TIDMTRR
RNS Number : 1922L
Trident Royalties PLC
04 September 2023
4 September 2023
Trident Royalties Plc
("Trident" or the "Company")
Acquisition of Advanced Stage Lithium Royalty
Trident Royalties Plc (AIM: TRR, OTCQB: TDTRF), the diversified
mining royalty company, is pleased to announce that it has entered
into a binding sale and purchase agreement to acquire an existing
lithium royalty (the "Royalty") from Atherton Resources LLC over
projects owned by Anson Resources Ltd. ("Anson", ASX:ASN, market
capitalisation of circa A$175 million), in the Paradox Basin in
Utah, USA. The Royalty notably covers Anson's flagship Paradox
Lithium Project ("Paradox").
The Royalty is a 2.50% net smelter return ("NSR") royalty tied
to Anson's ownership of the projects. Should Anson sell a property
within the Paradox Basin, Trident will be entitled to 2.00% of the
net sales proceeds and the royalty would no longer apply to the
sold asset.
HIGHLIGHTS
Multi-project coverage, diversifying Trident's lithium
extraction exposure
-- The Royalty covers all projects owned by Anson within the
Paradox Basin, which includes Anson's flagship Paradox Lithium
Project. Paradox is an advanced stage lithium brine project,
targeting use of direct lithium extraction ("DLE").
-- Anson released a Definitive Feasibility Study ("DFS") for
Paradox in September 2022 outlining a Phase 1 operation producing
an initial 13,074 tonnes per annum of Lithium Carbonate (Li(2)
CO(3) ) for the first 10 years of a 23-year operation.(1) Anson is
currently targeting a Final Investment Decision at the end of
2023.(2)
-- At spot prices of approximately US$35,000 per tonne of
lithium carbonate equivalent ("LCE"), the Royalty would pay
approximately US$11 million per annum for the first 10 years.
-- Anson further highlighted that the Phase 1 economics are
based solely on a JORC 2012 compliant Indicated Mineral Resource
estimate ("MRE") of 239,000 tonnes LCE.(2) A subsequent MRE update
significantly upgraded the Indicated resource tonnage to 346,109
tonnes LCE(3) and the DFS economics are expected to be updated
based on future MRE upgrades.(1)
-- Additionally, Phase 2 development at Paradox is expected to
comprise a further substantial increase in lithium production
capacity, together with new bromine production capacity. (1)
-- Anson is well-funded to continue rapidly progressing Paradox,
with A$38.6 million in cash-on-hand as of 30 June 2023.(3) Anson
has appointed global engineering firm Worley Group Inc. ("Worley")
for the Front-End Engineering and Design ("FEED") Study for the
proposed lithium carbonate processing plant, which is expected to
be completed in Q4 2023.(5)
-- The Paradox Basin hosts significant Mineral Resource
expansion potential. Anson has outlined an Exploration Target at
Paradox containing 1,294,000 to 3,096,000 tonnes LCE(5) ; and an
Exploration Target for the Green River project area containing
1,064,600 to 2,075,900 tonnes of LCE.(6)
In consideration, Trident shall pay up to US$10 million in three
tranches as follows:
-- US$1.5 million in cash on closing;
-- Upon (i) commencement of commercial production by Anson at
Paradox, and (ii) receipt of the first payment under the Royalty,
Trident shall pay up to US$3.5 million ("First Contingent
Payment"), up to 50% of which may be paid in shares at the
Company's election; and
-- On the second anniversary of the First Contingent Payment,
Trident shall pay up to US$5 million ("Second Contingent Payment"),
up to 50% of which may be paid in shares at the Company's
election.
Adam Davidson, Chief Executive Officer of Trident commented:
"We are delighted to announce the acquisition of this royalty
over the Paradox Lithium Project. For a modest initial cash outlay,
we have secured exposure for shareholders to a well funded, highly
attractive project with a pathway to cash generation and
significant growth potential. The Paradox project reinforces our
strong position in battery materials, and introduces exposure to
direct lithium extraction, which could play a significant role in
future lithium supply. The acquisition again demonstrates Trident's
ability to source innovative transactions to create shareholder
value."
Paradox Lithium Project
Paradox is an advanced stage development project located in the
Paradox Basin in Utah, USA, which contemplates the extraction of
lithium from brines associated with past oil and gas operations.(1)
Paradox consists of 2,434 placer claims, of which 87 are subject to
an earn-in agreement. Upon completion of the pending acquisition of
the Green Energy Lithium Project from Legacy Lithium Corp., Paradox
will comprise a land holding of 231 square kilometres.(2) Paradox
has an Indicated Mineral Resource estimate for 346,109 tonnes LCE
and an Inferred Resource 691,800 tonnes of LCE.(4)
Figure 1. Map showing the location of Legacy Lithium Corp. Green
Energy Lithium Project Claims Area(5)
On 8 September 2022, Anson announced the results of a DFS for
Phase 1 operations at Paradox. The DFS contemplates the processing
of lithium-bearing brines utilising DLE techniques. The DFS
outlined production of 13,074 tonnes per annum of lithium carbonate
for the first 10 years of a 23-year operation at a C1 Operating
Cost of US$4,368 per tonne of LCE. The DFS further notes an initial
capital expenditure of US$495 million, a post-tax NPV(7%) of US$922
million, and a post-tax IRR of 37%.(1)
Anson is rapidly advancing Paradox towards production. Worley, a
global engineering firm, has been appointed and has commenced the
FEED study for the proposed lithium carbonate processing plant,
which is expected to be completed in Q4 2023. Anson's chosen DLE
process, developed by Sunresin New Materials Co. Ltd ("Sunresin"),
will be incorporated into the design and engineering work, and the
FEED team will work closely with Sunresin and its independently
appointed design and engineering consultants in the delivery of the
FEED Study. Sunresin is the process package owner and technology
provider for the proposed DLE plant at Paradox, processing raw
brine into sellable product, and will be responsible for the design
and engineering work to applicable United States standards. Worley
will provide the engineering for the supporting infrastructure and
utilities for the broader site development.
Anson is in process of developing a suppliers list of components
and equipment required for the production plant. It is focused on
sourcing as much of the required equipment and components from
North America as is possible, in order to maximise the opportunity
to secure debt financing from government agencies, Export Credit
Agencies and the United States Department of Energy - with whom
Anson reports it is in frequent consultation.(7)
The Royalty
The Royalty is a 2.50% net smelter return royalty that covers
any projects owned by Anson in the Paradox Basin.
Figure 2: Location of the Paradox Brine Site(1)
The Royalty is a perpetual royalty tied to Anson's ownership of
the underlying projects, such that if Anson were to sell a project,
the royalty would no longer apply to the asset. In this event,
Trident would be entitled to receive 2.00% of the net sales
proceeds upon the sale of a project within the Paradox Basin by
Anson. The Royalty does not include any buyback provisions for the
operator.
The Transaction
Pursuant to the sale and purchase agreement, Trident shall pay
up to US$10 million in three tranches, the first being US$1.5
million in cash to Atherton Resources LLC on closing.
Upon (i) the declaration of commercial production by Anson at
Paradox, and (ii) receipt of the first payment under the Royalty,
Trident shall pay up to US$3.5 million. The payment of
US$3.5million is based on Anson retaining 100% beneficial ownership
(either directly or indirectly) of Paradox and will be reduced by a
proportionate percentage for any reduction in Anson's beneficial
ownership of Paradox at that time the payment is triggered. Should
Trident elect to settle any portion of the First Contingent Payment
with Trident shares (up to 50%, at Trident's election), such shares
will be issued at a 20-day volume weighted average price prior to
the date of the First Contingent Payment.
On the second anniversary of the First Contingent Payment,
Trident shall pay US$5.0 million. The payment of US$5.0million is
based on Anson retaining 100% beneficial ownership (either directly
or indirectly) of Paradox and will be reduced by a proportionate
percentage for any reduction in Anson's beneficial ownership of
Paradox at that time the payment is triggered. Should Trident elect
to settle any portion of the Second Contingent Payment with Trident
shares (up to 50%, at Trident's election), such shares will be
issued at a 20-day volume weighted average price prior to the date
of the Second Contingent Payment.
References
1: Source: Anson Press Release - Paradox Lithium Project DFS
confirms outstanding economics and ESG credentials for Phase 1
Lithium Development, dated 8 September 2022
( https://wcsecure.weblink.com.au/pdf/ASN/02565661.pdf )
2: Source: Anson Media Articles - Anson Resources assessing debt
and equity funding for US$495 million Paradox Lithium Project, Utah
Mining.com.au, dated 27 March 2023
( https://www.ansonresources.com/media/ )
Article - Anson Resources assessing debt and equity funding for
US$495 million Paradox Lithium Project, Utah Mining.com.au, dated
27 March 2023
(
https://mining.com.au/anson-resources-assessing-debt-and-equity-funding-for-us495-million-paradox-lithium-project-utah/
)
3: Source: Anson Press Release - Anson Reports Major Resource
Upgrade at Paradox Lithium Project, dated 22 August 2022
( https://wcsecure.weblink.com.au/pdf/ASN/02555773.pdf )
4: Source: Anson Press Release - Anson Delivers 1Mt LCE Mineral
Resource at Paradox Lithium Project, dated 2 November 2023
( https://wcsecure.weblink.com.au/pdf/ASN/02592902.pdf )
Table 1: Paradox Lithium Project Total JORC 2012 Mineral
Resource estimate, dated 2 November 2022
Category Brine Brine Li Br (ppm) Contained ('000t)
Volume Tonnes (ppm) *
(Ml(3) (Mt)
)
LCE Br(2)
--------- ---------
Indicated 4,350 530 123 3,474 346 1,840
-------- -------- ------- --------- --------- ---------
Inferred 8,108 1,038 125 3,308 692 3,434
-------- -------- ------- --------- --------- ---------
Total Resources 12,458 1,568 124 3,364 1,038 5,275
-------- -------- ------- --------- --------- ---------
Notes: * Lithium is converted to lithium carbonate (Li(2) CO(3)
) using a conversion factor of 5.32 and boron is converted to boric
acid (H(3) BO(3) ) using a conversion factor of 5.72. Rounding
errors may occur. No cut-off grades have been applied to the
resource reporting. The model has been classified by radius around
sampled wells. Indicated resources have been classified within 2 km
of a sampled well and inferred resourced within 4 km of a sampled
well. Estimation by inverse distance squared interpolation. JORC
2012: 2012 edition of the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves.
5: Source: Anson Financial Report- June 2023 Quarterly
Activities Report, dated 31 July 2023
( https://wcsecure.weblink.com.au/pdf/ASN/02691735.pdf )
Table 2: Exploration Target estimation for the combined Paradox
Lithium Project and Legacy Lithium claims
Exploration Density Brine Li (ppm) "Li2CO3 Exploration Density
Target (Mt) Target
Minimum 1.27 310 108 1,294 2,000 4,811
-------- ------ --------- -------- ------------ --------
Maximum 1.27 350 200 3,096 3,000 8,734
-------- ------ --------- -------- ------------ --------
Notes: The Exploration Target figure is conceptual in nature as
there has been insufficient exploration undertaken on the project
to define a mineral resource for the Clastic Zones and
Mississippian units. It is uncertain that future exploration will
result in a mineral resource.
6: Source: Anson Press Release - Exploration Target Confirmed at
Green River Lithium Project, dated 31 July 2023
( https://wcsecure.weblink.com.au/pdf/ASN/02631599.pdf )
Table 3: Exploration Target estimation for the Green River
Lithium Project - for the combined Mississippian Leadville and
Pennsylvanian Paradox Units
Lithological Range Brine Li Grade Br Grade Li Li O Br
Unit Tonnes (ppm) (ppm) (t) (t) (t)
(Mt)
Mississippian
& Clastic
Zones Minimum 2,000 100 2,000 200,000 1,064,600 3,200,000
--------- -------- --------- --------- -------- ---------- ----------
Maximum 2,600 150 3,000 390,000 2,075,900 7,800,000
------------------------- -------- --------- --------- -------- ---------- ----------
Notes: The Exploration Target figure is conceptual in nature as
there has been insufficient exploration undertaken on the Project
to define a mineral resource for the Leadville units. It is
uncertain that future exploration will result in a mineral
resource.
7: Source: Anson Press Release - Anson Advances Lithium Plant
Front End Engineering & Design Study, May 25, 2023
( https://wcsecure.weblink.com.au/pdf/ASN/02669416.pdf )
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 / 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
------------------------------
Liberum Capital Limited (Joint www.liberum.com
Broker) +44 20 3100 2184
Scott Mathieson / Cara Murphy
------------------------------
Stifel Nicolaus Europe Limited www.stifelinstitutional.com
(Joint Broker) +44 20 7710 7600
Callum Stewart / Ashton Clanfield
------------------------------
Tamesis Partners LLP (Joint Broker) www.tamesispartners.com
Richard Greenfield +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
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