LONDON, UK / ACCESSWIRE / June 5, 2023 / Trident Royalties Plc (AIM:TRR)(OTCQX:TDTRF), the diversified mining royalty company, today announces its full year results for the year ended 31 December 2022. The Annual Report and Accounts for the year ended 31 December 2022 and Notice of the 2023 Annual General Meeting will be made available to download from the Company's website at www.tridentroyalties.com later today.
These two documents, together with a Form of Proxy, will be mailed to those shareholders who have elected to receive paper copies on 7 June 2023.
The Company's AGM is to be held at 30 Finsbury Square, London, EC2A 1AG on 29 June 2023 at 11:00 a.m.
The Company further announces that with effect from the beginning of the Annual General Meeting on 29 June 2023 Paul Smith has requested to step down as Chairman of the Board, given his other business interests. He is being retained as a special advisor to the Company. Al Gourley will assume the role as Chair of the Board. The Board expresses its thanks to Paul for his significant contribution as Chairman and is pleased that the Company will continue to benefit from his considerable industry experience.
Trident shares saw an increase of 37% during 2022. This increase compared to declines of 32% and 44% for the AIM and the All-Share Mining Index respectively. The outperformance reflected 3 factors; the inherent resilience of the royalty model, the evolution of Trident's portfolio; and further improvements in analyst coverage and our shareholder register.
2022 was light in terms of transactions, which partly reflected the economic backdrop and pressure on commodity prices. Many operators chose to postpone capital raising, in anticipation of improved conditions. We commenced the year with the completion of the gold offtake portfolio acquisition. This transaction materially increased the cash generation from within our portfolio, which in turn enables us to internally fund a larger proportion of future growth.
The sale of our Lake Rebecca royalty to Franco Nevada highlighted several key themes which underpin the reasons for owning Trident Royalties' shares. Firstly, Trident's ability to access world class assets. Secondly, our willingness to lock-in value and recycle capital when we feel this to be in shareholders' best interests. The transaction was at a value which was not reflected in our share price prior to sale. Thirdly, the cash proceeds from the disposal allowed us to renegotiate our debt facility and deliver a significant reduction in our cost of debt.
2022, also saw major improvements in the quality of our register and trading liquidity, which was principally due to management's active engagement with investors.
The Board recognises the importance of cash returns to shareholders. We ourselves are significant shareholders. Many of our major assets are not yet in production and our priority remains to invest in new royalties whilst further reducing our cost of capital. As we add more cash generating assets and our existing portfolio matures, we expect to pay a dividend based on a sustainable percentage of free cash flow.
Trident seeks to invest in royalties or streams where the asset owner runs safe, efficient, cost-effective mines and projects and demonstrates a commitment to the responsible management of their ESG impacts.
Looking forward, our priorities for 2023 are to further reduce our cost of capital (as this directly improves our competitiveness) and deploy capital for value. We are well resourced based on our existing cash on hand and debt facility. We continue to see base and battery metals as most prospective in terms of demand for royalty finance.
2023 is looking more prospective in terms of potential new transactions. The widespread postponement of capital raising by mining companies during 2022 has created a backlog of project funding. The combination of higher interest rates and continued depressed equity prices for mining companies are making royalties an increasingly attractive funding alternative.
With our strong management team and balance sheet, we are well positioned to deploy capital and continue to create shareholder value.
Chief Executive Officer's Statement
2022 has seen Trident's business grow significantly in terms of both revenue, as well as portfolio scale and diversification. The investment strategy that we implemented at the inception of Trident is yielding results and providing a solid foundation for considerable growth over the medium and long term. Importantly, the royalty model has proven to be a resilient investment approach, as highlighted in performance through 2022, a year in which a confluence of inflationary pressures had a significant impact on mine operators' capital and operating costs. As shareholders will be aware, as royalty holders, Trident is largely insulated from these capex overruns and operating margin squeezes, with our portfolio benefitting from exposure to top line revenue.
This strategy delivered for us in 2022 and is expected to continue as we expand and diversify our portfolio, offering shareholders superior returns through commodity cycles. Royalty receipts and offtake revenue for the year increased nearly ninefold to US$13.6 million, reflecting the significant asset-level progress of several of our royalties, in addition to the expansion of our portfolio with new, cash generative and value accretive transactions.
The completion of the acquisition of a portfolio of gold offtakes presented a strong start to 2022. It was our largest transaction to date and increased the number of producing assets in our portfolio significantly. This was a defining moment for Trident, which resulted in an immediate and significant boost to our revenue for the year.
This transactional momentum continued in late-January, as Trident entered into an agreement to acquire, subject to certain conditions and at its election, an indirect 1.5% gross revenue royalty over the Sonora Lithium Project in Mexico. Like the Thacker Pass Lithium Project, over which Trident acquired a gross revenue royalty in 2021, Sonora is a globally significant lithium asset. In the year, Ganfeng announced an expanded planned production profile, with Stage 2 production increasing by 43% to 50,000 tonnes per annum of lithium hydroxide, while noting that early construction works are underway.
Trident's transactional creativity was further evidenced in December with the agreement to sell its pre-production, exploration stage gold royalties over Rebecca, Spring Hill and three other projects to Franco-Nevada in exchange for cash proceeds of up to US$15.55 million. This portfolio of royalties was acquired by Trident for approximately US$6.5 million, representing a return on invested capital of over 140% in approximately two years. Not only was this transaction a clear demonstration of the potential returns from acquiring royalties over quality assets, but it also provided Trident with a significant increase in available capital for future acquisitions at a time of current weakness in traditional debt and equity markets. This disciplined investment approach will continue to define Trident's strategy as it targets accretive opportunities.
The sale of the pre-production gold royalties also precipitated the restructuring of the Group's existing debt facility with Macquarie Bank Limited on more favourable terms, reducing the coupon by up to 2%, deferring principal repayments, and extending the term by one year. This restructuring illustrates the longer-term downward direction of the Group's cost of capital, with the cost of debt nearly halving from the previous year.
Since the period end, Lithium Americas, the operator of the Thacker Pass Lithium Project, announced its intention to jointly develop the project alongside General Motors, as part of a landmark investment and offtake partnership valued at US$650 million. This is the largest-ever investment by an automaker to produce battery raw materials and is clear evidence of the automotive industry's desire to mitigate concerns relating to critical minerals supply chains over the long-term.
Lithium Americas subsequently announced the positive confirmation of the Record of Decision appeals process which, with all final key Nevada state-level environmental permits received, has allowed the project to move forward in earnest; reporting in early March that construction has commenced ahead of targeted first production in H2 2026.
The recent acquisition of the La Preciosa royalty, provides exposure to an exciting asset, with expected near term cash flows, along with diversifying the portfolio further with the addition of silver.
The numerous asset-level and transactional developments that we have reported during the year have had a marked impact on our value proposition and revenue generation potential. In addition, the board has also assessed additional corporate activities through which to grow the Group. One such undertaking was the decision to cross-trade Trident's shares on the OTCQX post period end. We believe this listing will provide enhanced investor benefits, including easier trading access for investors located in the US, and greater liquidity due to a broader geographic pool of potential investors.
In 2022, we have also been working to evaluate and develop our approach to ESG in order to lay strong foundations for future reporting, increase transparency and performance.
I would like to take this opportunity to thank our shareholders and reiterate my genuine enthusiasm and confidence in both our portfolio and wider investment strategy. 2022 proved to be highly significant for Trident, and I believe this will continue to build throughout 2023 and over the coming years.
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SOURCE: Trident Royalties PLC
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