2021 Full Year Results
9 May 2022
Trident Royalties Plc
("Trident" the "Company" or the "Group")
2021 Full Year Results
Trident Royalties Plc (AIM:TRR, FSX:5KV), today announces its full year results for the year ended 31 December 2021. The Annual Report and Accounts for the year ended 31 December 2021 and Notice of the 2022 Annual General Meeting will be made available to download from the Company's website at www.tridentroyalties.com in due course.
Chairman's Statement
2021 was another transformative year for Trident Royalties. We added a further 4 investments during the year followed by the substantial acquisition of the gold offtake contracts in January 2022, bringing the total to 22 of which 12 are now producing. The acquisition of the Thacker Pass lithium royalty together with the gold offtake contracts, both from funds managed by Orion Resource Partners, were particularly notable. We entered 2022 with a portfolio capable of immediate and meaningful cash generation as well as substantial future optionality.
2021 was very strong year for financial markets as easing monetary conditions combined with fiscal stimuli designed to ensure a rapid recovery from the economic effects of Covid. Commodity markets were particularly strong in most areas, notably base and battery metals. Momentum around decarbonisation has continued to build globally.
2022 has so far seen far weaker financial markets. Covid in China and the Ukrainian war have had a demonstrably negative impact on real demand globally. Rising interest rates designed to curb evident inflation have further eroded sentiment in financial markets and the real world. None of these factors seems likely to recede particularly quickly so we can expect continued volatility and pressure on the underlying economy over the course of the year.
Notwithstanding the more challenging short term economic conditions, Trident will continue to look to deploy capital, consistent with our investment criteria of materially exceeding our cost of capital. We will also target ways to improve our rating and reduce our cost of capital. This should occur naturally as we add more assets and the level of diversification, optionality and cash flow continues to build. This s-curve can be seen in the evolution of our more mature and larger gold royalty peers.
We believe that we can add most value to shareholders through growth and we continue to see a lot of opportunity. The priority remains to invest in value accretive deals, particularly at this stage in our development. However, we intend to write a dividend policy during 2022, so that shareholders get greater transparency over our planned allocation of capital.
Potential deal flow currently continues to be both numerous and attractive. Our priority will remain royalties in established mining jurisdictions which are immediately or very near-term cash generative.
The underlying drivers of decarbonisation mean that an unprecedented level of investment into base and battery metals will be required over the next decade. Base and battery metals are therefore likely to continue to offer some of the most attractive returns for royalty providers such as Trident.
In terms of the Board, I was delighted to join as Chairman in June. We also welcomed the experienced deal-maker Peter Bacchus in July complementing a very capable and experienced Board. Alongside Adam Davidson as Chief Executive Officer the small management team (and a small team of advisers) continue to be relentless in driving the business forward, intent on implementing the Board strategy and adding value for shareholders. Finally, I would like to thank long-term and new shareholders who continue to support the business recognising the huge opportunity that Trident offers.
Chief Executive Officer's Statement
2021 has been a pivotal year for Trident in which we continued to build upon the momentum generated following our first full year as a listed royalty company. We've not only continued to grow our portfolio in an accretive manner, but have also witnessed significant asset-level progress across a number of Trident's key assets. In last year's annual report, I noted three key differentiating factors which guide Trident's strategic approach, specifically:
1. Building a diversified and balanced portfolio of royalties with the ultimate objective of broadly reflecting the commodity exposure of the global mining sector (excluding fossil fuels).
2. Targeting attractive assets in resource friendly jurisdictions worldwide.
3. Taking a flexible and innovative approach to transaction sizing and structuring, prioritising small-to-mid sized transactions which tend to be overlooked by larger peers.
We have adhered to these principles across 2021, resulting in the generation of a significant opportunity set across the royalty space, which has underpinned the acceleration of growth and diversification of our portfolio.
Our first major transaction for the year occurred in March 2021, with the acquisition of a 60% stake in a gross revenue royalty over the globally significant Thacker Pass lithium project located in the United States. Thacker Pass provides Trident shareholders with tier-1 lithium exposure - a critical battery metal - in a developed mining jurisdiction, acquired at a compelling return profile. Since the acquisition of the royalty, lithium spot prices have increased 6-fold as demand for the critical metal outstrips supply, highlighting the value inherent in a tier-1 asset such as Thacker Pass. Outside of lithium, we further strengthened our presence in 'electrification' minerals with the completion of the acquisition of the Pukaqaqa copper and molybdenum royalties package.
We have also increased our exposure to precious metals in 2021, with the completion of the acquisition of the Talga gold royalty portfolio, which covers four assets located in Western Australia - including a portion of the Warrawoona gold project which commences production in 2022. Further, in August we acquired a fully-secure Net Smelter Return royalty over the Lincoln Gold Mine, located in California, which the operator is seeking to commission on a small scale in 2022.
Most significantly, shortly after the year-end we completed the acquisition of a portfolio of gold offtake contracts, providing immediate and future cashflow to our business. This acquisition represents our largest to date, and was funded in December 2021 by an equity placing which raised approximately $40 million, as well as the arrangement of a $40 million debt facility with Macquarie Bank Limited.
As the scale of the company increases, our access to capital and corresponding cost of capital will continue to improve. In addition, as the portfolio grows to include more cash generative assets, we see internally generated cash providing greater flexibility for funding future acquisitions and growth.
Whilst growing quickly, Trident adheres to investment principles which are based upon compliance with the highest levels of ESG standards. We are committed to developing our sustainability reporting and practices at a corporate level, and to this end are currently undertaking a materiality assessment and audit process that will identify the key focus areas for our own ESG policies and disclosure.
From a macro perspective, we have seen the return of inflation which is broadly anticipated to become more significant in the short-to-medium term. Royalty instruments and companies are particularly attractive during inflationary markets as they retain exposure to inflationary driven upward commodity price movements, but remain insulated from associated inflationary pressure on operating and capital costs. As such, it is an ideal time to further grow and diversify our portfolio, specifically with additional base and battery metal exposure which will play a key role in decarbonisation.
As a small team we have an ability to build scale without any meaningful increase in central costs. I would like to thank my colleagues for their dedication over the past year. I should also like to thank the Board for their input and guidance, and to our other stakeholders, including our operating partners, advisors and financiers who are a key component of Trident's business.
Our key focus remains unchanged - to drive shareholder returns and investor value. We are very pleased with the progress within our existing portfolio and, with an attractive pipeline of potential opportunities, I remain confident in the team's ability to continue sourcing and delivering high-quality, value accretive transactions into the future.
We approach 2022 with optimism, and I look forward to updating the market on our progress.
Operational Review
Producing Assets
KOOLYANOBBING IRON ORE PROJECT
Location: Western Australia
Operator: Mineral Resources Ltd (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 (excluding Claw)
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 tenements which covers part of the Deception Pit and all of the Claw Pit at Koolyanobbing.
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 cashflow which will assist in bringing scale and diversification to Trident's growing royalty portfolio.
During the year Trident received US$0.08m (2020: US$1.67m) in royalty income - the reduction was due to the mine operator not being active on the Trident tenement. Since September 2021, Mineral Resources has recommenced activity in the Deception pit and commenced mining at the Claw deposit.
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:
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.
During the year Trident received US$1.5m (2020: US$0.8m) of payments from Mimbula in line with the minimum payment schedule.
Moxico Resources (owner of Mimbula) successfully raised US$73M in equity in June 2021 in order to fast-track the construction of a standalone processing centre at Mimbula capable of producing 30,000kta of copper.
Pre-development Assets
THACKER PASS LITHIUM ROYALTY
Location: Nevada USA
Operator: Lithium Americas Corp (TSX:LAC)
Commodity: Lithium
Mine Type: Open pit
Stage: Pre-development (initial construction funding secured, finalisation of permits expected in 2022)
Total Reserve: 3.1Mt @ 3,283 ppm of lithium carbonate
Royalty: Gross Revenue Royalty (1.75% following buy-back - 60% attributable to Trident)
On 19 March 2021, Trident acquired a 60% interest in a GRR over the Thacker Pass Lithium Project from Alnitak Holdings LLC a special purpose vehicle indirectly owned by Orion Resource Partners (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.
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.
The royalty provides Trident with attractive exposure to the growing lithium market, the demand for which is growing as a result of increasing demand for rechargeable batteries driven by the uptake in electric vehicles.
Lithium Americas received its final state permits in Q1 2022 and is expected to receive all final permits necessary to commence construction during H2 2022.
LAKE REBECCA GOLD PROJECT
Location: Western Australia
Operator: Ramelius Resources Ltd (ASX: RMS)
Commodity: Gold
Mine Type: Open pit
Stage: Pre-development
Royalty: 1.5% net smelter royalty
Total Resource: 29.1Mt @ 1.2g/t Au for 1.1Moz
Trident owns a 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 Ramelius Resources ("Ramelius") - 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 2020.
Ramelius acquired the project from Apollo Consolidated the previous owner in January 2022 for circa US$130m. With a market capitalisation in excess of US$1bn Ramelius recently announced an extensive drilling programme targeting an expanded resource for the project during H1 2022.
PUKAQAQA COPPER PROJECT
Location: Peru
Operator: Nexa Resources SA (TSX:NEXA)
Commodity: Copper, Molybdenum
Mine Type: Open pit
Stage: Pre-development
Royalty (sliding scale NSR): 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/molybdenum asset located in the Huancavelica region in Peru. The Pukaqaqa Project has 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 and related molybdenum credits).
The project is held 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.
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. 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 Q1 2021, the operator of Spring Hill received the final substantive environmental permit required to proceed with development of the Spring Hill project.
WARRAWOONA GOLD ROYALTY
Location: Western Australia
Operator: Calidus Resources Ltd (ASX: CAI)
Commodity: Gold
Mine Type: Open pit
Stage: Pre-development
Royalty: 1.5% net smelter royalty (over down dip extension zone)
Total Resource: 13.6Mt @ 1.2g/t Au for 519koz
The royalty applies over an area totalling 153.52km2, providing coverage for at least 16 high priority exploration targets, as well as mining licence M45/1290 which holds the eastern extension of the planned Klondyke open pit gold mine. This extension, known as Klondyke East, has been scheduled for exploitation in Year 3 of the Warrawoona mining schedule. The mine is currently fully financed and under construction. It is estimated that approximately 125 koz of gold, subject to the royalty, fall within the current mine plan.
LINCOLN GOLD PROJECT ROYALTY
Location: California, USA
Operator: Seduli Holdings Pty (private)
Commodity: Gold
Mine Type: Underground
Stage: Restart/commissioning
Royalty: 1.5% net smelter royalty (over down dip extension zone)
Total Resource: 958Kt @ 9.29g/t Au for 286koz
During 2021, Trident acquired a 1.5% NSR gold royalty covering the entire Lincoln gold project in California. The royalty includes a 5-mile area of interest which spans the majority of the exploration area. The royalty is fully secured by the project assets and reduces to a 0.75% NSR in perpetuity once the royalty has paid US$3M. Existing infrastructure, including a fully functional processing plant, has been installed onsite and supports an initial 220tpd operation. The project is permitted to a maximum of 1,000tpd, leaving it well placed to exploit the significant exploration potential of the region. The Lincoln Gold Mine is the only permitted project and processing plant on the Californian Mother Lode, providing it with significant leverage to aggressively explore and acquire additional tenure for further upside to Trident's royalty.
Exploration assets
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.
Mosquito Creek
The royalty covers exploration licence E46/1035 which was acquired by Nimble Resources in November 2017 from Novo Resources Inc ("Novo"). The royalty zone sits to the north east of Novo's Millennium Mill and, 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 farm in agreement with Calidus on the royalty tenement. Calidus is constructing the nearby Warrawoona mine and the royalty lies within trucking distance of the mine and along strike from mineralised trends identified on adjacent tenements.
Bullfinch
The royalty covers Mining Leases owned by Torque Metals. Torque is listed on the Australian Stock Exchange (ASX) and, and in 2021 completed a A$5.0m fundraise. The royalty tenements are located in the prospective Yilgarn goldfields, located within 70km of two existing processing plants.
Assets acquired after the reporting date
GOLD OFFTAKES
On 11 January 2022, Trident completed the acquisition of a portfolio of gold offtake contracts from funds managed by Orion Resource Partners for US$69.75m. The portfolio comprises offtakes over 7 producing mines in 6 countries. On 23 March, Trident acquired a further gold offtake contract over the Sugar Zone mine operated by Silver Lake Resources Limited.
An offtake contract is a contract pursuant to which the operator agrees to sell, and the purchaser agrees to buy, refined gold produced from the mine or mines over which the offtake is granted. The key commercial terms include those relating to the amount of gold to be purchased, the duration of the contract, and the payment terms. The purchaser has the right to purchase gold at the lowest reference price in a defined quotation period, which is typically 6-8 days. A positive margin can normally be made on the resale of the gold. The average margin is typically larger during periods of increased volatility and higher/rising gold prices.
The offtake portfolio is expected to generate significant cash flow for the Group over the coming years.
Offtake portfolio
|
Contract # |
Asset(s) |
Operator |
Country |
Quotation period |
Contract Key Terms |
|
1 |
Los Filos |
Equinox Gold |
Mexico |
6 Days |
· Offtake on 50% of all refined gold production, up to cap of 1,100,000 ounces of refined gold · 828,471 ounces remained under the contract at 1/12/21 |
|
2 |
Eagle |
Victoria Gold |
Canada |
7 Days |
· Offtake on 25% of all refined gold production, up to cap of 1,111,500 ounces of refined gold · 1,044,188 ounces remained under contract at 1/12/21 |
|
3 |
Blyvoor |
Blyvoor Gold |
South Africa |
8 Days |
· Offtake on 100% of all refined gold production (after deduction of streamed ounces), up to cap of 2,700,000 ounces of refined gold · 2,697,900 ounces remained under contract at 1/12/21 |
|
4 |
RDM Fazenda Santa Luz |
Equinox Gold |
Brazil |
6 Days |
· Offtake on 35% of all refined gold production, up to a cap of 658,333 ounces of refined gold · 469,806 ounces remained under the contract at 1/12/21 |
|
5 |
Bonikro |
Allied Gold |
Cote d'Ivoire |
6 Days |
· Offtake on 50% of all refined gold production (after deduction of streamed ounces), no cap |
|
6 |
Mercedes Greenstone |
Equinox Gold |
Mexico Canada |
6 Days |
· Offtake on 100% of refined gold production, up to cap of 58,500 ounces per year through 2027 |
|
7 |
Various |
i-80 Gold |
USA |
7 Days |
· Offtake on 100% of refined gold production subject to an annual ounce cap |
|
8 |
Sugar Zone |
Silver Lake Resources |
Canada |
7 Days |
· Offtake on 50% of all refined gold production, up to a cap of 375,000 ounces of refined gold · 325,000 ounces remained under the contract at 23/3/22 |
Further details of the Group's royalties is provided on its website at www.tridentroyalties.com .
Financial Review
During 2021, Trident continued to grow rapidly pursuing the strategy of building a diversified mining royalty company. The year was bookended by 2 transformational acquisitions that have positioned Trident with significant long-term project value together with current and near term cash generation. The acquisitions of the Thacker Pass lithium royalty and the gold offtake contracts in Q1 and Q4, respectively, were expedited by Trident's capital raising ability with over US$62.0m of cash raised from the equity market and US$40m from a new loan facility negotiated with Macquarie Bank. Trident ended the year with a clear line of sight to profitability and cash generation, combined with a strong a cash position and growing portfolio on the balance sheet.
Royalty acquisitions
The Group acquired the following royalties during the year:
· 60% interest in the Thacker Pass lithium 1.75% gross revenue royalty over the Thacker Pass Lithium project in Nevada, USA for US$28.0m, plus costs;
· Pukaqaqa copper sliding scale royalty (1-2% net smelter - 1.05% net) over production from the Pukaqaqa copper/molybdenum development operation in Peru for US$3.0m payable in equity, plus costs;
· West Australian gold royalties over a variety of tenements and projects for A$0.8m, paid in cash and equity; and
· Lincoln gold 1.5% net smelter royalty over production from the Lincoln Gold Mine located in California, USA for US$2.5m, plus costs.
In addition, on 13 December 2021 the Group entered into a binding, conditional agreement to acquire:
· 7 producing gold offtake contracts from Orion Resource Partners for US$69.75m.
This acquisition completed on 11 January 2022 and has been disclosed as a capital commitment.
Statement of Financial Position
Royalty intangible assets consist of US$46.17m cost, less US$1.27m amortisation for total net book value of US$44.90m representing the acquisitions in the year detailed above and the existing royalty assets of Koolyanobbing, Spring Hill and Lake Rebecca.
Royalty financial instruments were valued at US$7.46m representing the fair value of the Mimbula copper project in Zambia. The royalty financial instrument has been designated as fair value through profit and loss with the fair value gains and losses recognised in 'revaluation of royalty financial assets' line item in the income statement. The value at the beginning of the financial year was US$7.45m and US$1.50m royalty income was received in the year and a fair value increase of US$1.51m was recognised in the income statement.
Trade and other receivables totalling US$1.21m (2020: US$0.78m) includes US$0.38m in respect of 4th quarter 2021 royalty income due from Koolyanobbing and Mimbula receivable after the year-end. Other receivables also includes US$0.61m in respect of prepaid legal and other fees for the Gold offtakes and Sonora transactions completed after the year end and US$0.14m in respect of VAT repayable in the UK following registration with HMRC.
Trade and other payables totalling US$1.04m (2020: US$0.34m) consisted predominantly of trade payables, social security and taxation and accruals with all amounts within agreed payment terms.
Deferred contingent consideration of US$0.43m represents A$0.60m contingent payment due on the Spring Hill project based on the operator meeting certain production targets. The amount has been treated as due > 1 year representing managements' assessment of when the project will become operational and the targets achieved.
Total cash at the end of the year was US$45.64m and total debt and accrued interest was US$10.54m. Subsequent to the year end the existing debt facility was refinanced for a US$40m facility with Macquarie bank and cash totalling US$60m was deployed acquiring the gold offtake contracts.
Total net assets increased to US$88.07m during the year from US$25.51m at 31 December 2020 largely due to the Thacker Pass acquisition and the fund-raise in December 2021.
Income Statement
The 2021 results show the need for the Group to continue to grow and diversify and particularly highlights the importance of Trident's acquisition of the gold offtake contracts in January 2022 which will provide significant cashflow.
The primary impacts on the 2021 income statement and resultant loss were the limited royalty revenue from the Koolyanobbing iron ore asset in Australia, together with the cost of refinancing the Tribeca debt facility within 6 months of drawdown and foreign exchange losses totalling US$0.52m. Loss after taxation was US$3.54m (2020: US$1.71m profit) and basic earnings per share of 2.15 loss (2020: 2.45c).
Updates to the market during the year by Mineral Resources Ltd, the mine operator at Koolyanobbing, informed the Company that mining had been focused on areas that did not fall within the Trident royalty tenement. Towards the end of 2021 and subsequent to the year end, the operator recommenced mining on areas that will result in revenue for the Group - highlighted by the Q1 2022 payment of AUS$0.2m. The Group generated royalty income from its Koolyanobbing asset of US$0.08m (2020: US$1,67m) in the year. The amortisation charge was US$0.02m (2020: US$1.19m) and total Group overheads of US$3.74m (2020: US$2.53m); resulted in an operating loss of US$3.68m (2020: US$2.06m).
The fair value gain on the Mimbula copper project was US$1.51m (2020: US$2.53m) and US$1.50m of royalty income was received under the minimum payment terms. In addition, the Group made a foreign exchange loss totalling US$0.52m (2020: US$1.38m gain) mainly as a result of the retranslation of an intercompany loan balance between the parent company and an Australian subsidiary; and the conversion of cash balances denominated in non-US dollar currencies.
As the debt facility was fully refinanced after the year end all arrangement fees and costs were expensed in the year totalling US$0.90m, rather than being spread over the expected 2 year facility life. This amount included arrangement and broker fees and the fair value charge of the warrants issued to the lender. Redemption interest was also accrued for a total interest charge on the facility of US$0.7m, plus withholding taxes suffered on both the facility and the intercompany loan.
Cashflow and liquidity
Net cash increased in the year by US$38.46m (2020: US$2.32m) although this increase was predominantly due to the fund-raise in December for the gold offtake stream acquisition completed in January 2022. Financing inflows were US$60.25m (2020: US$18.60m) from 2 equity fund raises; which were invested US$29.07m (2020: US$) into Thacker Pass and Lincoln Gold, and US$2.93m (2020: US$1.26m) in operating activities. A further US$10m inflow came from the Trident's first debt facility with a syndicate managed by Tribeca Investment Partners to strengthen the balance sheet and facilitate further acquisitions. This facility was redeemed in January 2022. In addition, the Group made foreign exchange gains on the cash totalling US$0.21m (2020: US$0.52) for a final cash figure as at 31 December 2021 of US$45.64m (2019: US$6.97m).
Taxation
Trident recognised a deferred tax credit of US$0.86m (2020: US$0.05m) mainly due to losses incurred in Australia as a result of debt finance charges and accelerated allowances on the Koolyanobbing asset. With the Group expected to return to profit during 2022 (and the losses utilised) the deferred tax asset of US$1.04m was recognised in full. The Group paid US$0.15m in tax on the 2020 results.
Reporting currency
The Group has a presentational reporting currency of the US dollar. The Australian subsidiary TRR Services Australia, which directly owns some of the Group's royalty assets, has a functional currency of Australian dollars. Accordingly, the Group is subject to foreign exchange gains and losses when reporting consolidated balances and results. In addition, the Australian subsidiary has an intercompany loan balance with the parent company denominated in US dollars which results in gains and losses in the income statement.
During the year, the Australian dollar strengthened against the US dollar by approximately 6% decreasing the value of those assets and liabilities denominated in Australian dollars and subject to conversion. All other subsidiaries of the Group have US dollar functional currencies.
Events occurring after the reporting period
Subsequent to the year-end the Group announced the completion of the gold offtake portfolio acquisition for a total of US$69.75m funded by a new US$40m debt facility with Macquarie and the existing cash balance. At the same time the existing debt facility was fully redeemed and the conditional element of the placement announced in December 2021 was closed raising a further US$6.10m. In addition, on 27 January 2022 Trident paid a US$2.50m deposit for the right to acquire 50% of the 3% gross royalty over the Sonora lithium project, subject to certain conditions, for total consideration of US$26.0m.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2021
|
Continuing operations |
Notes |
|
Year ended 31 December 2021 |
Year ended 31 December 2020 |
|
|
|
|
US$'000 |
US$'000 |
|
|
|
|
|
|
|
Royalty related revenue |
3 |
|
83 |
1,668 |
|
Amortisation of royalty intangible assets |
12 |
|
(21) |
(1,193) |
|
Gross profit |
|
|
62 |
475 |
|
|
|
|
|
|
|
Administrative expenses |
4 |
|
(3,744) |
(2,529) |
|
Operating loss |
|
|
(3,682) |
(2,054) |
|
|
|
|
|
|
|
Revaluation of royalty financial assets |
13 |
|
1,511 |
2,528 |
|
AIM listing fees |
|
|
- |
(204) |
|
Finance income |
7 |
|
- |
21 |
|
Other finance costs |
8 |
|
(1,707) |
(20) |
|
Net foreign exchange (losses)/gains |
|
|
(523) |
1,383 |
|
|
|
|
|
|
|
(Loss)/profit before taxation |
|
|
(4,401) |
1,654 |
|
Income tax |
9 |
|
863 |
53 |
|
(Loss)/profit attributable to owners of the parent |
|
|
(3,538) |
1,707 |
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
Items that may be subsequently reclassified to profit and loss: |
|
|
|
|
|
Deferred tax |
9 |
|
- |
17 |
|
Exchange gains on translation of foreign operations |
|
|
29 |
112 |
|
Other comprehensive income for the period, net of tax |
|
|
29 |
129 |
|
Total Comprehensive income attributable to owners of the parent |
|
|
(3,509) |
1,836 |
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
Basic and diluted earnings per share (U.S. cents) |
10 |
|
(2.15) |
2.45 |
The notes are an integral part of these financial statements.
Consolidated Statement of Financial Position
As at 31 December 2021
|
|
Notes |
|
31 December 2021 |
31 December 2020 |
|
|
|
|
US$'000 |
US$'000 |
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Royalty intangible assets |
12 |
|
44,900 |
11,018 |
|
Royalty financial assets at fair value through profit and loss |
13 |
|
7,461 |
7,453 |
|
Deferred tax asset |
9 |
|
1,043 |
210 |
|
Total non-current assets |
|
|
53,404 |
18,681 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Trade and other receivables |
16 |
|
1,212 |
778 |
|
Cash and cash equivalents |
17 |
|
45,637 |
6,971 |
|
Current assets |
|
|
46,849 |
7,749 |
|
Total assets |
|
|
100,253 |
26,430 |
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
18 |
|
1,039 |
335 |
|
Current tax liabilities |
9 |
|
- |
122 |
|
Borrowings |
19 |
|
10,536 |
- |
|
Total current liabilities |
|
|
11,575 |
457 |
|
Non-current liabilities |
|
|
|
|
|
Contingent consideration |
18 |
|
436 |
464 |
|
Derivative financial liability |
19 |
|
172 |
- |
|
Total non-current liabilities |
|
|
608 |
464 |
|
Total liabilities |
|
|
12,183 |
921 |
|
|
|
|
|
|
|
Net Assets |
|
|
88,070 |
25,509 |
|
|
|
|
|
|
|
Equity attributable to owners of the parent |
|
|
|
|
|
Share Capital |
20 |
|
3,307 |
1,335 |
|
Share Premium |
20 |
|
87,046 |
23,288 |
|
Share-based payments reserve |
21 |
|
403 |
63 |
|
Foreign exchange reserve |
|
|
118 |
89 |
|
Retained Earnings |
|
|
(2,804) |
734 |
|
Total Equity |
|
|
88,070 |
25,509 |
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
|
|
Share capital |
Share Premium |
Share based payments reserve |
Foreign exchange reserve |
Retained earnings |
Total |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Balance at 1 January 2020 |
328 |
4,787 |
- |
(23) |
(990) |
4,102 |
|
|
|
|
|
|
|
|
|
Profit for the year |
- |
- |
- |
- |
1,707 |
1,707 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
Deferred tax |
- |
- |
- |
- |
17 |
17 |
|
Exchange gains on translation of foreign operations |
- |
- |
- |
112 |
- |
112 |
|
Total comprehensive income for the year |
- |
- |
- |
112 |
1,724 |
1,836 |
|
|
|
|
|
|
|
|
|
Transaction with owners in their capacity as owners: |
|
|
|
|
|
|
|
Issue of share capital |
1,046 |
20,119 |
- |
- |
- |
21,165 |
|
Cancellation of deferred shares |
(39) |
39 |
- |
- |
- |
- |
|
Share issue costs |
- |
(1,657) |
- |
- |
- |
(1,657) |
|
Share-based payment charge |
- |
- |
63 |
- |
- |
63 |
|
Total transactions with owners, recognised directly in equity |
1,007 |
18,501 |
63 |
- |
- |
19,571 |
|
|
|
|
|
|
|
|
|
Balance at 31 December 2020 |
1,335 |
23,288 |
63 |
89 |
734 |
25,509 |
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
(3,538) |
(3,538) |
|
Other comprehensive income: |
|
|
|
|
|
|
|
Exchange gains on translation of foreign operations |
- |
- |
- |
29 |
- |
29 |
|
Total comprehensive income for the year |
- |
- |
- |
29 |
(3,538) |
(3,509) |
|
|
|
|
|
|
|
|
|
Transaction with owners in their capacity as owners: |
|
|
|
|
|
|
|
Issue of share capital |
1,972 |
66,993 |
- |
- |
- |
68,965 |
|
Share issue costs |
- |
(3,235) |
- |
- |
- |
(3,235) |
|
Share-based payment charge |
- |
- |
340 |
- |
- |
340 |
|
Total transactions with owners, recognised directly in equity |
1,972 |
63,758 |
340 |
- |
- |
66,070 |
|
|
|
|
|
|
|
|
|
Balance at 31 December 2021 |
3,307 |
87,046 |
403 |
118 |
(2,804) |
88,070 |
Consolidated Statement of Cash Flows
for the year ended 31 December 2021
|
|
Notes |
|
Year to 31 December 2021 |
Year to 31 December 2020 |
|
|
|
|
US$'000 |
US$'000 |
|
Cash flow from Operating Activities |
|
|
|
|
|
(Loss)/profit before taxation |
|
|
(4,401) |
1,654 |
|
Revaluation of royalty financial assets |
13 |
|
(1,511) |
(2,528) |
|
AIM listing fees |
|
|
- |
204 |
|
Finance income |
|
|
- |
(21) |
|
Other finance costs |
|
|
1,707 |
20 |
|
Net foreign exchange losses/(gains) |
|
|
523 |
(1,383) |
|
Amortisation of royalty intangible asset |
12 |
|
21 |
1,193 |
|
Other non-cash items |
|
|
56 |
- |
|
Share-based payments charge |
|
|
340 |
63 |
|
Net cash used before changes in working capital |
|
|
(3,265) |
(798) |
|
Increase in payables |
|
|
684 |
257 |
|
Increase in receivables |
|
|
(195) |
(714) |
|
Net cash used in operating activities before tax |
|
|
(2,776) |
(1,255) |
|
Corporate income tax paid |
|
|
(153) |
- |
|
Net cash used in operating activities |
|
|
(2,929) |
(1,255) |
|
Cash flows from investing activities |
|
|
|
|
|
Payments for acquisition of royalty intangible assets |
|
|
(29,072) |
(10,063) |
|
Payments for acquisition of royalty financial assets at fair value through profit and loss |
|
|
- |
(5,000) |
|
Cash received from royalty financial asset |
|
|
1,182 |
22 |
|
Finance income |
|
|
- |
21 |
|
Net cash used in investing activities |
|
|
(27,890) |
(15,020) |
|
Cash flows from financing activities |
|
|
|
|
|
Issue of share capital |
|
|
63,489 |
20,080 |
|
Share issue costs and AIM listing fees |
|
|
(3,235) |
(1,484) |
|
Proceeds from borrowings |
|
|
10,000 |
- |
|
Finance costs |
|
|
(979) |
- |
|
Net cash generated from financing activities |
|
|
69,275 |
18,596 |
|
Net increase in cash and cash equivalents during the year |
|
|
38,456 |
2,321 |
|
Cash at the beginning of year |
|
|
6,971 |
4,135 |
|
Effect of foreign exchange rate |
|
|
210 |
515 |
|
Cash and cash equivalents at the end of the year |
|
|
45,637 |
6,971 |
Company Statement of Financial Position
As at 31 December 2021
|
|
Notes |
|
31 December 2021 |
31 December 2020 |
|
|
|
|
US$'000 |
US$'000 |
|
Non-current assets |
|
|
|
|
|
Investment in subsidiaries |
14 |
|
113 |
113 |
|
Royalty financial assets at fair value through profit and loss |
13 |
|
7,461 |
7,453 |
|
Amount due from subsidiary undertakings |
15 |
|
47,609 |
10,089 |
|
Deferred tax asset |
9 |
|
93 |
29 |
|
Total non-current assets |
|
|
55,276 |
17,684 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Trade and other receivables |
16 |
|
1,176 |
405 |
|
Cash and cash equivalents |
17 |
|
34,480 |
6,547 |
|
Current assets |
|
|
35,656 |
6,952 |
|
Total assets |
|
|
90,932 |
24,636 |
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
Trade and other payables |
18 |
|
439 |
162 |
|
Current tax liabilities |
9 |
|
- |
27 |
|
Current liabilities |
|
|
439 |
189 |
|
|
|
|
|
|
|
Non-current Liabilities |
|
|
|
|
|
Derivative financial liability |
19 |
|
172 |
- |
|
Total liabilities |
|
|
611 |
189 |
|
Net Assets |
|
|
90,321 |
24,447 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Share Capital |
20 |
|
3,307 |
1,335 |
|
Share Premium |
20 |
|
87,046 |
23,288 |
|
Share-based payments reserve |
21 |
|
403 |
63 |
|
Foreign exchange reserve |
|
|
(23) |
(23) |
|
Retained Earnings |
|
|
(412) |
(216) |
|
Total Equity |
|
|
90,321 |
24,447 |
Company Statement of Changes in Equity
For the year ended 31 December 2021
|
|
Share capital |
Share Premium |
Share based payments reserve |
Foreign exchange reserve |
Retained earnings |
Total |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Balance at 1 January 2020 |
328 |
4,787 |
- |
(23) |
(910) |
4,182 |
|
|
|
|
|
|
|
|
|
Profit for the year |
- |
- |
- |
- |
677 |
677 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
Deferred tax |
- |
- |
- |
- |
17 |
17 |
|
Total comprehensive income for the year |
- |
- |
- |
- |
694 |
694 |
|
|
|
|
|
|
|
|
|
Issue of share capital |
1,046 |
20,119 |
- |
- |
- |
21,165 |
|
Cancellation of deferred shares |
(39) |
39 |
- |
- |
- |
- |
|
Share issue costs |
- |
(1,657) |
- |
- |
- |
(1,657) |
|
Share-based payment charge |
- |
- |
63 |
- |
- |
63 |
|
Total transactions with owners, recognised directly in equity |
1,007 |
18,501 |
63 |
- |
- |
19,571 |
|
|
|
|
|
|
|
|
|
Balance at 31 December 2020 |
1,335 |
23,288 |
63 |
(23) |
(216) |
24,447 |
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
(196) |
(196) |
|
Total comprehensive income for the year |
- |
- |
- |
- |
(196) |
(196) |
|
|
|
|
|
|
|
|
|
Issue of share capital |
1,972 |
66,993 |
- |
- |
- |
68,965 |
|
Share issue costs |
- |
(3,235) |
- |
- |
- |
(3,235) |
|
Share-based payment charge |
- |
- |
340 |
- |
- |
340 |
|
Total transactions with owners, recognised directly in equity |
1,972 |
63,758 |
340 |
- |
- |
66,070 |
|
|
|
|
|
|
|
|
|
Balance at 31 December 2021 |
3,307 |
87,046 |
403 |
(23) |
(412) |
90,321 |
Company Statement of Cash Flows
for the year ended 31 December 2021
|
|
Notes |
Year to 31 December 2021 |
Year to 31 December 2020 |
|
|
|
US$'000 |
US$'000 |
|
Cash flows from Operating Activities |
|
|
|
|
(Loss)/profit before taxation |
|
(255) |
692 |
|
Revaluation of royalty financial asset |
13 |
(1,511) |
(2,528) |
|
AIM listing fees |
|
- |
204 |
|
Finance income |
|
- |
(21) |
|
Intercompany interest received |
|
(510) |
(201) |
|
Other finance costs |
|
51 |
20 |
|
Net foreign exchange gains |
|
(239) |
(321) |
|
Other non-cash items |
|
56 |
- |
|
Share-based payments charge |
|
340 |
63 |
|
Net cash used before changes in working capital |
|
(2,068) |
(2,092) |
|
Increase in payables |
|
462 |
110 |
|
Increase in receivables |
|
(277) |
(342) |
|
Net cash used in operating activities before tax |
|
(1,883) |
(2,324) |
|
Corporate income tax paid |
|
(33) |
- |
|
Net cash used in operating activities |
|
(1,916) |
(2,324) |
|
Cash flows from investing activities |
|
|
|
|
Payments for acquisition of royalty financial assets at fair value through profit and loss |
|
- |
(5,000) |
|
Cash received from royalty financial asset |
|
1,182 |
22 |
|
Finance income |
|
- |
21 |
|
Finance costs |
|
(51) |
- |
|
Investment in subsidiary |
|
- |
(113) |
|
Loans granted to subsidiary undertakings |
|
(38,589) |
(9,641) |
|
Loan repayments from subsidiary undertakings |
|
7,000 |
529 |
|
Net cash used in investing activities |
|
(30,458) |
(14,182) |
|
Cash flows from financing activities |
|
|
|
|
Issue of share capital |
|
63,489 |
20,080 |
|
Share issue costs and AIM listing fees |
|
(3,235) |
(1,484) |
|
Net cash generated from financing activities |
|
60,254 |
18,596 |
|
Net increase in cash and cash equivalents during the year |
|
27,880 |
2,090 |
|
Cash at the beginning of year |
|
6,547 |
4,120 |
|
Effect of foreign exchange rate |
|
53 |
337 |
|
Cash and cash equivalents at the end of the year |
|
34,480 |
6,547 |
Notes to the financial statements
1. GENERAL INFORMATION
Trident Royalties plc is a company incorporated and domiciled in the United Kingdom. The Company is a public limited company, which is listed on AIM of the London Stock Exchange, incorporated and domiciled in England and Wales. The address of the registered office is 6th Floor 60 Gracechurch Street, London, United Kingdom, EC3V 0HR.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied throughout the year presented, unless otherwise stated.
Basis of preparation
The Group's consolidated financial statements and the Parent Company financial statements have been prepared and approved by the Directors in accordance with international accounting standards in conformity with the Companies Act 2006.
The financial information set out in this document does not constitute the Group's statutory accounts for the years ended 31 December 2021 or 2020 but is derived from those accounts. Statutory accounts for 2020 have been delivered to the registrar of companies. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not contain an Emphasis of Matter highlighting a materiality uncertainly related to going concern and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. Statutory accounts for 2021 will be delivered to the registrar of companies in due course. The auditors have reported on those accounts; their reports were (i) unqualified, and (ii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The financial statements for the year ended 31 December 2021 (including the comparatives for the year ended 31 December 2020) were approved and authorised for issue by the Board of Directors on 6 May 2022. This results announcement for the year ended 31 December 2021 was also approved by the Board on 6 May 2022.
The financial statements have been prepared under the historical cost convention except for financial assets at fair value through profit and loss account and contingent consideration which are measured at fair value. The principal accounting policies adopted are set out below. The Group financial statements are presented in US Dollars ($) and rounded to the nearest thousand.
The preparation of the Group financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are explained below.
Going Concern
The financial position of the Group and cash flows as at 31 December 2021 are set out above. The Group meets its day-to-day working capital and other funding requirements with its current cash, raised through equity placings and revenue from its cash generating royalties. The Group actively manages its financial risks as set out in note 22 and operates Board-approved financial policies, that are designed to ensure that the Group maintains an adequate level of headroom and effectively mitigates financial risks.
On the basis of current financial projections (at least 12 months from the date of approval of the financial statements), the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence, and meet its liabilities as they fall due, for the foreseeable future. Accordingly, the Directors consider it appropriate to adopt the going concern basis in preparing these financial statements.
COVID-19
The Group has not been made aware of any significant issues at the operations in which it has made investments. Whilst the mining sector as a whole has been affected by COVID-19 - mainly in respect to their supply chains - their very nature (usually self-contained mine sites) has been such that mitigation of COVID-19 is easier than in other industries. The Board continues to monitor the impact of COVID-19 on the ability of the Group to continue to pursue its strategy and will make appropriate changes should they be required. There is not considered to be any material impacts on the reporting financial position and results of the Group as a result of COVID-19 as at the reporting date.
Standards, interpretations and amendments to published standards effective from 1 January 2021
The accounting policies applied are consistent with those adopted and disclosed in the Group financial statements for the year ended 31 December 2020. The Group adopted Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) at 1 January 2021, with no significant impact.
Standards, interpretations and amendments to published standards not yet effective
The Directors have considered those standards and interpretations, which have not been applied in the financial statements, that are in issue but not yet effective and do not consider that they will have a material impact on the future results of the Group or Company.
Basis of consolidation
The consolidated financial statements present the results of the Company and its subsidiaries as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
At 31 December 2021, the consolidated financial statements combine those of the Company with those of its subsidiaries. Subsidiaries are entities over which the Group has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
· The contractual arrangement with the other vote holders of the investee;
· Rights arising from other contractual arrangements; and
· The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the Group financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.
Investments in subsidiaries are accounted for at cost less impairment within the Company financial statements. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by other members of the Group
Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker which is considered to be the Board.
Foreign currency
Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss.
Exchange gains and losses arising on the retranslation of monetary financial assets are treated as a separate component of the change in fair value and recognised in profit or loss. Exchange gains and losses on non-monetary other comprehensive income ("OCI") financial assets form part of the overall gain or loss in OCI recognised in respect of that financial instrument.
Translation into presentation currency
The Company's functional currency changed from British pound (£) to US Dollars (US$) on 1 January 2020. The Group presents its financial information in US Dollars (US$). The functional currency of all the Company's subsidiaries is US$ except for TRR Services Australia Pty Ltd which has a AUD functional currency.
· Assets and liabilities for each financial reporting date presented (including comparatives) are translated at the closing rate of that financial reporting period.
· Income and expenses for each income statement (including comparatives) is translated at exchange rates at the dates of transactions. For practical reasons, the Company applies average exchange rates for the period.
· All resulting changes are recognised as a separate component of equity.
· Equity items are translated at exchange rates at the dates of transactions.
The following exchange rates were used in the retranslation of these financial statements.
|
|
At 31 December 2021 |
At 31 December 2020
|
|
US$/AUD closing rate at financial reporting date |
0.7263 |
0.7736 |
|
US$/AUD average exchange rate during the reporting period |
0.7483 |
0.6948 |
Intangible assets
Royalty arrangements
Royalty arrangements which are identified and classified as intangible assets are initially measured at cost, including any transaction costs, less provision for impairment where required.
Upon commencement of production at the underlying mining operation intangible assets are amortised on a units of production basis matching the depletion of the ore body over the life of the mine. Amortisation rates are adjusted on a prospective basis for all changes to estimates of the life of mine reserves.
Impairment
At each reporting date, the Group reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets are impaired. If such an indication is identified, the recoverable amount of the asset is estimated in order to determine the extent of any impairment. The recoverable amount is the higher of fair value (less costs of disposal) and value in use. In assessing value in use, the estimated cash flows are discounted to their present value using a pre-tax discount rate. If the recoverable amount of the asset is estimated to be less than its carrying value, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is also recognised in the income statement. Should an impairment loss subsequently reverse, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment been recognised. A reversal of an impairment loss is also recognised in the income statement.
Investments
Investment in subsidiaries are recorded at cost less provision for impairment.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
Current tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted in the countries in which the Group operates by the Statement of Financial Position date and is based on taxable profit for the year.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the year when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
Share-based payments
The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of any non-market service and performance vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total amount expensed is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At each reporting date, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit and loss, with a corresponding adjustment to equity.
Financial Instruments
Financial instruments comprise royalty financial assets, cash and cash equivalents, borrowings, financial assets and liabilities and equity instruments. Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument and comprise trade and other receivables and trade and other payables respectively.
Cash and cash equivalents
Cash and cash equivalents comprise cash at hand and current and deposit balances at banks.
Borrowings
Interest bearing debt facilities are initially recognised at fair value, net of directly attributable transaction costs. Transaction costs are recognised in the income statement on a straight-line basis over the term of the facility.
Trade and other receivables
Trade and other receivables are accounted for under IFRS 9 using the expected credit loss model and are initially recognised at fair value and subsequently measured at amortised cost less any allowance for expected credit losses.
Royalty financial assets at fair value through profit and loss
Royalty financial assets are recognised or derecognised on completion date where a purchase or sale of the royalty is under a contract, and are initially measured at fair value, including transaction costs.
All of the Group's royalty financial assets have been designated as at fair value through profit and loss ("FVTPL").
The royalty financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in the 'revaluation of royalty financial assets' line item of the income statement. Fair value is determined in the manner described in note 13.
Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward-looking expected credit loss model.
Trade and other payables
Trade and other payables are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
Warrant liability at fair value through profit and loss
The warrant liability is initially measured at fair value, including transaction costs. The liability is measured at fair value at the end of each reporting period, with any gains or losses recognised as other finance costs in the income statement. Fair value is determined by the calculation described in note 21.
Equity instruments and reserves description
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.
Ordinary shares are classified as equity.
Deferred shares are classified as equity but have restricted rights such that they have no economic value.
Share capital account represents the nominal value of the ordinary and deferred shares issued.
The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.
Share based payment reserve represents equity-settled share-based employee remuneration until such share options are exercised.
Foreign exchange reserve represents
· differences arising on the opening net assets retranslation at a closing rate that differs from opening rate; and
· differences arising from retranslating the income statement at exchange rates at the dates of transactions at average rates and assets and liabilities at the closing rate.
Retained earnings include all current and prior period results as disclosed in the Statement of Comprehensive Income.
Revenue recognition
The revenue of the Group comprises mainly royalty income. It is measured at the fair value of the consideration received or receivable after deducting discounts, value added tax and other withholding tax. The royalty income becomes receivable on extraction and sale of the relevant underlying commodity, and by determination of the relevant royalty agreement.
Interest income is accrued on a time basis, by reference to the carrying value and at the effective interest rate applicable.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The Group's estimate in respect of contingent consideration that may be payable following the acquisition of Royalty Intangible Assets, is capitalised as an asset acquisition cost. The value of the provision is determined by the amounts deemed payable by management at the balance sheet date.
Critical accounting estimates and judgements
The preparation of the financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Although these estimates are based on management's best knowledge of the amounts, events or actions, actual results ultimately may differ from these estimates.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting judgements
Classification of royalty arrangements: initial recognition and subsequent measurement
The Directors must decide whether the Group's royalty arrangements should be classified as:
· Intangible assets in accordance with IAS 38 Intangible Assets; or
· Financial assets in accordance with IFRS 9 Financial Instruments
The Directors use the following selection criteria to identify the characteristics which determine which accounting standard to apply to each royalty arrangement:
Type 1 - Intangible assets: Royalties, are mainly classified as intangible assets by the Group. The Group considers the substance of a simple royalty to be economically similar to holding a direct interest in the underlying mineral asset. Existence risk (the commodity physically existing in the quantity demonstrated), production risk (that the operator can achieve production and operate a commercially viable project), timing risk (commencement and quantity produced, determined by the operator) and price risk (returns vary depending on the future commodity price, driven by future supply and demand) are all risks which the Group participates in on a similar basis to an owner of the underlying mineral licence. Furthermore, in a royalty intangible, there is only a right to receive cash to the extent there is production and there are no interest payments, minimum payment obligations or means to enforce production or guarantee repayment. These are accounted for as intangible assets under IAS 38.
Type 2 - Financial royalty assets (royalties with additional financial protection): In certain circumstances where the risk is considered too high, the Group will look to introduce additional protective measures. This has taken the form of minimum payment terms. Once an operation is in production, these mechanisms generally fall away such that the royalty will display identical characteristics and risk profile to the intangible royalties; however, it is the contractual right to enforce the receipt of cash which results in these royalties being accounted for as financial assets under IFRS 9.
|
Accounting classification |
Substance of contractual terms |
Accounting treatment |
Examples |
|
Royalty intangible assets |
Simple royalty with no right to receive cash other than through a royalty related to production |
· Investment is presented as an intangible asset and carried at cost less accumulated amortisation and any impairment provision · Royalty income is recognised as revenue in the income statement · Intangible asset is assessed for indicators of impairment at each period end |
· Koolyanobbing · Spring Hill · Lake Rebecca · Thacker Pass · Lincoln gold · WA Gold |
|
Royalty financial instruments |
Royalty arrangement with a contractual right to receive cash (e.g. through a minimum payment profile) |
· Financial asset is recognised at fair value on the balance sheet · Fair value movements taken through the income statement (FVTPL) · Royalty income is not recognised as revenue in the income statement and instead reduces the fair value of the asset |
· Mimbula |
Going concern
The Group and Company financial statements have been prepared on a going concern basis as the Directors have assessed the Group's and Company's ability to continue in operational existence for the foreseeable future. The operations are currently being funded through existing cash reserves and royalty income.
The financial statements do not include the adjustments that would result if the Group or Company were not to continue as a going concern. See Going Concern section above for more details.
Loans to subsidiaries
Loans to subsidiaries have a carrying value at 31 December 2021 of US$47.6m (2019: US$10.1m). The Directors have assessed the carrying value to be equal to fair value on the basis that the loans will be recovered once the subsidiaries as they generate cash flow from their underlying investments in royalty assets. In the event that the underlying value of the royalty asset becomes impaired, and the loans are not considered to be recoverable, an impairment charge will then be recognised in the Company
Statement of Comprehensive Income.
Key sources of estimation uncertainty
Assessment of fair value of royalty arrangements held at fair value
The Mimbula royalty is held at fair value. Fair value is determined based on discounted cash flow models (and other valuation techniques) using assumptions considered to be reasonable and consistent with those that would be applied by a market participant. The determination of assumptions used in assessing fair values is subjective and the use of different valuation assumptions could have a significant impact on financial results.
In particular, expected future cash flows, which are used in discounted cash flows models, are inherently uncertain and could materially change over time. They are significantly affected by a number of factors including commodity prices, exchange rate changes and reserves and resources and timing/likelihood of mines entering production if not already generating income.
The key assumptions relating to the Group's royalty financial asset classified as fair value through profit or loss is set out in note 13.
Impairment review of intangible assets
Intangible assets are assessed for indicators of impairment at each reporting date with the assessment considering variables such as the production profiles, production commissioning dates where applicable, forecast commodity prices and guidance from the mine operators.
Where indicators are identified, the starting point for the impairment review will be to measure the expected future cash flows expected from the royalty arrangement should the project continue/come into production. A pre-tax nominal discount rate is applied to the future cash flows. The discount rate of each royalty arrangement is specific to the underlying project, making reference to the risk-free rate of return expected on an investment with the same time horizon as the expected mine life, together with the country risk associated with the location of the operation. Changes in discount rate are most sensitive to changes in the risk-free rate, country risk premiums and the expected mine life.
The outcome of this net present value calculation is then risk weighted to reflect management's current assessment of the overall likelihood and timing of each project coming into production and royalty income arising. This assessment is impacted by news flow relating to the underlying operation in the year, in conjunction with management's assessment of the economic viability of the project based on commodity price projections.
Amortisation
During the year the Group amended its amortisation policy from a straight line basis to depletion using units of production.
Management now has sufficient information to reliably estimate the depletion of the ore body over which Trident holds the royalty and accordingly applied a more appropriate amortisation policy. Management regularly review the life of its assets and amortisation rates and methodology, and may be adjusted for changes to the estimates.
3. BUSINESS AND GEOGRAPHICAL REPORTING
The Group's chief operating decision maker is considered to be the Executive Board. The Executive Board evaluates the financial performance of the Group by reference to its diversified portfolio - split between precious, bulk/battery and base metal assets - its reportable segments.
The following individual royalty arrangements are aggregated into the reportable segments:
Precious: Lake Rebecca, Spring Hill, Lincoln Gold Mine, Western Australia gold
Bulk/Battery Metals: Koolyanobbing, Thacker Pass
Base: Mimbula, Pukaqaqa
Below is a summary of the Group's results, assets and liabilities by reportable segment as presented to the Executive Board. Operating profit/(loss) is stated before revaluation of royalty financial instruments, one off costs, finance income and expense foreign exchange gains and taxation.
Segmental information as at 31 December 2021:
|
|
Precious |
Bulk/ Battery metals |
Base |
Other |
Total |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Royalty related revenue |
- |
83 |
- |
- |
83 |
|
Amortisation of royalty intangible assets |
- |
(21) |
- |
- |
(21) |
|
Gross profit |
- |
62 |
- |
- |
62 |
|
Operating expenses |
- |
- |
- |
(3,744) |
(3,744) |
|
Total segment operating profit/(loss) |
- |
62 |
- |
(3,744) |
(3,682) |
|
|
|
|
|
|
|
|
Total segment assets |
9,869 |
31,956 |
10,535 |
47,893 |
100,253 |
|
|
|
|
|
|
|
|
Total segment liabilities |
436 |
- |
- |
11,747 |
12,183 |
|
|
|
|
|
|
|
As at 31 December 2021 the Group was receiving royalty income from Koolyanobbing (bulk segment) and Mimbula (base segment) which is accounted for as a financial asset (see note 13). A fair value gain of US$1.51m (2020: US$2.53m) was recognised in the base segment.
Segmental information as at 31 December 2020:
|
|
Precious |
Bulk/ Battery metals |
Base |
Other |
Total |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Royalty related revenue |
- |
1,668 |
- |
- |
1,668 |
|
Amortisation of royalty intangible assets |
- |
(1,193) |
- |
- |
(1,193) |
|
Gross profit |
- |
475 |
- |
- |
475 |
|
Operating expenses |
- |
- |
- |
(2,529) |
(2,529) |
|
Total segment operating result |
- |
475 |
- |
(2,529) |
(2,054) |
|
|
|
|
|
|
|
|
Total segment assets |
7,032 |
4,246 |
7,454 |
7,698 |
26,430 |
|
|
|
|
|
|
|
|
Total segment liabilities |
464 |
- |
- |
457 |
921 |
|
|
|
|
|
|
|
4. EXPENSES BY NATURE
|
|
Year ended 31 December 2021 US$'000 |
Year ended 31 December 2020 US$'000 |
|
Employee benefit expense (note 6) |
2,093 |
980 |
|
Share based payments |
340 |
63 |
|
Legal and professional |
788 |
1,109 |
|
Other operating expenses |
523 |
377 |
|
Total operating expenses |
3,744 |
2,529 |
5. AUDITOR REMUNERATION
During the year the Company obtained the following services from the auditor:
|
|
Year ended 31 December 2021 US$'000 |
Year ended 31 December 2020 US$'000 |
|
Fees payable to the auditor for the audit of the Company |
62 |
48 |
|
Total auditor's remuneration |
62 |
48 |
|
|
|
|
|
Other assurance services pursuant to legislation |
6 |
48 |
Details of the Company's policy on the use of auditors for non-audit services, the reasons why the auditor was used rather than another supplier and how the auditor's independence and objectivity are safeguarded are set out in the Audit Committee Report.
6. EMPLOYEE BENEFIT EXPENSE
|
|
Group |
Company |
Group |
Company |
|
|
Year ended 31 December 2021 US$'000 |
Year ended 31 December 2021 US$'000 |
Year ended 31 December 2020 US$'000 |
Year ended 31 December 2020 US$'000 |
|
Directors' salary and fees |
899 |
447 |
602 |
243 |
|
Employee costs |
1,011 |
358 |
314 |
33 |
|
Social security costs |
183 |
85 |
64 |
24 |
|
Total employee benefit expense |
2,093 |
890 |
980 |
300 |
All the wages and salaries were paid to the Directors and senior management. There were no employees in the year other than the Directors and senior management. The average number of employees (including Directors) during the year was 8 (2020: 5).
7. FINANCE INCOME
|
|
Year ended 31 December 2021 US$'000 |
Year ended 31 December 2020 US$'000 |
|
Interest from bank deposits |
- |
21 |
|
|
- |
21 |
8. FINANCE EXPENSE
|
|
Year ended 31 December 2021 US$'000 |
Year ended 31 December 2020 US$'000 |
|
Interest paid or payable |
801 |
20 |
|
Amortisation of financing costs (including warrant charge) |
906 |
- |
|
|
1,707 |
20 |
9. INCOME TAX
|
|
Year ended 31 December 2021 US$'000 |
Year ended 31 December 2020 US$'000 |
|
Analysis of charge for year: |
|
|
|
|
|
|
|
United Kingdom corporation tax |
- |
27 |
|
Overseas taxation |
- |
95 |
|
Adjustments in respect of prior years |
2 |
- |
|
Current tax expense |
2 |
122 |
|
|
|
|
|
|
|
|
|
Deferred tax credit in current year |
(914) |
(175) |
|
Adjustments in respect of prior years |
49 |
- |
|
Deferred tax |
(865) |
(175) |
|
|
|
|
|
Income tax credit |
(863) |
(53) |
|
|
|
|
|
|
Year ended 31 December 2021 US$'000 |
Year ended 31 December 2020 US$'000 |
|
Factors affecting the tax charge for the year/period:
|
|
|
|
(Loss)/profit before taxation |
(4,401) |
1,654 |
|
|
|
|
|
Tax on result calculated at UK Corporation tax of 19% (2019: 19%) |
(836) |
314 |
|
Tax effects of: |
|
|
|
Items non-taxable/deductible for tax purposes: |
|
|
|
Non-deductible expenses |
87 |
62 |
|
Non-taxable income |
157 |
(202) |
|
|
|
|
|
Temporary and other differences: |
|
|
|
Utilisation of losses not previously recognised |
- |
(160) |
|
Current year losses not recognised |
37 |
- |
|
Effect of differences between local and UK tax rates |
(257) |
(35) |
|
Prior year adjustment to current and deferred tax |
51 |
- |
|
Other adjustments |
(102) |
(32) |
|
Income tax |
(863) |
(53) |
The Group is subject to taxation in United Kingdom, USA and Australia with applicable tax rates of 19.00%, 21.00% and 30.00% respectively. The Group does not have any unresolved tax matters or disputes with the tax authorities in the jurisdictions in which it operates.
DEFERRED TAXATION
The following are the deferred tax assets and liabilities recognised by the Group and the movements during the year:
|
Group |
Tax losses |
Other |
Total |
|
|
US$000 |
US$000 |
US$000 |
|
|
|
|
|
|
At 1 January 2020 |
- |
- |
- |
|
|
|
|
|
|
Credit/(charge) to income statement |
220 |
(45) |
175 |
|
Credit to other comprehensive income |
- |
17 |
17 |
|
Exchange differences |
- |
18 |
18 |
|
31 December 2020 |
220 |
(10) |
210 |
|
|
|
|
|
|
Credit/(charge) to income statement |
1,262 |
(397) |
865 |
|
Exchange differences |
- |
(32) |
(32) |
|
|
|
|
|
|
At 31 December 2021 |
1,482 |
(439) |
1,043 |
|
|
|
|
|
The deferred tax asset predominantly relates to losses incurred in the Australian subsidiary (as partially offset by accelerated capital allowances). Based on forecast future cashflows on those royalty assets held by the Australian subsidiary these losses are expected to be fully utilised, accordingly the deferred tax asset has been recognised in full.
|
Company |
Tax losses |
Other |
Total |
|
|
US$000 |
US$000 |
US$000 |
|
|
|
|
|
|
At 1 January 2020 |
- |
- |
- |
|
|
|
|
|
|
Credit to income statement |
- |
12 |
12 |
|
Credit to other comprehensive income |
- |
17 |
17 |
|
At 31 December 2020 |
- |
29 |
29 |
|
|
|
|
|
|
Credit to income statement |
- |
64 |
64 |
|
|
|
|
|
|
At 31 December 2021 |
- |
93 |
93 |
|
|
|
|
|
10. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.
|
NET (LOSS)/PROFIT ATTRIBUTABLE TO SHAREHOLDERS |
Year ended 31 December 2021 US$'000 |
Year ended 31 December 2020 US$'000 |
|
|
|
|
|
Earnings |
(3,538) |
1,707 |
The weighted average number of shares in issue for the purpose of calculating basic and diluted earnings per share and basic and diluted adjusted earnings per share are as follows:
|
WEIGHTED AVERAGE NUMBER OF SHARES IN ISSUE |
2021 |
2020 |
|
|
|
|
|
Basic number of shares outstanding |
164,638,648 |
69,528,254 |
|
Dilutive effect of Employee Share Option Scheme |
- |
61,169 |
|
Diluted number of shares outstanding |
164,638,648 |
69,589,423 |
|
|
|
|
|
Earnings per share - basic |
(2.15) c |
2.45 c |
|
Earnings per share - diluted |
(2.15) c |
2.45 c |
Subsequent to the year end a further 39,258,030 ordinary shares were issued - full details of share capital is provided in note 20.
11. DIVIDENDS
There were no dividends paid or proposed by the Company in either period.
12. ROYALTY INTANGIBLE ASSETS
|
Group |
|
US$'000 |
|
Cost |
|
|
|
At 1 January 2020 |
|
- |
|
Additions |
|
11,201 |
|
Exchange differences |
|
1,145 |
|
At 31 December 2020 |
|
12,346 |
|
Acquisition of Western Australia Gold Royalty |
|
631 |
|
Acquisition of Pukaqaqa Royalty |
|
3,075 |
|
Acquisition of Thacker Pass Royalty |
|
28,234 |
|
Acquisition of Lincoln Gold Royalty |
|
2,666 |
|
Exchange differences |
|
(785) |
|
At 31 December 2021 |
|
46,167 |
|
Accumulated Amortisation |
|
|
|
At 1 January 2020 |
|
- |
|
Amortisation |
|
(1,193) |
|
Exchange differences |
|
(135) |
|
At 31 December 2020 |
|
(1,328) |
|
Amortisation |
|
(21) |
|
Exchange differences |
|
82 |
|
At 31 December 2021 |
|
(1,267) |
|
Net book value at 31 December 2020 |
|
11,018 |
|
Net book value at 31 December 2021 |
|
44,900 |
Amortisation
Amortisation is charged on a units of production basis (over initial estimated reserves) on those assets in production. In the case of Koolyanobbing it is estimated that circa 70% of the original acquired reserve remains.
Acquisitions
Thacker Pass Royalty
On 19 March 2021 the Group acquired a 60% interest in an existing gross revenue royalty over the Thacker Pass Lithium Project from Orion Resource Partners for US$28.00m, consideration payable by US$26.00m in cash and US$2.00m in new Trident shares issued at 34.00p on 24 March 2021.
Western Australia Gold Royalty
On 30 March 2021 the Group completed the acquisition of a package of gold royalties located in Western Australia from Talga Resources Limited for A$0.80m (US$0.63m), consideration payable by A$0.25m in cash and A$0.55m in new Trident shares issued at 35.98p on 31 March 2021.
Pukaqaqa Royalty
On 8 April 2021 the Group acquired the Pukaqaqa copper royalty package from Orion Resource Partners for US$3.00m, consideration fully payable in new Trident shares issued at 32.03p on 9 April 2021. A royalty within the package was held by Tiomin Peru S.A.C ('Tiomin') a Peruvian company, which was acquired as part of the transaction. Tiomin does not meet the definition of a business as defined by IFRS 3 - business combinations and accordingly has been treated as a purchase of an asset.
Lincoln Gold Royalty
On 31 August 2021, the Group acquire a royalty over the Lincoln Gold Mine from Seduli Sutter Operations Corporation for a cash consideration of US$2.5m.
The Parent Company does not hold any royalty intangible assets.
13. ROYALTY FINANCIAL ASSETS
In July 2020 the Group acquired the Mimbula Royalty from Moxico Resources plc a staged GRR over production from the operating Mimbula copper mine and associated stockpiles located in Zambia's prolific Copperbelt Province. The GRR was acquired for cash consideration of US$5m. Trident is entitled to royalty payments on production commencing from 1 July 2020 and extending in perpetuity. This royalty asset is classified as FVTPL.
Trident will receive either a Minimum Payment ("MP") or royalty payment, whichever is higher until June 2023. Thereafter, Trident will only receive royalty payments. The royalty payments are calculated as a percentage of the gross revenue derived from sale of finished copper and copper concentrate. Per the terms of the agreement, the royalty percentage is calculated as follows:
a. During the MP period, 1.25% of gross revenue;
b. During the period commencing on the day after the expiry of MP period and ending on the date on which royalty payments have been made to Trident in respect of a total aggregate quantity of no less than 575,000 tonnes of copper cathode or other finished copper product, 0.3% of gross revenue; and
c. during the period commencing on the day after the expiry of the MP period and continuing for the duration of the agreement, 0.2% of gross revenue.
Group and Company
|
Fair Value |
2021 US$'000 |
2020 US$'000 |
|
At 1 January |
7,453 |
- |
|
Acquisition of Mimbula |
- |
5,000 |
|
Royalties due or received |
(1,503) |
(75) |
|
Revaluation of royalty financial asset recognised in profit or loss |
1,511 |
2,528 |
|
At 31 December |
7,461 |
7,453 |
As at 31 December 2021 the Group determined the fair value of Mimbula by calculating the discounted future cash flows of the royalty with a 12% pre-tax nominal discount rate, resulting in a valuation of US$7.46m (2020: US$7.45m). This results in a fair value gain in the income statement of US$1.51m (2020: US$2.53m). The key input assumptions are discount rate and commodity price.
If the discount rate used were to increase or decrease by 2% the valuation effect would be a US$0.39m (2020: US$0.43m) reduction and a US$0.43m (2020: US$0.49m) increase, respectively.
If the commodity price used was to increase or decrease by 10% the valuation effect would be a US$0.5m (2020: US$0.44m) increase and a US$0.1m (2020: US$0.59m) reduction, respectively.
14. INVESTMENTS IN SUBSIDIARIES
|
Company |
|
US$'000 |
|
Cost |
|
|
|
At 31 December 2020 and 1 January 2021 |
|
113 |
|
Investment in subsidiary |
|
- |
|
At 31 December 2021 |
|
113 |
As at 31 December 2021 the Company held interests in the following subsidiary and joint venture companies:
|
Company |
Country of registration |
Proportion held |
Registered Office |
Nature of business |
|
TRR Services LLC
|
USA
|
100%
|
7233 S.Kellerman Way, Aurora, CO 80016 |
Service company
|
|
TRR Services Australia Pty Limited |
Australia |
100% |
Floor 2, 44A Kings Park Road, West Perth, WA 6005 |
Service company |
|
TRR Services Schweiz AG |
Switzerland |
100% |
Grafenauweg 8, 6300 Zug |
Service company |
|
TRR Services UK Ltd |
United Kingdom |
100% |
6th Floor 60 Gracechurch Street, London, United Kingdom, EC3V 0HR |
Service company |
|
Tiomin Peru S.A.C |
Peru |
100% |
Parque las Leyendas MZA, 13 Lote, 902A Al Costado de Metro De La Av La Marina, Lima, Peru
|
Dormant |
|
TRR Holdings LLC |
USA |
100% |
251 Little Falls Drive, Wilmington, DE 19808 |
Dormant |
|
TRR Offtakes LLC |
USA |
100% |
251 Little Falls Drive, Wilmington, DE 19808 |
Dormant |
|
TRR Sonora Limited |
United Kingdom |
100% |
6th Floor 60 Gracechurch Street, London, United Kingdom, EC3V 0HR |
Dormant |
|
Sonoroy Holdings Limited |
United Kingdom |
50% |
Lynton House 7-12 Tavistock Square, London, England, WC1H 9BQ |
Dormant |
15. AMOUNT DUE FROM SUBSIDIARY UNDERTAKINGS
|
Company |
2021 US$'000 |
2020 US$'000 |
|
Loans and contributions to subsidiaries |
47,609 |
10,089 |
|
|
47,609 |
10,089 |
During the year ended 31 December 2021 the maximum amount owed by the subsidiaries to the Parent Company was US$47.6m (2020: US$10.1m). The related party loans are unsecured, repayable upon demand and have a 6% interest rate where applicable. The fair value of loans to subsidiaries is the same as their carrying values stated above.
16. TRADE AND OTHER RECEIVABLES
|
|
Group 2021 US$'000 |
Company 2021 US$'000 |
Group 2020 US$'000 |
Company 2020 US$'000 |
|
Prepayments and accrued income |
1,040 |
1,033 |
517 |
144 |
|
Current tax asset |
29 |
- |
- |
- |
|
Indirect taxes recoverable |
143 |
143 |
261 |
261 |
|
|
1,212 |
1,176 |
778 |
405 |
Due to the short-term nature of the current receivables, their carrying amount is considered to be approximate to their fair value.
17. CASH AND CASH EQUIVALENTS
|
|
Group 2021 US$'000 |
Company 2021 US$'000 |
Group 2020 US$'000 |
Company 2020 US$'000 |
|
Cash at bank and on hand |
45,637 |
34,480 |
6,971 |
6,547 |
All of the Company's cash and cash equivalents are held in accounts which bear interest at floating rates and the Directors consider their carrying amount approximates to their fair value. Details of the credit risk associated with cash and cash equivalents is set out in note 22.
18. TRADE AND OTHER PAYABLES
|
|
Group 2021 US$'000 |
Company 2021 US$'000 |
Group 2020 US$'000 |
Company 2020 US$'000 |
|
Trade payables |
203 |
199 |
109 |
107 |
|
Other taxation and social security |
49 |
- |
164 |
- |
|
Accrued expenses |
787 |
240 |
62 |
55 |
|
|
1,039 |
439 |
335 |
162 |
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms. The Directors consider that the carrying amount of trade payables approximates to their fair value.
|
CONTINGENT CONSIDERATION
|
|
|
|
|
Group |
|
US$'000 |
|
|
At 31 December 2020 |
|
464 |
|
|
Exchange differences |
|
(28) |
|
|
At 31 December 2021 |
|
436 |
|
|
|
|
|
|
Contingent consideration relates to the acquisition of the Spring Hill royalty. A total of A$600k remains payable to the vendor on the operator meeting certain production milestones. The above amount is management's estimate of the amounts due assuming the operation meets those production limits that trigger payment of the additional consideration. The amount is discounted and expected due after more than one year.
19. BORROWINGS
On 1 July 2021 the Group entered into a US$10m secured loan facility agreement with a syndicate managed by Tribeca Investment Partners. The Facility was drawdown on 3 August 2021.
|
Group |
|
US$'000 |
|
At 31 December 2020 |
|
- |
|
Secured loan facility at amortised cost |
|
10,000 |
|
Accrued finance charges |
|
536 |
|
At 31 December 2021 |
|
10,536 |
The facility had an initial term of 1 year from drawdown, with an option to extend for a further year subject to certain conditions. The facility had a coupon of 10% plus Libor per annum. On 6 January 2022 the Tribeca loan facility was repaid in full including redemption interest to ensure a minimum cash return of 7%, which was accrued in full. All associated finance and arrangement costs were expensed in the year.
On 10 January 2022, a new fully secured US$40m loan facility was entered into with Macquarie Bank Limited. The facility has a 3 year term and interest is charged at 7.75% plus SOFR.
WARRANT LIABILITY
As part of the Tribeca facility, 3,500,000 share warrants to subscribe for shares in the Company were issued exercisable at £0.5166 per share. The Warrants were exercisable immediately on issue and will expire 24-months from drawdown. As the US$ value of the Warrant exercise price is a variable amount they have been treated as a derivative financial liability and are classified as fair value through profit and loss. The inputs used to calculate the fair value of the Warrants on initial recognition is shown in note 21.
Group and Company
|
Fair Value |
|
US$'000 |
|
At 1 January 2021 |
|
- |
|
Fair value of Warrants on initial recognition |
|
181 |
|
Revaluation of derivate financial asset recognised in profit or loss |
|
(9) |
|
At 31 December 2021 |
|
172 |
20. SHARE CAPITAL AND SHARE PREMIUM
|
Group and Company |
Number of ordinary shares of 1p |
Number of deferred shares of 1p |
Share capital US$'000 |
Share premium US$'000 |
|
At 1 January 2020 |
22,000,000 |
3,000,000 |
328 |
4,787 |
|
Share issue - placing |
80,000,000 |
- |
1,004 |
19,077 |
|
Share issue - advisor shares |
1,500,000 |
- |
19 |
358 |
|
Share issue - Lake Rebecca |
1,862,556 |
- |
23 |
684 |
|
Share issue expenses |
|
|
|
(1,657) |
|
Cancellation of deferred shares |
|
(3,000,000) |
(39) |
39 |
|
At 31 December 2020 |
105,362,556 |
- |
1,335 |
23,288 |
|
Share issue - placing |
134,181,943 |
- |
1,806 |
61,683 |
|
Share issue - royalty acquisitions |
11,939,806 |
- |
164 |
5,256 |
|
Share issue - non-executive directors' fees |
108,108 |
- |
2 |
54 |
|
Share issue expenses |
- |
- |
- |
(3,235) |
|
At 31 December 2021 |
251,592,413 |
- |
3,307 |
87,046 |
Share issues during the year:
Share placings
On 25 March 2021, 60,800,000 ordinary shares were issued for cash at 34p per share.
On 18 June 2021, 2,500,000 ordinary shares were issued for cash at 40p per share to Collingwood Capital of which Paul Smith a director of the Company is the beneficial owner.
On 20 December 2021, 70,881,943 ordinary shares were issued for cash at 36p per share.
Royalty acquisitions
On 24 March 2021, 4,213,720 ordinary shares were issued at 34p per share as part of the consideration for the acquisition of the Thacker Pass royalty (see note 12).
On 31 March 2021, 848,059 ordinary shares were issued at 35.98p in order to complete the acquisition of the Western Australian gold royalties from Talga Resources Limited.
On 8 April 2021, 6,878,027 ordinary shares were issued at 32.03p in order to complete the acquisition of the Pukaqaqa copper royalty from Bellatrix Limited, a wholly owned subsidiary of Orion Resource Partners.
Directors' shares
On 20 April 2021, 108,108 ordinary shares were issued at 37p per share to the non-executive directors of the Company in lieu of directors fees.
Shares issued subsequent to the year-end
On 11 January 2022, 13,118,057 ordinary shares were issued for cash at 36p per share.
On 11 January 2022, 20,471,151 ordinary shares were issued at 36p as part of the part of the consideration for the gold offtake portfolio as detailed in note 25.
On 17 January 2022, 126,070 ordinary shares were issued at 37.02p per share to the non-executive directors of the Company in lieu of directors fees. In addition, 280,157 ordinary shares were issued at 37.02p per share to the management team in lieu of annual bonuses.
On 23 March 2022, 5,542,752 ordinary shares were issued at 51.43p as consideration for the acquisition of the Sugar Zone gold offtake stream as detailed in note 26
21. SHARE BASED PAYMENTS
Share options
During 2021 and the previous year share options were granted to Directors and Senior Management of the Company. Under IFRS 2 "Share-based Payments", the Company considers these to be equity settled share-based payments and determines the fair value of the options issued to Directors and employees as remuneration and recognises the amount as an expense in the statement of income with a corresponding increase in equity.
At 31 December 2021, the Company had outstanding options to subscribe for Ordinary shares as follows:
|
Option exercise price |
Expiry date |
Vesting date |
Fair value of individual option |
At 01/01/2021 |
Issued |
At 31/12/2021 |
|
£0.2000 |
02/06/2030 |
02/06/2021 |
£0.0630 |
1,041,666 |
- |
1,041,666 |
|
£0.2400 |
02/06/2030 |
02/06/2022 |
£0.0608 |
1,041,667 |
- |
1,041,667 |
|
£0.2800 |
02/06/2030 |
02/06/2023 |
£0.0605 |
1,041,667 |
- |
1,041,667 |
|
£0.2965 |
20/12/2030 |
20/12/2022 |
£0.1260 |
533,334 |
- |
533,334 |
|
£0.3558 |
20/12/2030 |
20/12/2023 |
£0.1180 |
533,333 |
- |
533,333 |
|
£0.4551 |
20/12/2030 |
20/12/2024 |
£0.1060 |
533,333 |
- |
533,333 |
|
£0.3700 |
20/04/2028 |
20/12/2024 |
£0.1068 |
- |
610,000 |
610,000 |
|
£0.4000 |
17/06/2022 |
18/06/2021 |
£0.0720 |
- |
2,500,000 |
2,500,000 |
|
|
|
|
|
4,725,000 |
3,110,000 |
7,835,000 |
The following information is relevant in the determination of the fair value of options granted during 2021:
|
Grant date |
|
20 April 2021 |
18 June 2021 |
|
Option exercise price |
|
£0.37 |
£0.40 |
|
Fair value of one option, £ |
|
0.1068 |
0.072 |
|
Option pricing model used |
|
Black Scholes |
Black Scholes |
|
Weighted average share price at grant date, £ |
|
0.36 |
0.40 |
|
Weighted average contractual life, years |
|
8 |
1 |
|
Expected volatility,% |
|
45% |
45% |
|
Expected dividend growth rate,% |
|
0% |
0% |
|
Risk-free interest rate (5 year bond),% |
|
0.29% |
0.29% |
The following information is relevant in the determination of the fair value of options granted 2 June 2020:
|
Option exercise price |
£0.20 |
£0.24 |
£0.28 |
|
Fair value of one option, £ |
0.0630 |
0.0608 |
0.0605 |
|
Option pricing model used |
Black-Scholes |
Black-Scholes |
Black Scholes |
|
Weighted average share price at grant date, £ |
0.22 |
0.22 |
0.22 |
|
Weighted average contractual life, years |
10 |
10 |
10 |
|
Expected volatility,% |
45% |
45% |
45% |
|
Expected dividend growth rate,% |
0% |
0% |
0% |
|
Risk-free interest rate (5 year bond),% |
0.29% |
0.29% |
0.29% |
|
The following information is relevant in the determination of the fair value of options granted 18 December 2020: |
|||
|
Option exercise price |
£0.2965 |
£0.3558 |
£0.4551 |
|
Fair value of one option, £ |
0.126 |
0.118 |
0.106 |
|
Option pricing model used |
Black-Scholes |
Black-Scholes |
Black Scholes |
|
Weighted average share price at grant date, £ |
0.37 |
0.37 |
0.37 |
|
Weighted average contractual life, years |
10 |
10 |
10 |
|
Expected volatility,% |
45% |
45% |
45% |
|
Expected dividend growth rate,% |
0% |
0% |
0% |
|
Risk-free interest rate (5 year bond),% |
0.29% |
0.29% |
0.29% |
Share-based remuneration expense related to the share options granted during the reporting period is included in the administration expenses line in the consolidated income statement in the amount of US$0.34m (31/12/2020: US$0.06m). Volatility was determined by reference to historic share price data and comparison to peer groups where historic data is limited to a short time period.
Share warrants
On 3 August 2021, 3,500,000 share warrants to subscribe for shares in the Company were issued to Tribeca. See note 19 for further information.
The following information is relevant in the determination of the fair value of the Warrants on initial recognition:
|
Warrant exercise price |
|
|
£0.5166 |
|
Fair value of one option, £ |
|
|
0.052 |
|
Option pricing model used |
|
|
Black Scholes |
|
Weighted average share price at grant date, £ |
|
|
0.3974 |
|
Weighted average contractual life, years |
|
|
2 |
|
Expected volatility,% |
|
|
35% |
|
Expected dividend growth rate,% |
|
|
0% |
|
Risk-free interest rate (5 year bond),% |
|
|
0.29% |
The fair value on initial recognition of the Warrants was US$181,000.
22. FINANCIAL RISK MANAGEMENT
The Group's activities expose it to a variety of financial risks which result from its operating and investing activities; market risk (foreign currency exchange risk and commodity price risk), liquidity risk, capital risk and credit risk. These risks are mitigated wherever possible by the Group's financial management policies and practices described below. The Group's financial risk management is carried out by the finance team led by the Chief Financial Officer and under policies approved by the Board. Group finance identifies, evaluates and mitigates financial risks in close co-operation with the Group's senior management team.
Capital risk
The Group's objectives when managing capital are:
· to safeguard the Group's ability to continue as a going concern, so that it continues to provide returns and benefits for shareholders;
· to support the Group's growth; and
· to provide capital for the purpose of strengthening the Group's risk management capability
The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Management regards total equity as capital and reserves, for capital management purposes. The Group is not subject to externally imposed capital requirements.
Commodity price risk
The royalty portfolio exposes the Group to commodity price risk through fluctuations in commodity prices of its royalty investments particularly the prices of iron ore, gold and copper. The Board consider that the strategy of the Group to build a diversified portfolio of royalty assets that mirrors the global natural resources sector is sufficient mitigation with regard to the exposure to commodity price risk. Prior to committing to royalty acquisitions the Board obtain independent price forecasts to ensure that such investments are priced in accordance with consensus pricing. The Group does not hedge against commodity price movements
Credit risk
Credit risk refers to the risk that the Group's financial assets will be impaired by the default of a third party (being non-payment within the agreed credit terms). The Group is exposed to credit risk primarily on its cash and cash equivalent balances as set out in note 17 and on its trade and other receivable balances as set out in note 16. The Group's credit risk is primarily attributable to its other receivables, being royalty receivables. It is the policy of the Group to present the amounts in the balance sheet net of allowances for doubtful receivables, estimated by the Group's management based on prior experience and the current economic environment. In certain cases, the Group has the right to audit the reported royalty income.
For banks and financial institutions, only parties with a minimum credit rating of BBB are accepted. The majority of cash is held with HSBC Bank plc in the UK and household names in the US and Australia.
The Directors have considered the credit exposures and do not consider that they pose a material risk at the present time. The credit risk for cash and cash equivalents is managed by ensuring that all surplus funds are deposited only with financial institutions with high quality credit ratings. There are currently no expected credit losses.
Liquidity risk
Liquidity risk relates to the ability of the Group to meet future obligations and financial liabilities as and when they fall due. The Group currently has sufficient cash resources to pay the trade and other payables and contingent consideration when they fall due.
|
Future expected payments |
|
|
|
Group |
2021 US$'000 |
2020 US$'000 |
|
Trade and other payables within one year |
1,039 |
335 |
|
Current tax liabilities within one year |
- |
121 |
|
Contingent consideration due > one year |
436 |
464 |
As at 31 December 2021 the Group had borrowings of US$10.0m plus accrued interest. Subsequent to the year end, the Group refinanced the facility for a 3 year US$40m term facility with Macquarie Bank. The Group has sufficient resources to service the borrowings and meet related financial covenants.
Foreign exchange risk
The Group is exposed to foreign exchange risk arising from currency exposures, primarily with respect to the United States Dollar, British Pound (GBP) and the Australian Dollar.
The following table highlights the major currencies the Group operates in and the movements against the US Dollar during the course of the year:
|
|
Average rate |
Reporting spot rate |
||||
|
|
2021 |
2020 |
Movement |
2021 |
2020 |
Movement |
|
British Pound |
1.37 |
1.28 |
0.09 |
1.35 |
1.37 |
(0.02) |
|
Australian Dollar |
0.75 |
0.69 |
0.06 |
0.73 |
0.77 |
(0.04) |
The Group's exposure to foreign currency risk based on US Dollar equivalent carrying amounts of monetary items at the reported date:
|
|
2021 US$'000 |
2020 US$'000 |
||||
|
|
US$ |
GBP |
Other |
US$ |
GBP |
Other |
|
Cash and cash equivalents |
44,496 |
852 |
289 |
6,167 |
581 |
223 |
|
Trade and other receivables |
375 |
- |
7 |
53 |
- |
260 |
|
Trade and other payables |
(238) |
(438) |
(314) |
(21) |
(142) |
(8) |
|
Contingent consideration |
- |
- |
(436) |
- |
- |
(464) |
|
Net exposure |
44,633 |
414 |
(454) |
6,199 |
439 |
11 |
The royalty financial asset is denominated in US dollar.
The Group does not hedge against foreign exchange movements.
Exchange rate sensitivity
The Group is mainly exposed to foreign exchange risk on the cash balances and trade and other payables denominated in currencies other than US$ as detailed above. A +/- 10% change in the USD:GBP and USD:AUD rate and the impact of a +/- 10% change on the exchange rates on the translation of foreign subsidiaries into the Group's presentation currency would result in the following changes:
|
|
|
2021 US$'000 |
|
2020 US$'000 |
|
|
Profit/(loss) |
Equity |
Profit/(loss) |
Equity |
|
British Pound |
(99) |
- |
(84) |
- |
|
Australian Dollar |
265 |
183 |
105 |
79 |
23. FINANCIAL INSTRUMENTS
The Group and Company held the following investments in financial instruments:
|
|
Group 2021 US$'000 |
Company 2021 US$'000 |
Group 2020 US$'000 |
Company 2020 US$'000 |
|
Fair value through profit and loss |
|
|
|
|
|
Royalty financial assets |
7,461 |
7,461 |
7,453 |
7,453 |
|
Cash and cash equivalents |
45,637 |
34,480 |
6,971 |
6,547 |
|
Financial assets at amortised cost |
|
|
|
|
|
Trade and other receivables |
381 |
47,984 |
313 |
10,042 |
|
Financial liabilities at amortised cost |
|
|
|
|
|
Trade and other payables |
990 |
439 |
171 |
162 |
|
Contingent consideration |
436 |
- |
464 |
- |
|
Financial liabilities at fair value through profit and loss |
|
|
|
|
|
Warrant liability |
172 |
172 |
- |
- |
|
|
|
|
|
|
Trade and other receivables and trade and other payables excludes all amounts considered to be statutory arrangements (such as VAT recoverable and corporation tax) and prepayments.
Fair value hierarchy
The Group and Company only has one asset that is measured at fair value - the Mimbula investment that is recognised as a royalty financial asset at fair value through profit and loss totalling US$7.46m (2020: US$7.45m). The asset is deemed to be a level 3 asset under the fair value hierarchy criteria - some of the inputs for the fair value determination are not based on observable market data (mainly private resource data).
24. RELATED PARTY TRANSACTIONS
Paul Smith the non-executive Chairman provided US$0.5m of the US$10.0m loan facility syndicated by Tribeca Investment Partners, at the year-end US$35k of interest was paid and payable to Mr Smith.
Al Gourley, non-executive director, and Adam Davidson, CEO, together with LIM Asia Special Situations Master Fund Limited (who was at the time a substantial shareholder), participated in a placing on 25 March 2021 subscribing for 800,000 ordinary shares, 14,706 ordinary shares and 10,112,928 ordinary shares respectively at a price of 34 pence per ordinary share.
Paul Smith, Al Gourley, Adam Davidson and Helen Pein, agreed to subscribe for new ordinary shares in December 2021 in the conditional placing on 20 December 2021, which was completed on 11 January 2022, for 839,842 ordinary shares,1,035,000 ordinary shares, 52,490 ordinary shares and 69,444 ordinary shares respectively at a price of 36 pence per ordinary share.
During the year the Group paid legal fees totalling US$0.18m (2020: nil) to Fasken Martineau DuMoulin LLP ("Fasken") and its worldwide affiliates. Fasken is a legal firm in which Al Gourley is a senior partner.
There are no other related party transactions, or transactions with Directors that require disclosure except for the remuneration items disclosed in note 6. The disclosures in note 6 include the compensation of key management personnel as all employees are considered to be key. The Company's related parties consist of its subsidiaries and the transactions and amounts due from them are disclosed in note 14.
25. CAPITAL COMMITMENTS
On 13 December 2021, the Group announced the proposed acquisition of a portfolio of producing gold offtake contracts from funds managed by Orion Resource Partners for total consideration of US$69.75m of which US$60.00m was payable in cash and US$9.75m in new ordinary shares. Completion of the transaction was conditional, amongst other things, upon drawdown of a new debt facility with Macquarie Bank for US$40m and issuance of 20,471,151 new consideration shares following a General Meeting on 10 January 2022. The debt facility was signed on 17 December 2021, but conditions precedent to drawdown were not completed until 10 January 2022 when the funds were drawn and the existing Tribeca debt facility was repaid in full. The acquisition completed on 11 January 2022 when the cash consideration was paid and the consideration shares issued. This has been treated as a non-adjusting event for reporting purposes.
26. EVENTS OCCURING AFTER THE REPORTING DATE
On 27 January 2022, the Group announced it had entered into an agreement to acquire, subject to certain conditions, an indirect 1.5% Gross Royalty over the Sonora Lithium Project in Mexico. Sonoroy Holdings Limited, a joint venture company in which Trident holds a 50% interest, has the right to acquire the royalty for total consideration of US$52m in cash (US$26m attributable to Trident). A deposit of US$2.5m was paid by Trident, with the balance to be paid upon completion of the transaction, expected to occur in early-2023 following a favourable resolution of a dispute between the seller and the mine operator. If the dispute is found against the seller, Trident's deposit is fully repayable.
On 23 March 2022, the Group completed the acquisition of a gold offtake contract over the Sugar Zone mine operated by Silver Lake Resources Limited from a fund managed by Orion Resource Partners. Total consideration paid was US$3.75m, payable in 5,542,752 new ordinary shares.
On 14 April 2022, the Group reached an agreement with Equinox Gold Corp ("Equinox") following the sale of the Mercedes gold mine in Mexico by Equinox to Bear Creek Mining Corporation. Under the terms of the gold offtake contract (which was part of the portfolio acquisition described in note 25) the sale of the mine triggered a payment from Equinox to Trident of US$3.7m and the mine was removed from the offtake contract. The payment was received on 22 April 2022.
Details of shares issued subsequent to the year-end are provided in note 20. Additional information is included in note 25 regarding the gold offtake acquisition. All of the above events have been treated as non-adjusting for reporting purposes.
27. ULTIMATE CONTROLLING PARTY
The company does not have a single controlling party.
** Ends **
Contact details:
|
Trident Royalties Plc Adam Davidson / Paul Smith |
+1 (757) 208-5171 / +41 79 947 1348 |
|
Grant Thornton (Nominated Adviser) Colin Aaronson / Samantha Harrison / Samuel Littler |
+44 020 7383 5100 |
|
Stifel Nicolaus Europe Limited (Joint Broker) Callum Stewart / Ashton Clanfield |
+44 20 7710 7600 |
|
Tamesis Partners LLP (Joint Broker) Richard Greenfield |
+44 20 3882 2868 |
|
Hudson Sandler Investor Relations: John Smelt Public Relations: Charlie Jack / Harry Griffiths |
+44 207 796 4133 |
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;
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Maintaining a low-overhead model which is capable of supporting a larger scale business without a commensurate increase in operating costs; and
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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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