Trident Royalties Share Discussion Threads

[zho] 21/2/2023 13:36

Lithium’s recent price collapse and the prospect that supply from new mines could accelerate the slump are stoking fierce debate in the electric-car battery industry. It’s an argument pitting ARK Investment Management Chief Executive Officer Cathie Wood against some of the sector’s most prominent voices.

[carcosa] 20/2/2023 06:33

Goldman Sachs forecast Lithium/Spodumene prices are:

Lithium carbonate
2023 US$53,300
2024 US$11,000
2025 US$11,000

Lithium hydroxide
2023 US$58,015
2024 US$12,500
2025 US$12,500

Spodumene 6%
2022 US$4,233
2023 US$4,330
2024 US$800
2025 US$800

Exceprt from hxxps://www.fool.com.au/2022/12/08/heres-the-lithium-price-forecast-through-to-2025/

[donald pond] 19/2/2023 09:34

Rumours that Tesla are mulling a bid for Sigma Lithium. That can only be a positive

[bo doodak] 18/2/2023 00:44

If only more AIM CEO's had the mentality to drive a 2008 Honda Accord

[someuwin] 17/2/2023 11:43

Today's RNS spells it out. At full production (and using today's spot lithium price of $59k) Thacker Pass will generate $50m per year to TRR.

$50m = £42m. This is pure profit to TRR, so on a PE of 10 would add value of £420m. As TRR's current valuation is only £170m this seems remarkable.

Clearly the market doesn't believe Lithium will remain at these prices. Who knows? But as this is only one of TRR's many royalty revenue streams thee upside is clearly very much to the upside.

[mwj1959] 16/2/2023 10:08

For now the lithium price is key for the company and that is also likely to be the case for the foreseeable future, particularly if Sonora (where the lithium hydroxide produces currently achieves a price premium) happens. That is unless the company does other non-lithium transformative deals. Given what was said during the presentation that seems unlikely. Consequently I think that they would be crazy to sell either royalty (between them forecast to generate c.$110m p.a. royalty at current prices, so c.50% of current mkt cap), unless of course they were either offered crazy prices for them or the company became a lot more cautious about the outlook for the lithium price.

[robertspc1] 16/2/2023 10:01

I wasn't suggesting LAC have a buy out right rather that they will make an offer to TRR which would be hard to turn down.

[dumbpunter] 16/2/2023 09:58

>>My understanding is that LAC have no right to buy the 'entire' royalty.

It's FUD.

[carcosa] 16/2/2023 09:54

TP planned production profile can be found here:

Slide 22

My understanding is that LAC have no right to buy the 'entire' royalty.

Usually it's a fools errand in predicting commodity prices but for business reasons there has to be some sort of expectation. Analysts, US and Australian industry (e.g. expect much lower lithium prices over the medium term.

I think the sale of the gold portfolio was well explained in the presentation although I had not recognised the importance of the line into Franco which may well end up taking TRR's Lithium Royalty at 2x NAV :-)

[dumbpunter] 16/2/2023 09:20

Spot price in a few years is far more important than the expected discount.

[donald pond] 16/2/2023 09:20

I was surprised that TRR sold the gold portfolio to Franco for $15m in December for a couple of reasons: it seems odd to be selling anything during a period of building the company up and when 2 months on we've not redeployed the funds but equally I'm surprised Franco would be interested in something so small and bitty. The fact that TRR must have a line into Franco is pretty significant too

[robertspc1] 16/2/2023 09:07

TP due to commence production in late 26. And I suspect LAC will buy out the royalty in full before then

[carcosa] 16/2/2023 08:55

Downside risk is perhaps when many retail investors get to understand the large Thacker Pass royalty income stream is nearly ten years away, get bored and sell?

Meanwhile keep an eye on this for 'Bacanora Minerals Ltd v Orr-Ewing (Estate)' - Can use something like to monitor it for free.

[donald pond] 16/2/2023 07:52

Good write up carcosa, many thanksI've got lots here but don't see much downside risk so may add more

[shanklin] 16/2/2023 07:16

Carcosa

Perhaps surprisingly, in light of your very reasonable “big boys comment”, TRR seemed confident of continuing to be able to find deals accretive to their NAV.

[kaos3] 16/2/2023 07:06

i asked the bond Q vs revolver... royalty asset is perfect match for bond financing - predictable cash flows ...

in any case they will opt for several banks revolvers - pointing out their mindset - wheeling and dealing - hence building NAV much faster - then just sitting

on the royalty bond spread

hence my Q

[carcosa] 16/2/2023 05:51

As Shanklin correctly says, there is a replay facility available at ( and the presentation material is available at ).

Of the 68 minute presentation the last 34 minutes were the Q&A session of which there were a number of good questions raised.

My take away is that:

Slide 11 is worth pointing out. TRR is trading below NAV whereas the top Royalty companies are trading 2x above NAV. This allows those companies to buy Royalties at for a high price (pushing out the likes of TRR) because the value to them would be 2x the NAV of the Royalty.

It also begs the question that if TRR end up holding royalties in both Sonora and Thacker then would we become a bid target in future years if we are still trading at or below NAV?

Thacker pass will remain cornerstone of the portfolio because its value may increase due to possible further declared resources and perhaps additional production rate. It's a world class resource, as is Sonara. However it is very possible the Royalty will be sold (years) in the future as improving the NAV is the name of the game. I suspect part of the decision making process will depend on what happens with Sonora. I don't think Trident want to be be dominated with one metal type in the portfolio.

If the likes of the big royalty companies are operating at 2x NAV then does that not call into question the ~$150m valuation we have for Thacker pass? In theory Trident should be able to sell that Royalty for $300m??

As a side note worth pointing out Thacker is priced as per Lithium Carbonate but Sonora is priced as Lithium Hydroxide; a lower price/ton but TRR have a larger royalty (%) over Sonora compared to Thacker.

wrt Trident being saddled with non-payment of the Sonora Royalty even if the Alberta court rules in favour (hoping a decision H1/2023), I got the impression Trident management would not be surprised if Ganfeng Lithium did not pay and took further legal action. Trident were of the opinion that the jurisdictions involved (Canada, Mexico and UK) are strong legal jurisdictions and, at this stage, TRR would enter into litigation. Was interesting to note Trident management mentioned UK/Mexico bilateral agreement several times.

The Mexican government shenanigans were discussed. View was that whatever happens the Royalty remains valid. Also, as far as Sonara is concerned its a bit of a storm in a teacup.

Someone asked about having a bond issue for further financing in preference to the revolving credit. Not feasible due to a bond issue would have to be minimum $300m.

The recent Orion share sales was discussed. Response was along the lines of seeing them as partners. Noting in the past they have sold and bought back. See them as responsible sellers and facilitating share sales where other buyers are wanting to buy in volume.

There were some other interesting questions regarding what other metals/minerals are on the agenda and a particularly interesting question regarding Nuclear (Uranium). Also the perennial question of dividends came up once again.

It is abundantly clear to me from the presentation that the bigger Royalty players can easily walk all over Trident should they wish to do so. When the big boys turn their attention to battery metals then Trident will be hard pressed to find quality royalty business going forward. Trident need to have something of a 'land grab' mentality imo.

I would like to see another couple of new deals being completed sooner than later.

[shanklin] 15/2/2023 23:28

Everybody is able to watch a replay of the presentation at any time.

[robertspc1] 15/2/2023 22:17

In short..a great long term buy

[kadvfn1] 15/2/2023 17:43

anyone kind enough to offer a summary to those who didn't manage to attend? Thanks in advance

[shanklin] 15/2/2023 15:25

Indeed, excellent, particularly the Q&A.

[888icb] 15/2/2023 13:59

Webinar about to Start at 2pm. Usually very informative.