Trident Royalties: Acquisition, $35m Placing & $40m Debt Facility

13th December 2021 | Trident Royalties plc

US$69.75M Cash-flowing Gold Portfolio Acquisition

US$40M Debt Facility and Proposed US$35M Equity Fundraising

Trident Royalties Plc (AIM:TRR, FSX:5KV), the growth-focused mining royalty and streaming company, is pleased to announce the proposed acquisition of a portfolio of producing gold offtake streams (the “Portfolio”) from funds managed by Orion Resource Partners (“Orion”) for total consideration of US$69.75 million (the “Acquisition”). US$9.75 million of the Acquisition consideration is payable in new ordinary shares of 1p each in the Company (“Ordinary Shares”) at the Placing Price (as defined below) (“Consideration Shares”), with the balance payable in cash.

In order to finance the cash component of the consideration for the Acquisition, Trident will shortly announce a proposed fundraising (the “Fundraising”) to raise gross proceeds of up to £26.5 million (approximately US$35.0 million) before expenses, via the issue of approximately 73.55 million new Ordinary Shares (“Placing Shares”) at a price of 36 pence per share (the “Placing Price”).

HIGHLIGHTS

  • Highly accretive transaction providing immediate, significant cash flow: Trident estimates that the Portfolio will generate average annual revenue of US$14.3 million per year between 2023-2026, with expected average annual revenue of US$6.3 million from 2027-2035. For 2022, revenue is expected to be approximately US$13.3 million as ramp-up occurs at the Blyvoor gold mine and expansions at the Los Filos gold mine[1].
  • Materially increases scale and asset diversification: The Portfolio comprises offtakes covering seven producing gold mines operated in six countries. On completion of the Acquisition, Trident will have 20 royalties and streams, of which 9 are cash flowing.
  • First major portfolio transaction delivers on strategy: Trident’s largest deal to date represents a step-change transaction and re-balances the portfolio towards precious metals and cash generative assets, complementing Trident’s existing base metals, battery metals and iron ore exposure. The significantly enhanced cash flow profile is expected to support an appropriate dividend policy in due course.
  • Offtake contracts historically provide a 1.33%[2] NSR equivalent return: The acquired offtake contracts provide ‘royalty-like’ exposure with returns driven by gold price, volatility, production profile, and exploration success. Between February 2020 and June 2021, under Orion’s ownership, the portfolio generated a return equivalent to a 1.7%[3] NSR on revenue from the underlying projects.
  • New proposed US$40 million debt facility significantly reduces cost of capital: Credit approved commitment letter received for a new US$40 million debt facility with Macquarie Bank Limited. Existing US$10 million Tribeca debt facility to be retired, significantly reducing borrowing costs.
  • Equity financing maintains strong balance sheet to execute on deal pipeline: Proposed £26.5 million (approximately US$35.0 million) Fundraising to part fund the Acquisition consideration and maintain strong balance sheet for further growth. Pro forma cash of approximately US$19.2[4] post completion of the Acquisition.
  • Trident’s third transaction with Orion, increasing its shareholding: The Acquisition will see Orion, a global alternative investment management firm with approximately US$8.6 billion in assets under management, increase its equity position in Trident with a post-completion shareholding of approximately 9.96%[5].

Adam Davidson, Chief Executive Officer of Trident commented:

“For Trident and our shareholders, the impact of the acquisition of this portfolio of producing gold offtake streams cannot be overestimated. The offtakes cover seven producing gold mines operated by five counterparties in six countries, which immediately increases our number of producing royalties and streams by 350%. This acquisition, our largest to date by far, materially increases scale and diversification and importantly demonstrates further support for our business model from Orion, which will substantially increase its shareholding in Trident.

“The acquired portfolio of gold offtake streams gives direct exposure to high-quality producing gold assets, significantly increasing our precious metals exposure and complementing our existing portfolio of gold, lithium, copper and iron ore royalties. Crucially, the material and immediate income from the acquired assets gives us clear visibility on sustainable, well diversified cash flows beyond 2035. With this, we can now look at the possibility of an appropriate dividend policy in due course which will provide regular returns on investment to our shareholders.

“The new US$40 million debt facility with Macquarie is, I believe, testament to the progress we have made, and reputation we have built, in a short period of time and will dramatically reduce our borrowing costs. With this and the proposed placing, we will be well capitalised to execute on further pipeline opportunities.

“This is a truly exciting time for Trident, propelling us to the next stage of accretive growth.”

News in full

CEO Adam Davidson recently provided an update of the business and its strategy below

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