Thacker Pass: $2.3bn Loan Commitment from DOE

Trident Royalties PLC

15 March 2024

 

15 March 2024

Trident Royalties Plc

("Trident" or the "Company")

Thacker Pass Update: Conditional Commitment for $2.3 billion DoE Loan

Trident Royalties Plc (AIM: TRR, OTC: TDTRF), the diversified mining royalty company, is pleased to note recent positive announcements by Lithium Americas Corporation ("LAC", NYSE: LAC) in relation to its Thacker Pass Lithium Project ("Thacker Pass"). Trident holds a net 1.05% gross revenue royalty over Thacker Pass (after expected exercise of a partial royalty buyback, which would see $13.2 million to Trident).

U.S. Government Advanced Technology Vehicles Manufacturing Loan¹

·      LAC has received a conditional commitment (the "Conditional Commitment") from the U.S. Department of Energy ("DOE") for a $2.26 billion loan under the Advanced Technology Vehicles Manufacturing ("ATVM") Loan Program (the "Loan") for financing the construction of the processing facilities at Thacker Pass.

·      The Loan is intended to help finance the construction of Thacker Pass, targeted to produce an initial 40,000 tonnes per year ("tpa") of battery grade lithium carbonate ("Phase 1").

·      Thacker Pass supports the U.S. government's commitment to securing a domestic supply chain for critical minerals to reduce reliance on foreign materials. Phase 1 production could support lithium needs for up to 800,000 electric vehicles annually.

Construction Update²

·      Approximately US$194 million was spent on Thacker Pass in 2023, with site preparation for the first phase of major earthworks completed, including all site clearing, commissioning a water supply system, site access improvements and site infrastructure.

·      General Motors released $320 million in funding in February 2023 in the largest investment publicly disclosed to date by an automaker in a company to produce battery raw materials, with the second tranche of $330 million expected before or in connection with closing of the DOE loan.

·      Lithium Americas is currently focused on advancing detailed engineering, procurement and execution planning for the construction of Thacker Pass Phase 1. Detailed engineering is approximately 30% design complete to date. Lithium Americas plans to continue to increase the level of detailed engineering in advance of issuing full notice to proceed ("FNTP"), which is expected in the second half of 2024.

·      Estimated total capital cost for Phase 1 construction has been revised to $2.93 billion to reflect updated quantities and execution planning tied to increased engineering progress, use of union labor through a PLA for construction of Thacker Pass, development of an all-inclusive housing facility for construction workers, updated equipment pricing and a larger project contingency.

·      Mechanical completion of Thacker Pass Phase 1 is targeted for 2027 following a three-year construction period, with full capacity production targeted for 2028. Major construction is expected to commence in the second half of 2024 following the anticipated closing of the DOE Loan and issuance of FNTP.

Jonathan Evans, President and CEO of LAC, commented for the purposes of their announcement¹:

"The United States has an incredible opportunity to lead the next chapter of global electrification in a way that both strengthens our battery supply chains and ensures that the economic benefits are directed toward American workers, companies and communities.  The ATVM Loan Conditional Commitment announced today by the DOE is a significant milestone for Thacker Pass, which will help meet the growing domestic need for lithium chemicals and strengthen our nation's security.

 "We are pleased to have completed the rigorous DOE due diligence process. The Loan plus GM's strategic investment will provide the vast majority of the capital necessary to fund Phase 1. We deeply appreciate the U.S. government's support as we advance the responsible development of Thacker Pass, and we are excited to continue collaborating with all of our stakeholders to bring shared success for America."

Adam Davidson, Chief Executive Officer of Trident commented:

"Thacker Pass is a high priority asset with considerable strategic value for the United States, and the commitment of a $2.26 billion loan from the U.S. Department of Energy underscores the level of support to bring this asset to production.  The DoE loan is expected to coincide with the release of the second tranche of funding from General Motors of $330 million, such that the capex for Phase 1 production is largely secured.

"We anticipate first production from Thacker Pass within three years and the associated royalty payments thereafter.  As previously disclosed, we expect Thacker Pass royalty receipts to have a dramatic impact on our revenue, with $10.5 million generated per year at Phase 1 production and a $25,000 lithium price, increasing to $21 million per year at Phase 2."     

References

1:             Source: Lithium Americas Corp news release, 14 March 2024

                ( https://lithiumamericas.com/news/news-details/2024/Lithium-Americas-Receives-Conditional-Commitment-for-2.26-Billion-ATVM-Loan-from-the-U.S.-DOE-for-Construction-of-Thacker-Pass/default.aspx  )

2:             Source: Lithium Americas Corp news release, 14 March 2024

                ( https://lithiumamericas.com/news/news-details/2024/Lithium-Americas-Provides-a-Thacker-Pass-Construction-Plan-Update/default.aspx )

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Contact details:

Trident Royalties Plc Adam Davidson / Richard Hughes	www.tridentroyalties.com [phone] / [phone]
Grant Thornton (Nominated Adviser) Colin Aaronson / Samantha Harrison / Enzo Aliaj	www.grantthornton.co.uk [phone]
Liberum Capital Limited (Joint Broker) Scott Mathieson / Cara Murphy	www.liberum.com [phone]
Stifel Nicolaus Europe Limited (Joint Broker) Callum Stewart / Ashton Clanfield	www.stifelinstitutional.com [phone]
Tamesis Partners LLP (Joint Broker) Richard Greenfield	www.tamesispartners.com [phone]
St Brides Partners Ltd (Financial PR & IR) Susie Geliher	www.stbridespartners.co.uk [phone]

About Trident

Trident is a growth-focused diversified mining royalty and streaming company, providing investors with exposure to a mix of base battery, precious, and bulk metals.

Key highlights of Trident's strategy include:

·	Building upon a royalty and streaming portfolio which broadly mirrors the commodity exposure of the global mining sector (excluding fossil fuels) with a bias towards production or near-production assets, differentiating Trident from the majority of peers which are exclusively, or heavily weighted, to precious metals;
·	Acquiring royalties and streams in resource-friendly jurisdictions worldwide, while most competitors have portfolios focused on North and South America;
·	Targeting attractive small-to-mid size transactions which are often ignored in a sector dominated by large players;
·	Active deal-sourcing which, in addition to writing new royalties and streams, will focus on the acquisition of assets held by natural sellers such as: closed-end funds, prospect generators, junior and mid-tier miners holding royalties as non-core assets, and counterparties seeking to monetise packages of royalties and streams which are otherwise undervalued by the market;
·	Maintaining a low-overhead model which is capable of supporting a larger scale business without a commensurate increase in operating costs; and
·	Leveraging the experience of management, the board of directors, and Trident's adviser team, all of whom have deep industry connections and strong transactional experience across multiple commodities and jurisdictions.

The acquisition and aggregation of individual royalties and streams is expected to deliver strong returns for shareholders as assets are acquired on terms reflective of single asset risk compared with the lower risk profile of a diversified, larger scale portfolio. Further value is expected to be delivered by the introduction of conservative levels of leverage through debt. Once scale has been achieved, strong cash generation is expected to support an attractive dividend policy, providing investors with a desirable mix of inflation protection, growth and income.

Forward-looking Statements

This news release contains forward‐looking information. The statements are based on reasonable assumptions and expectations of management and Trident provides no assurance that actual events will meet management's expectations. In certain cases, forward‐looking information may be identified by such terms as "anticipates", "believes", "could", "estimates", "expects", "may", "shall", "will", or "would". Although Trident believes the expectations expressed in such forward‐looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those projected. Mining exploration and development is an inherently risky business. In addition, factors that could cause actual events to differ materially from the forward-looking information stated herein include any factors which affect decisions to pursue mineral exploration on the relevant property and the ultimate exercise of option rights, which may include changes in market conditions, changes in metal prices, general economic and political conditions, environmental risks, and community and non-governmental actions. Such factors will also affect whether Trident will ultimately receive the benefits anticipated pursuant to relevant agreements. This list is not exhaustive of the factors that may affect any of the forward‐looking statements. These and other factors should be considered carefully and readers should not place undue reliance on forward-looking information.

Third Party Information

As a royalty and streaming company, Trident often has limited, if any, access to non-public scientific and technical information in respect of the properties underlying its portfolio of royalties and investments, or such information is subject to confidentiality provisions. As such, in preparing this announcement, the Company often largely relies upon information provided by or the public disclosures of the owners and operators of the properties underlying its portfolio of royalties, as available at the date of this announcement.

 

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