposits, the gold mineralisation is hosted by broad zones of disseminated, pyrite and pyrrhotite, sulphides associated with deformation and silicification in dominantly granite and gneiss hosts rocks.

Trident considers there is good potential of Apollo achieving material resource tonnage increases and resource classification upgrades to the current Mineral Resource Estimate as well as having the potential to outline new exploration upside, within the wider tenement covered by the royalty zone.

Infill drilling since the completion of the February MRE has intersected wide high-grade zones, most notably within the south Jennifer structure of the Rebecca deposit, this structure together with the accompanying Maddy and Laura structures have the potential to add mineralisation to the optimised in-pit Mineral Resources. The current block model shows these higher-grade structures also contain significant mineralised material below the current pit shell and Apollo reports that the Rebecca mineralised corridor remains open over its more than 1.7km strike length.

Apollo is expected to publish an updated mineral resource estimate in Q2 2021 which is expected to incorporate the successful drilling programme described above.

PUKAQAQA COPPER PROJECT

Location: Peru

Operator: Nexa Resources (TSX:NEXA)

Commodity: Copper, Molybdenum

Mine Type: Open pit

Stage: Pre-development

Royalty (sliding scale NSR): Over 3 Royalties

Total Resources: 349.1Mt @ 0.40% Cu

Trident acquired a portfolio of three existing royalties over the Pukaqaqa Copper Project, a pre-development stage copper asset located in the Huancavelica region in Peru. The Pukaqaqa Project comprises 34 concessions covering 11,125.8ha and containing NI 43-101 compliant Measured and Indicated Resources of 309m tonnes at 0.41% Cu (approximately 1.26m tonnes of contained copper), with an additional Inferred Resource of 40.1m tonnes at 0.34% Cu for 136,340 tonnes contained copper.

The project is being advanced by NYSE- and TSX-listed Nexa Resources, an established South America-focused mid-tier producer with five operating base metals mines (plus an additional mine under construction) and three operating smelters in Peru and Brazil. The most recent technical report contemplates an open-pit mining operation to feed a 30,000 tonne-per-day processing plant to produce copper and molybdenum concentrates over an initial 19-year mine life. Nexa has allocated a total of US$16m towards advancing the project over the last three years.

Trident believes there exists significant potential to expand and upgrade the sizeable mineral resource inventory through drilling along strike and down-dip, as well as with additional infill drilling. Additionally, there are up to seven named exploration targets situated within a 6km radius from the existing deposit, adding potential mine life to the operation. There is also potential for the skarn deposit to overlay large scale copper porphyry mineralisation. Based on the current resource and at a processing rate of 30,000 tonnes-per-day, Trident believes that Pukaqaqa has the potential to produce around 35,000 tonnes of copper per year, along with potential molybdenum, gold, and silver credits.

Trident’s first all-share consideration deal helps grow the portfolio while adding a renowned royalty investor, Orion Resource Partners, to the shareholder register. The acquisition was completed after the year-end and consequently been treated as a capital commitment in these financial statements.

SPRING HILL GOLD ROYALTY

Location: Australian Northern Territory

Operator: PC Gold Pty (private)

Commodity: Gold

Mine Type: Open pit

Stage: Pre-development

Royalty: fixed rate A$13.30 per oz (where the gold price is > A$1,500/oz)

Total Resource: 8.8Mt @ 1.26g/t Au for 355koz

Spring Hill is located within the highly prospective Pine Creek region in Australia’s Northern Territory, which has historically produced over 3Moz of gold across multiple deposits and contains more than 10Moz of undeveloped Resources. Gold contained at Spring Hill is freely leachable via conventional processing methods and contains a material proportion of gravity recoverable gold which is susceptible to low capital cost gravity concentration and leaching techniques.

Spring Hill has a JORC (2012) compliant open pit Inferred Mineral Resource Estimate of 8.79Mt grading 1.26g/t Au for 355,000 ounces of contained gold at 0.5g/t Au cut-off, as at January 2017. In addition, Spring Hill has an Exploration Target of 119,000 – 734,000 ounces supported by mineralisation open at depth and along strike. The project is strategically located within 30km of an existing gold processing plant which successfully processed Spring Hill material in 2017.

The Spring Hill Gold Royalty provides Trident with attractive exposure to a strategically located and growing gold asset. The asset is operated by an experienced team in a favourable jurisdiction for mining and permitting activities continue to progress successfully with the final recommendation report completed by the Australian permitting authorities on 23 December 2020.

WESTERN AUSTRALIA GOLD ROYALTIES

Project: Various

Location: Western Australia

Stage: Pre-development

Operator: various

Royalty (NSR): various

Talga Talga

The royalty covers granted Mining Lease M45/618 which is owned and operated by TSX listed Novo Resources Corporation. Located in the Pilbara region of Western Australia, historical drilling has identified shallow dipping, near-surface gold zones including 7m @ 14.4g/t Au and 3m @ 24.8g/t Au.

Warrawoona

The royalty covers exploration licence E45/3381, which forms part of the broader Warrawoona Gold Project, owned and operated by ASX-listed gold developer Calidus Resources. The royalty zone covers the down dip extension of the 1Moz orebody at Klondyke and is estimated to contain a portion of the Indicated and Inferred Resource. Calidus recently applied to convert this portion of the royalty area to a Mining Lease. Calidus published the results of a study in September 2020 which contemplated an 90koz/annum operation at Warrawoona at a pre-production capital cost of A$120M and AISC of US$1,290/oz. Construction of the project has been fully funded and begun in Q1 2021.

Mosquito Creek

The royalty covers exploration licence E46/1035 which was acquired by Nimble Resources in November 2017. The royalty zone sits to the north east of the Millenium Mill acquired by Novo, is considered prospective for gold as evidenced by historical workings, soil and rock geochemistry and previous drilling. In February of 2021, Nimble entered into a JV agreement with Calidus. The tenement sits 85km from Warrawoona and along strike from mineralised trends identified on adjacent tenements.

Bullfinch

The royalty covers Mining Leases E77/2222, E77/2251, E77/2350 which is owned and operated by Torque Metals. Torque recently delisted from the Sydney Stock Exchange and after undertaking a capital raising which included funding to advance drilling at the Bullfinch Project. Torque is currently intending to list on the Australian Stock Exchange (ASX) and undertake a A$5.0m fundraise. The royalty tenements are located in the prospective Yilgarn goldfields, located within 70km of two existing processing plants. Trident notes that some of the Torque Metals are subject to a forfeiture application at the time of the acquisition.

The acquisition was completed after the year-end and consequently has been treated as a capital commitment in these financial statements.

Asset acquired after the reporting date

THACKER PASS LITHIUM ROYALTY

Location: Nevada USA

Operator: Lithium Americas Corp (TSX:LAC)

Commodity: Lithium

Mine Type: Open pit

Stage: Pre-development (fully funded and permitted)

Total Resource: 385Mt @ 2,917 ppm for 6Mt lithium carbonate

Royalty: Gross Revenue Royalty (1.75% following buy-back – 60% attributable to Trident)

On 19 March 2021, Trident announced the acquisition of a 60% interest in a GRR over the Thacker Pass Lithium Project from Alnitak Holdings LLC a special purpose vehicle indirectly owned by Orion Mine Finance (which retains ownership of the remaining 40%) for US$28.0m. The project is the largest known lithium reserve and resource in North America and is 100% owned and operated by Lithium Americas Corp. The acquisition was completed on the same day.

Thacker Pass currently contains CIM compliant Mineral Reserves of 3.1Mt Lithium Carbonate Equivalent (“LCE”), the largest lithium reserve in the United States, with a mine life of 46 years based on Reserves. With the Total Resources amounting to circa 8.3Mt LCE plus further as yet undrilled exploration targets, there is significant additional resource upside to potentially provide further reserve conversion to increase the mine life or support a production expansion.

The key terms of the royalty are as follows:

  • A gross revenue royalty on all mineral products generated at the mine of 8% (4.8% attributable to Trident) until US$22.0m is paid, after which the GRR drops to 4%.
  • The GRR may be reduced to 1.75% (1.05% attributable to Trident) at any time by the operator making a one-time payment of US$22.0m (US$13.2m attributable to Trident).
  • Trident notes that the PFS assumes the US$22.0m buyback is completed within the first year of operation.

Prior to the acquisition of the royalty, Orion had engaged with other parties in respect of a possible sale of the royalty. One unsuccessful bidder has commenced legal proceedings in Ontario, Canada, against Orion Resource Partners – further detail is given in note 25.

Further details of the Group’s royalties is provided on its website at www.tridentroyalties.com.

CEO Adam Davidson provides an overview of the business and its strategy below

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