TIDMTRR
RNS Number : 2989R
Trident Resources Plc
29 June 2020
29 June 2020
Trident Resources Plc
US$5 million acquisition of a copper royalty over a significant
producing asset
Trident Resources Plc ("Trident" or the "Company", to be renamed
Trident Royalties Plc) (AIM: TRR), is pleased to announce that it
has entered into an agreement with Moxico Resources plc ("Moxico"),
to acquire a staged Gross Revenue Royalty ("GRR") over production
from the operating Mimbula copper mine and associated stockpiles
(the "Mimbula Mine") located in Zambia's prolific Copperbelt
Province. The GRR is being acquired in exchange for a cash
consideration of US$5.0 million (the "Transaction"). Trident is
entitled to royalty payments on production commencing from 1 July
2020 and extending in perpetuity.
HIGHLIGHTS
An attractive transaction structure, enhancing Trident's
portfolio
-- A highly accretive transaction on an immediately
cash-generative royalty over a long-life, low-cost producing asset
which is currently ramping-up production;
-- Structured as a GRR of 1.25%, decreasing to 0.3% upon
aggregate royalty payments of US$5.0 million being paid to Trident,
with a subsequent decrease to 0.2% once the royalty has been paid
on 575,000 tonnes of copper cathode or other finished copper
product sold; and
-- The GRR is subject to a Minimum Payment Schedule (as defined
below), which ensures that Trident will at minimum be repaid US$5
million within three years.
-- At current copper prices, Moxico's long-term production
profile is expected to exceed that required for the Minimum Payment
Schedule
A significant asset operated by an experienced counterparty
-- The asset is currently ramping-up production, having sold its
first London Metal Exchange registered Grade A copper with a 99.99%
purity in June 2020;
-- The Mimbula Mine has a large, well-defined JORC (2012)
compliant total Mineral Resource of 84 million tonnes of ore
grading 0.95% copper for a total of 798,000 tonnes of contained
copper at a 0.3% cut-off;
-- The GRR covers a large land package of 1,271 hectares, with
attractive exploration and growth potential; and
-- Moxico has a high-quality management team led by Alan Davies
(former Chief Executive of Rio Tinto's Minerals and Energy
division) with additional collective prior experience at Anglo
American, Anglo Gold Ashanti, and First Quantum.
A desirable commodity with sound growth fundamentals
-- Enhances Trident's royalty portfolio diversification by
adding exposure to a highly favourable commodity;
-- Copper is currently in a deficit position which is forecast
to widen in the near future; and
-- Zambia is a favourable mining jurisdiction as the 2(nd)
largest copper producer in Africa and 7(th) largest globally.
The Central African copperbelt is the world's largest and
highest-grade sediment-hosted copper district, with world class
mining operators in the region such as First Quantum, Glencore, Rio
Tinto, Barrick, Ivanhoe and China Non-Ferrous Metals. The Mimbula
Mine is an open pit operation located adjacent to the Konkola
Copper Mine complex. As an established mining district, Zambia
boasts excellent infrastructure, a skilled workforce, and suitable
legal framework for mining royalties.
Mimbula has JORC (2012) Measured and Indicated Resources of
69.8Mt grading 0.96% total copper ("TCu") for approximately 668,000
tonnes of contained copper and an Inferred Resources of 14.2 Mt
grading 0.92% TCu for approximately 130,000 as at August 2019. In
addition, the Company has a non-compliant Resource on the Zuka
licence of 7.3Mt grading 1.1% TCu for 80,400 tonnes of contained
copper. The Company has a strategic, life-of-mine tolling agreement
with Konkola Copper Mines ("KCM") in which the oxide ores are
currently being processed through the Nchanga Tailings Leach Plant
("TLP"), producing LME Grade A copper cathode.
Adam Davidson, Chief Executive Officer and Executive Director of
Trident commented:
"We are delighted to announce the acquisition of a cash
generative royalty over the Mimbula Mine, a long-life asset with
favourable production and cost profiles. The royalty will provide
our investors with exposure to an attractive commodity produced
from an asset located in a prolific region in the Zambian
Copperbelt, operated by an experienced management team.
"In addition, the royalty is structured attractively such that
Trident will rapidly recover its invested capital, while retaining
long-life exposure to the growth of the asset. We are very pleased
to have concluded transactions on two cash generative royalties
within a short time frame and I look forward to reporting further
on our progress as we continue to build a diversified portfolio of
mining royalties and streams."
The Transaction
The Gross Revenue Royalty is being acquired for a cash
consideration of US$5.0 million, payable immediately by Trident.
Moxico will utilise the proceeds of the Transaction to fund the
continued ramp-up of the Mimbula Mine, as well as for general
working capital purposes. Royalty payments to Trident will be made
on a quarterly basis.
The GRR rate will be 1.25%, decreasing to 0.3% upon US$5.0
million 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 Gross Revenue Royalty
amount, are due; specifically:
-- No required minimum payments on production in 2020 (GRR rate still applies);
-- 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.
If, in a given quarter during the Minimum Payment Schedule
period, Moxico makes GRR payments in excess of the quarterly
minimum amount, it may carry over the excess amount to any
subsequent quarter in which the GRR amount is less than the Minimum
Payment Schedule amount.
Mimbula Mine
The GRR is applicable to production from the Mimbula Mine,
comprising of 100% of production from licences 21816-HQ-LML
(Mimbula), 8440-HQ-SML (Zuka), and on 50% of the production from
licence 8514-HQ-SML (OB18). The licences collectively cover 1,271
ha.
Mimbula has a significant JORC (2012) Compliant Measured and
Indicated Resource of 69.8Mt grading 0.96% total copper ("TCu") for
668,000 tonnes of contained copper and an Inferred Resources of
14.2 Mt grading 0.92% TCu as at August 2019. In addition, the Zuka
licence has a non-compliant resource of 9.7Mt grading 1.14% TCu for
111,000 tonnes of contained copper. As the acquisition of 50% of
the OB18 stockpile was completed post- publication of the JORC
Resource, the below does not include OB18.
The Mimbula Mineral Resource Estimate as set out in the Mimbula
Project Phase 1 Feasibility Study Report (dated 31/01/2019) was
prepared by David H. Stock, Consulting Resource Geologist, in line
with the 2012 edition of The Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves ("JORC
(2012)"). Mr Stock is the Qualified Person responsible for the
Mineral Resource Estimate in compliance with the Canadian National
Instrument 43-101 (NI43-101) Standards of Disclosure for Mineral
Projects for a Definitive Feasibility Study.
Mimbula Resource Statement as of August 2019
Measured Indicated Inferred Total
Mt TCu% kt Mt TCu% kt Mt TCu% kt Mt TCu% kt
Cu Cu Cu Cu
--------- ----- ----- ----- ------ ----- ----- ------ ----- ----- ----
Mimbula 46.9 0.98 459.6 22.9 0.91 208.4 14.2 0.92 130.6 84 0.95 795
----- ----- ------ ----- ----- ------ ----- ----- ------ ----- ----- ----
Zuka 4.8 1.2 57.6 2.5 0.91 22.8 2.5 1.12 28.0 9.7 1.14 111
--------- ----- ----- ------ ----- ----- ------ ----- ----- ------ ----- ----- ----
Total 51.7 1.0 517.2 25.4 0.91 231.1 16.7 0.95 158.6 93.7 0.97 909
----- ----- ------ ----- ----- ------ ----- ----- ------ ----- ----- ----
Note: Cut-off at 0.3% Cu. Mimbula Resource is JORC (2012)
compliant, while Zuka Resource is non-compliant.
Mimbula Reserve Statement as of August 2019
Proven Probable Total
Mt TCu% Mt TCu% Mt TCu% kt Cu
--------- ----- ----- ----- ----- ----- -------
Mimbula 47.7 0.96 19.8 0.83 67.5 0.92 622.95
----- ----- ----- ----- ----- ----- -------
Note: Cut-off at 0.35% Cu.
The Resource is open on strike, indicating strong exploration
potential. In addition, <5% of the current Resource is
attributable to sulphide ore, indicating potential for extension at
depth. The Company has a strategic tolling agreement with KCM for
the life-of-mine in which oxides ores and stockpiles are being
processed through the TLP producing LME Grade A copper cathode.
Moxico has a highly experienced Board and management team led by
Alan Davies, who has assembled a strong team of proven mine
operators with significant experience in the Zambian
Copperbelt.
Competent Person's Statement
The technical information contained in this disclosure has been
read and approved by Mr Nick O'Reilly (MSc, DIC, MAusIMM, MIMMM,
FGS), who is a qualified geologist and acts as the Competent Person
under the AIM Rules - Note for Mining and Oil & Gas Companies.
Mr O'Reilly is a Principal consultant working for Mining Analyst
Consulting Ltd which has been retained by Trident to provide
technical support.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
** Ends **
Contact details:
Trident Resources Plc www.tridentroyalties.com
Adam Davidson +1 (757) 208-5171
Grant Thornton (Nominated Adviser) www.grantthornton.co.uk
Colin Aaronson / Richard Tonthat +44 020 7383 5100
/ Seamus Fricker
-------------------------
Tamesis Partners LLP (Financial www.tamesispartners.com
Adviser and Broker) +44 203 882 2868
Richard Greenfield
-------------------------
Yellow Jersey (Public Relations) www.yellowjerseypr.com
Charles Goodwin +44 203 004 9512
-------------------------
About Trident
Trident is a growth-focused diversified mining royalty and
streaming company, aiming to provide investors with exposure to a
mix of base and precious metals, bulk materials (excluding thermal
coal) and battery metals.
Key highlights of Trident's strategy include:
-- Constructing a royalty and streaming portfolio to broadly
mirror the commodity exposure of the global mining sector
(excluding thermal coal) 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.
Glossary of Technical Terms
"cut-off grade" A "cut-off grade" is a fundamental component in
the preparation of Mineral Resources or Mineral
Reserves. It is defined as the grade or value that
is used to differentiate between ore and waste for
a given set of conditions, parameters and time frame.
As such, the criteria and processes by which a cut-off
grade or value are determined will often be different
between mineral properties, for different situations
within a given mining operation, and at different
times.
"grade" The proportion of a mineral within a rock or other
material. For copper mineralisation this is usually
reported as % of copper per tonne of rock (g/t).
"Indicated Resource" An 'Indicated Mineral Resource' is that part of
a Mineral Resource for which quantity, grade (or
quality), densities, shape and physical characteristics
are estimated with sufficient confidence to allow
the application of Modifying Factors in sufficient
detail to support mine planning and evaluation of
the economic viability of the deposit.
Geological evidence is derived from adequately detailed
and reliable exploration, sampling and testing gathered
through appropriate techniques from locations such
as outcrops, trenches, pits, workings and drill
holes, and is sufficient to assume geological and
grade (or quality) continuity between points of
observation where data and samples are gathered.
An Indicated Mineral Resource has a lower level
of confidence than that applying to a Measured Mineral
Resource and may only be converted to a Probable
Ore Reserve.
"Inferred Resource" An 'Inferred Mineral Resource' is that part of a
Mineral Resource for which quantity and grade (or
quality) are estimated on the basis of limited geological
evidence and sampling. Geological evidence is sufficient
to imply but not verify geological and grade (or
quality) continuity. It is based on exploration,
sampling and testing information gathered through
appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes.
An Inferred Mineral Resource has a lower level of
confidence than that applying to an Indicated Mineral
Resource and must not be converted to an Ore Reserve.
It is reasonably expected that the majority of Inferred
Mineral Resources could be upgraded to Indicated
Mineral Resources with continued exploration.
"JORC" The Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves ('the
JORC Code') is a professional code of practice that
sets minimum standards for Public Reporting of minerals
Exploration Results, Mineral Resources and Ore Reserves.
The JORC Code provides a mandatory system for the
classification of minerals Exploration Results,
Mineral Resources and Ore Reserves according to
the levels of confidence in geological knowledge
and technical and economic considerations in Public
Reports.
"Measured Resource" A 'Measured Mineral Resource' is that part of a
Mineral Resource for which quantity, grade (or quality),
densities, shape, and physical characteristics are
estimated with confidence sufficient to allow the
application of Modifying Factors to support detailed
mine planning and final evaluation of the economic
viability of the deposit.
Geological evidence is derived from detailed and
reliable exploration, sampling and testing gathered
through appropriate techniques from locations such
as outcrops, trenches, pits, workings and drill
holes, and is sufficient to confirm geological and
grade (or quality) continuity between points of
observation where data and samples are gathered.
A Measured Mineral Resource has a higher level of
confidence than that applying to either an Indicated
Mineral Resource or an Inferred Mineral Resource.
It may be converted to a Proved Ore Reserve or under
certain circumstances to a Probable Ore Reserve.
"Mineral Reserve" A "Mineral Reserve" is the economically mineable
part of a Measured and/or Indicated Mineral Resource.
It includes diluting materials and allowances for
losses, which may occur when the material is mined
or extracted and is defined by studies at Pre-Feasibility
or Feasibility level as appropriate that include
application of Modifying Factors. Such studies demonstrate
that, at the time of reporting, extraction could
reasonably be justified.
The reference point at which Mineral Reserves are
defined, usually the point where the ore is delivered
to the processing plant, must be stated. It is important
that, in all situations where the reference point
is different, such as for a saleable product, a
clarifying statement is included to ensure that
the reader is fully informed as to what is being
reported.
"Mineral Resource" A "Mineral Resource" is a concentration or occurrence
of solid material of economic interest in or on
the Earth's crust in such form and quantity and
of such a grade or quality that it has reasonable
prospects for economic extraction. The location,
quantity, grade, geological characteristics and
continuity of a Mineral Resource are known, estimated
or interpreted from specific geological evidence
and knowledge.
"open pit mining" A method of extracting minerals from the earth by
excavating downwards from the surface such that
the ore is extracted in the open air (as opposed
to underground mining).
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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