Trident Royalties Share Discussion Threads

[mwj1959] 30/8/2023 17:25

I would be amazed if management invested here just to be associated with one of the majors (if B2G can really be described as a major). They're investment banking types with significant leverage to delivering a rising share price. Doing deals that have few merits would be counter to that.

[dead duck resources] 30/8/2023 15:25

AyJay12, it would be more useful to see TRR's calculations than my own but I'll try.

The first point is that B2Gold have de-emphasised plans for Dandoko in the mid-term;

Fekola Regional: potential 80,000-100,000 oz/year from Regional sources
Initial saprolite production to commence from Bantako North permit in 23/24
Haulage of select higher-grade saprolite material from Anaconda Area to Fekola mill.
The base-case mine plan is for a combined Fekola Mine, Cardinal Zone, Anaconda Area. The Bakalobi and Dandoko permits are not included in base case production schedules.
There's a reasonable chance of it being used as a satellite deposit in the long-term but production levels would be relatively low (30,000-60,000oz?) and some years away.

Using a basic online NPV calculator and applying some best guesses;
Production 60,000oz a year (optimistic for a satellite deposit but was imagining how TRR may have priced it up) starting in year 4 with a 12 year mine life. A gold price based on B2Gs forecast scaling up with inflation, offsetting the haulage costs which come out of net smelter royalties making satellite deposits a little less attractive for a royalty company. At NPV10, it is around zero. At NPV15, arguably more suitable for Mali in the current climate, it comes to -$1m. And year 4 is probably too early.

At 30,000oz and NPV10 / NPV15, it's -$2.5m / -$3m. Applying a much higher gold price can get a positive figure but that doesn't really justify the price paid. All things considered I think TRR was drawn to the B2Gold name here and wanted to be associated with one of the majors regardless of the merits of the acquisition. In any case it's not a large amount to throw away but does raise a question mark over the deal-making.

[melody9999] 30/8/2023 13:40

Priced in already I would have thought. I wonder what the actual share price was when Liberum put out their 80p target?

[someuwin] 30/8/2023 13:07

Liberum downgrade TRR price target from 80p to 76p.

"...In our valuation, we had risk multiple of 0.2x for Sonora. We have lowered this to 0.1x. We have also adopted a more conservative view on ounces from the gold offtake portfolio, taking a 30koz haircut to our forecast profile, and included the recent Dandoko acquisition. Together, this results in a downgrade to our price target, to 76p."

[the deacon] 28/8/2023 10:31

Agreed. Every royalty company needs to replace ounces sold, and good quality exploration assets/targets do that. Back in 1986 Franco paid £1m for a royalty over a small heap leach mine - assuming it'd cover their G&A. Well, that turned out to be a great move, with the resulting exploration eventually proving up the Goldstrike asset as a 50moz monster, and a company maker for both Franco and Barrick.I'm not for one minute likening this asset to Goldstrike, but one shouldn't underestimate the potential resource expansion. Many of the better quality royalty companies are proving up more ounces than they're depleting year after year - and at no cost to them, as their counterparties continue to drill the assets.

[ay_jay12] 28/8/2023 08:42

Big names create big royalties, the royalty sector is filled with stories of small resources growing into big things. Better to back someone who has the capacity to grow the asset.

RNS says "exploration royalty", no mention of the word "mine" in the RNS title that I can see?

What IRR do you calculate on the deal to decide they've overpaid and what assumptions?

[dead duck resources] 26/8/2023 12:39

'good deal' 'I'm topping up'... but no reason given as to why it's good other than B2G being a big name.

B2G only issued 1% of their equity for Dandoko so it's small fry for them (they issued 17% for another deal this year). Resource estimate downgraded post-acquisition and not included in its mine plan, which likely led to the vendor looking to sell the royalty. Regional exploration as TRR indicates in the RNS title.

$3.75M paid upfront and $2.5M payable out of royalty proceeds, they've paid top whack.

[the deacon] 26/8/2023 10:27

I'm not fond of Mali either. But I'd rather hold the royalty vs operator. Ultimately it's Africa (and other less than favourable jurisdictions) where the big discoveries of the future will be made. It's having a well established counterparty that's important, and B2 are undoubtedly that.

[1knocker] 25/8/2023 12:21

My limit order triggered at 41.87, for a 25% top up to my TRR holding. Now I need to exercise patience, so probably best not to look at the share price too often. 'A watched pot' and all that.

I don't much like the sound of Mali, and TRR seems to get itself involved directly or indirectly in more litigation than I like, but in their deals they do seem to cover themselves pretty well against things not running to plan and/or timetable. That I DO like.

[melody9999] 21/8/2023 10:23

Did you see this tucked away in the RNS:

Given current weakness in the traditional capital markets, Trident continues to see elevated deal flow and looks forward to updating the market on further opportunities."

Cash of US$29M at 280723 and US$5.5M committed today. Could be more news in the not too distant.

[mwj1959] 21/8/2023 09:45

I agree the deal looks good, but also that the geopolitical backdrop is hardly encouraging. Probably why the deal was good!!

[ccpag] 21/8/2023 07:47

Very strong operator. Financially and operationally.

[kaos3] 21/8/2023 07:37

Shares sold. Now we can go up.

Good deal. Production soon.the only thing i do not like is geopolitics in Mali. French are loosing control and unfeiendly forces are filling the void.

[glimmergold] 21/8/2023 01:59

hxxps://www.investments.halifax.co.uk/research-centre/news-centre/article/?id=8669972&type=bsm

LAC never appealed.

[carcosa] 18/8/2023 07:52

Should Orion give Lithium Royalty the 40-per-cent stake in the Thacker Pass royalty the asset manager still owns, then strike an agreement that compensates Lithium Royalty for the remaining 45 per cent then that figure could support the valuation of the Royalty that TRR maintains over Thacker Pass.

[shanklin] 17/8/2023 12:12

Worth reading the original TRR Thacker Pass RNS from 19-Mar-21,

It does mention the dispute which resulted in this court case

[zho] 17/8/2023 12:03

kannerwas,

That's a v helpful post. Thank you.

[bhartez] 17/8/2023 12:02

My take on this would be that Orion likely had second thoughts about selling 85% of the royalty, wanting to keep more to itself, and rather than renegotiate with Lithium Royalty decided to sell a smaller percentage i.e. 60% to TRR keeping 40% for itself and breach its contract and take its chances in the courts which it has now lost. The court will decide on the damages to be awarded to Lithium Royalty from Orion.

[kannerwas] 17/8/2023 11:54

TRR paid $28m for 60%, so it's not hard to see why Orion went with that rather than $18.7m offered by Lithium Royalty for 85%.

As far as I can see TRR's right to its 60% is not in dispute. LR now wants Orion to transfer the remaining 40%, and to pay damages of $100m in lieu of the 45% that it can no longer transfer, having sold it to TRR.

Incidentally that suggests a top limit to the NPV of TRR's 60% of $133m, though LR would presumably claim well above what it expects to get.

[zho] 17/8/2023 11:33

The article says that:

"The company [i.e. LIRC] initiated the litigation process against Orion last year after it was revealed that the latter had sold 60% of the same royalty to a third party [i.e. TRR] subsequent to their agreement. Looking to enforce its contract and obtain an order for transfer of the royalty, Lithium Royalty applied to the Ontario court."

"Looking to enforce its contract and obtain an order for transfer of the royalty" (to TRR) reads positively but it still seems v worrying that Orion sold a chunk of their royalty to TRR having already agree to sell it to LIRC.

What am I mising?

[bhartez] 17/8/2023 11:01

This is an interesting development. Whilst it shouldn’t have any bearing on TRR’s royalty over Thacker Pass sold to it by Orion, the court in Ontario has upheld Lithium Royalty’s claim that they binding agreement to 85% of the original Orion royalty over Thacker Pass so they were not entitled to sell 60% of the royalty to TRR. The claim is for damages for breach of contract against Orion and specific performance obligations over the remaining 40% royalty held by Orion not TRR nor its 60% of the existing royalty.



I think it would be useful for the Board to clarify this has no impact on TRR.

[kaos3] 16/8/2023 10:41

I used the selling to add up. Double now.

[catabrit] 08/8/2023 19:55

Now that Thacker Pass is a go, the odds of this getting taken out at significant premium increase with every tick down in the share price

[1knocker] 08/8/2023 10:14

dp, the whole market has been skewed by a decade and a half when lenders paid borrowers to borrow. Even now, many inflation adjusted rates are still negative. There is a lot of readjustment to be done, and we shall not know how far that will go until normalized interest rates start to break things and we see whether the Fed (which makes the monetary weather) sticks to its guns or reverses.

In the short term, Chinese construction is critical to commodity prices. In the medium to long term, the energy revolution will be critical. There are signs that the phase of magic wand target setting for electrification and the replacement of fossil fuels is on the wane. We have yet to see (or at any rate to hear) that rhetoric change to a technological and engineering debate about how to manage the transition, including a recognition that the transition will be highly energy intensive:it takes a lot of energy to make a windmill or a solar panel, and many years before ether has produced more energy than went into its creation. And as for the grid which will be needed to utilise such energy ...

I think that phase it is coming though. The USA is going hell for leather to become the world supplier of gas, and a net exporter of oil too. Only when the key to the electrical revolution is recognised to be cheap fossil fuels, utilized in as clean a way as possible, will electrification and electrical mineral demand really take off. Copper will be in over-supply this year. It may well be several years before there is real pressure on supply.

The eternal verities don't change. the cost of energy is the key. When energy is cheap, economic activity and production soar. When it is expensive, they slow down. The oil price shock of the 1970s put the brakes on. So will high energy prices slow the massive project of renewable electrification, and depress commodity prices while pushing up production costs, squeezing profits.

I think commodities are the right sector to be in (especially royalties, which have a good deal of insulation from that profit squeeze), but I also think that the post covid price (and especially profit) spike has led people to expect too much, too soon.

As always in the commodities sector, the real profits are made on investments judiciously made and stocks bought during the lean years. The Rio shares I bought in the low £20s years ago have been a mainstay of my portfolio ever since. Likewise Franco Nevada. And I was paid dividends for my patience.

So stock price weakness here does not keep me awake at night. When I have money to invest, I welcome it. Never forget though that nothing - not even a cooked lunch - happens without ENERGY. The price of that is the key to timing, and to the timeframe we can expect for the great electrification, and big demand for electrical and other minerals.

[laurence llewelyn binliner] 08/8/2023 09:44

#The Deacon / #DP, always interesting to hear other holders views, I am waiting to start building a position here, there are not many RS companies bucking the trend in 2023 so far, I am long ECOR but they have weakened and continue to do so even paying out 6% now at 110 pence..

Hard to justify buying a zero return when we are already getting a pasting from 8/10% inflation let alone a nil yield when cash deposits can buy 5% for 12/24 months..

More RS deals will be higher on operators agendas now debt interest is so high and commodity prices have softened, an interesting watch, I will sit on my hands here for now I think and wait further progress until the market takes notice..