Trident Royalties Share Discussion Threads

[ay_jay12] 16/11/2023 14:54

$28M sounds like a very large number for something that cost US$3m in equity I would think. As you say, a large risk discount should be applied.
I think 1.3% was the number assumed at the time of the purchase, makes sense based on Adams comment in the investor meet saying it was "on target".

[melody9999] 16/11/2023 09:52

KDNC RNS today
Sonora Lithium Investment Update -Request for treaty negotiations with Mexico

Cadence Minerals (AIM/Aquis: KDNC) advises that the Company and its subsidiary REM Mexico Limited ("REMML") have issued a Request for Consultations and Negotiations ("Request") to the Government of Mexico under the United Kingdom-Mexico Bilateral Investment Treaty ("BIT").

The Request concerns the purported revocation of the mining concessions for the Sonora Lithium Project (the "Project") by the Mexican General Directorate of Mines as announced by Cadence on 31 August 2023, and related acts and omissions by Mexico. The affected concessions include those granted to Mexilit S.A. de CV ("Mexilit") and Minera Megalit S.A. de CV ("Megalit"), these being joint venture companies in which Cadence holds a 30% stake through REMML.

In their Request, Cadence and REMML have identified various BIT obligations that have been breached by Mexico, including Mexico's obligation not to unlawfully expropriate the investments of UK investors such as Cadence and REMML and its obligation to treat such investments fairly and equitably.

In accordance with Article 10 of the BIT, Cadence and REMML have requested consultations and negotiations with Mexico with a view to resolving the dispute amicably. The BIT provides for disputes to be resolved by international arbitration if they cannot be resolved by consultation and negotiation.

Cadence and REMML have engaged leading international law firm Clifford Chance as counsel for the BIT process. The Clifford Chance team representing Cadence and REMML specialise in mining-related investment treaty arbitration cases.

Cadence CEO Kiran Morzaria commented: "The team at Clifford Chance have many years of experience in mining-related investment treaty arbitration, and have successfully resolved similar cases in the past. With their guidance, we are hopeful that a constructive solution can be reached through consultations and negotiations with Mexico under the BIT. "

[swanvesta] 15/11/2023 14:46

Ay_Jay12, I had Pukaqaqa down for NPV8 approaching $28m, based on the company's initial guidance. Of course that needed to be risked. But I would have liked an update, after all we got one after Silverlake idled Sugar Zone.

I've checked the quarterly gold offtakes revenue/margin. It varies between 0.91% and 1.71% so the average may be close to 1.33%:

1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23

Production oz 59,193 48,657 65,865 74,085 62,335 65,261 72,642
Revenue $m 1.578 1.033 1.308 2.229 1.880 1.150 1.400
Revenue/oz $ 26.658 21.233 19.861 30.086 30.160 17.622 19.273
Gold price $ 1875 1860 1750 1755 1865 1940 1925
Implied margin 1.42% 1.14% 1.13% 1.71% 1.62% 0.91% 1.00%

[zho] 15/11/2023 10:08

From post 582:

>>Given TRR's significant exposure to lithium, If Toyota do manage to get their batteries to market would this be positive, negative, or neither for the price of lithium?>>

The presentation addressed this potential concern:

"The potential for solid-state battere is positive, as they typically require 40-100% more lithium for higher-capacity cathodes and anodes."

[sev22] 15/11/2023 07:52

Yesterday's presentation.

[robertspc1] 14/11/2023 16:40

Basically management think the portfolio is in good shape, they are pleased with recent deals, looking to get an RCF facility to reduce cost of capital, think the shares are way undervalued and will look to buy when they can. In other words time to add while there are forced sellers around

[melody9999] 14/11/2023 16:38

I don't think Adam was any less clear re the gold offtakes than he was with anything else! Not necessarily a criticism - more that occasionally he seems to get carried away with his own enthusiasm!

I think it wou;ld help he let the FD get more involved - that might then come across as more balanced rather than a one man show....

I added a few more today too at these levels.

[ay_jay12] 14/11/2023 16:29

I thought the offtake answer was mostly straightforward. He went through the main delays to the ounces and said the return was on target, he may have said it was even a touch above target I think.

I knew Pukaqaqa was on the backburner. Dont recall if it was a TRR announcement or Nexa announcement I saw, it is public though. Given relatively immaterial I assume TRR doesnt have to re-state every announcement from an operator.

[swanvesta] 14/11/2023 16:07

Adam addressed the gold offtakes issue. A convoluted answer and it seemed to me he obfuscated a fair bit, but in summary the return is up to spec and it's just the ounces that are delayed. Will try to verify that.

BTW Did everyone here know that Nexa has dropped Pukaqaqa from their work programme? By which I mean has the company ever informed us?

[walter walcarpets] 14/11/2023 15:49

any chance of a precis robertspc1?

[robertspc1] 14/11/2023 15:39

Very informative and positive investor call. Added a few more

[the deacon] 10/11/2023 18:35

Orion are mine financiers, and to an extent - whether or not an asset makes it as a successful mine isn't too much of a concern to them, as they will sell the contracts on to the secondary market. They'll fund/part-fund bankable studies and construction capex, and part of the return might include a royalty and/or offtake contracts. They've sold many royalties and streams to the royalty sector, so yes - a lot comes down to the due diligence carried out by the buyer. I haven't seen many offtake contracts bought by the royalty and streamers. That could be explained by the fact they tend to get penalised by the market it they step out of their lane.

[swanvesta] 10/11/2023 18:02

DDR, they've also bought a lot off Orion, haven't they? What sort of due diligence does buying off/alongside their buddies imply?

There's interesting evidence of the above in Orion's Thacker Pass debacle. Not only does that say something about the way Orion operates, but also hints that TRR are quite a soft touch. After all they were willing to pay $28m for 60% of a royalty, when 85% had already been sold at $18.7m just a couple of months earlier. It was a risky bet that fortunately has so far paid off.

If I risk the gold offtakes to match the >50% underperformance to date I get NPV8 below $40m (vs $70m paid and Tamesis $108m.)

[the deacon] 10/11/2023 16:47

No. A dividend isn't likely until Thacker Pass is past ramp up and contributing consistently. I think they mentioned it previously as UK investors are generally keen, but realistically we're not there yet - and personally I'd rather funds go towards growth at this stage.

[likeawalrus] 10/11/2023 15:46

did trident ever announce a dividend policy by end of 2022 as stated in an rns? thx.

[dead duck resources] 10/11/2023 13:26

Potentially overpaying is one of the pitfalls of doing deals in the secondary market. Acquiring direct from mine owners would serve TRR better and not ones like New World where they are in my view really coming onboard at the prompting of Resource Capital.

As for NAV/revenue targets from Tamesis appearing overstated, it's worth remembering
they founded TRR and have done much of the marketing so not an objective source imho.

[the deacon] 10/11/2023 13:26

A question to ask Adam for sure. I wasn't particularly fond of the offtake acquisition, and remain that way. I understand that it provides them with some relatively stable cash flow, but I'd rather a royalty and streamer to stick to their knitting.

[swanvesta] 10/11/2023 13:22

I make the Greenstone contribution something like $1.5m pa, based on 58.5koz pa * $2000/oz * the published 1.33% expected margin. That apparently ends March 2027 ie lasts for 3 years. So I don't think Greenstone explains how Tamesis get to $20m for the next 3 or 4 years.

Note that the 400koz pa @ low AISC is great for Equinox but beside the point for Trident. The deal is for 58.5koz pa.

[swanvesta] 10/11/2023 12:57

The Deacon, yes the Mercedes mine recouped $3.7m (apparently at a profit) but revenue was still nowhere near published expectations. The deal RNS suggested $13.3m in 2022, they actually received $6.07m with the Mercedes money on top.

And the RNS also forecast an average $14.3m for 2023-26 and then $6.3m pa average for the next decade. We're nowhere near that so far this year - we may get half way there? And AIUI there are production caps on these royalties, so it's not as if there's potential for expansion in the future. So if the undershoot is due to delayed production, and that's not recovered (and accelerated) then it impairs NAV. Alternatively if the undershoot is because the return is below par then... damn.

Based on those company forecasts, which as I say we've massively undershot so far, I have a remaining NPV8 of $80m or so. Tamesis have $108m. I don't have the note but I'd love to know how they get there.

I note Tamesis has revenue bumping up to around the $20m level from next year and up to 2027. This will be nice to see, if it happens. Do you expect Greenstone to provide that extra $15m pa or so?

[the deacon] 10/11/2023 08:48

Re the offtake drop off, there was a one off payment from the Premier Offtake portfolio, which removed the Mercedes Mine from the offtake contract. This happened when Bear Creek bought the Mercedes Mine from Equinox last year

[the deacon] 10/11/2023 08:23

Lol, that should read 400k oz/yr. Too early on a Friday for me..

[the deacon] 10/11/2023 08:11

No, they sold some earlier stage gold royalties to Franco. Key for TRR's offtake portfolio is Equinox bringing Greenstone into production next year. Greenstone will be a significant asset, with production expected to ramp up to 400oz/yr, with AISC sub $900/oz

[melody9999] 09/11/2023 23:39

Swanvesta - do I recall TRR sold part of a gold offtakes portfolio to Franco Nevada? Not sure this is the same portfolio but could be the reason for lower revenues than originally forecast.

[the deacon] 09/11/2023 22:01

https://ceo.ca/@GlobeNewswire/lithium-americas-provides-thacker-pass-update-withShortish update from LAC

[kaos3] 09/11/2023 12:50

the more i read, appearing of a poster pointing to the circle deals, the brutal over paying Adam at the beginning without tangible results first, maybe overpaying or paying full price lately, troubles with being small /expensive bank loans/, low NAV valuation for further deals, unripe portfoglio etc ... the more i go hmmmmmm

and then i look at the share price - if share price agrees, confirms.....

will wait and observe