Trident Royalties upbeat on latest Thacker Pass progress

Mining royalty company Trident Royalties announced significant progress in the development of the Thacker Pass Lithium Project by Lithium Americas Corporation (LAC) on Friday.

The AIM-traded firm holds a net 1.05% gross revenue royalty over Thacker Pass, following the expected exercise of a partial royalty buyback, which would see $13.2m returned to Trident.

It said LAC had secured a conditional commitment from the US Department of Energy for a $2.26bn loan under the Advanced Technology Vehicles Manufacturing (ATVM) loan programme.

The funding was earmarked to build processing facilities at Thacker Pass.

Trident said the project aimed to produce an initial 40,000 tonnes per year of battery-grade lithium carbonate in its first phase, contributing to the US government's initiative to establish a domestic supply chain for critical minerals, potentially supporting the lithium needs for up to 800,000 electric vehicles annually.

Construction progress at Thacker Pass had seen $194m spent in 2023, with site preparation for major earthworks completed.

General Motors had committed significant funding to the project, with $320m already released and a further $330m expected on the closing of the DOE loan.

Lithium Americas was currently advancing detailed engineering and procurement for construction of the first phase, with about 30% of the design completed to date.

Full notice to proceed was expected in the second half of this year.

The estimated total capital cost for phase one construction had been revised to $2.93bn , reflecting updated quantities, execution planning, and the use of union labour.

Mechanical completion of the phase was targeted for 2027, with full capacity production expected in 2028.

Major construction was slated to start in the second half of 2024 following the expected closing of the Department of Energy loan and the issue of full notice to proceed.

“Thacker Pass is a high priority asset with considerable strategic value for the United States, and the commitment of a $2.26bn loan from the US Department of Energy underscores the level of support to bring this asset to production,” said chief executive officer Adam Davidson.

“The DoE loan is expected to coincide with the release of the second tranche of funding from General Motors of $330m, such that the capex for phase one production is largely secured.”

Davidson said the company anticipated first production from Thacker Pass within three years, and associated royalty payments thereafter.

“As previously disclosed, we expect Thacker Pass royalty receipts to have a dramatic impact on our revenue, with $10.5m generated per year at phase one production and a $25,000 lithium price, increasing to $21m per year at phase two.”

At 1216 GMT, shares in Trident Royalties were up 1.66% at 35.58p.

Reporting by Josh White for Sharecast.com.