Trident buys portfolio of Western Australia mining royalties
Mining royalty company Trident Royalties announced on Friday that its wholly-owned subsidiary TRR Services Australia has agreed to acquire a package of existing gold royalties from Talga Resources, covering four projects in the prospective Pilbara and Yilgarn regions of Western Australia.
The AIM-traded firm said the royalty package was being acquired for AUD 0.8m (£0.44m), comprising AUD 0.25m in cash and AUD 0.55m in new ordinary shares in Trident.
Completion of the transaction was conditional on approval by Australia's Foreign Investment Review Board by 31 March 2021, or a later date as the parties could agree.
It said the portfolio included a 1.5% net smelter royalty over tenements within the Talga Talga, Warrawoona and Mosquito Creek projects, and a 1% net smelter royalty over tenements at the Bullfinch project.
The package included assets operated by established exploration companies Novo Resources for the Talga Talga Project and Calidus Resources for the Warrawoona Project.
Trident said the Mosquito Creek and Bullfinch projects are operated by Nimble Resources and Torque Metals, respectively;
The royalties are over currently-active projects within the “geologically highly prospective” and “gold-endowed” Pilbara and Yilgarn cratons in Western Australia, the board explained.
They ranged from feasibility to resource development and exploration target stages, and included mining lease and exploration tenements prospective for greenstone-hosted orogenic gold, intrusive-related gold and placer and palaeoplacer-related gold deposits.
Trident’s board also said the acquisition would bring further portfolio diversification of quality assets, acquired through an attractive deal structure, with the Talga Talga Project including a mining lease owned and operated by Novo, which recently acquired Millennium Minerals' nearby gold mill and was pursuing “fast-track planned Pilbara conglomerate gold production”.
The Warrawoona Project, meanwhile, is owned and operated by Calidus, which is currently progressing the 1.25 million ounce "near-term, high-margin producer" pre-feasibility study-stage project, of which the royalty covered the exploration licence on the eastern strike extension of the Klondyke Resource, including a proportion of the JORC-compliant resources drilled in 2019.
Mosquito Creek and Bullfinch, meanwhile, are located in “geologically compelling” regions with “attractive” historic gold occurrences, and being proximal to existing processing plants and infrastructure.
The royalty package was primarily acquired for equity, preserving Trident's cash for cash-generative royalties, while still providing exposure to attractive exploration and development stage assets, the board said.
It added that the “disciplined and targeted” acquisition of early-stage royalty assets had been proven to generate significant equity value for stakeholders of royalty companies.
“We are delighted to announce the acquisition of the royalty package which provides precious metals exposure in the world's top mining jurisdiction,” said chief executive officer and executive director Adam Davidson.
“In particular, we are excited to follow the progress of Novo Resources and Calidus Resources as they advance their respective projects.
“The royalty package adds further depth and breadth to our growing portfolio and will provide our investors with exposure to a package of attractive underlying assets, located in a desirable jurisdiction being supported by gold prices at close to all-time highs.”
Davidson said the acquisition further contributed to Trident's strategy of constructing a portfolio of royalties and streams to “broadly mirror” the global mining sector, with the transaction structured so that it preserves Trident's cash for future acquisitions, facilitating the further build-out of mass in the portfolio.
In addition, he said Trident was ”pleased” to welcome Talga as a new shareholder on completion.
“More broadly, we are very pleased to announce our fourth transaction in less than three months of being listed on AIM.
“We're encouraged by the attractive opportunities available to Trident and anticipate additional transactions in 2020 as we continue our progress toward becoming the pre-eminent, growth-focused diversified mining royalty and streaming company.”
At 1051 BST, shares in Trident Royalties were up 6.67% at 32p.