Trident offloads several pre-production gold royalties

The AIM-traded firm said the sale was expected to generate cash proceeds of up to $15.55m, delivering a significant return on Trident's initial investment.

It said the transaction also balanced the gold exposure in its portfolio, and would strengthen its balance sheet for future acquisitions.

The pre-production gold royalties over Rebecca, Spring Hill, and three other projects acquired as a portfolio from Talga Resources were sold to Franco-Nevada in exchange for cash.

Trident noted that a non-material royalty was removed from the transaction by mutual agreement with Franco-Nevada, reducing the upfront consideration from the previously-announced $15.8m to $15.55m.

The company acquired the royalties for $6.25m, making for a gross return on invested capital of over 140% in around two years.

Franco-Nevada had paid $14.3m of the consideration already, with $1.25m to be paid upon first production from the Rebecca Gold Project.

In addition to the successful sale, Trident said it had restructured its existing $40m debt facility with Macquarie Bank, reducing service costs by up to $0.8m per year.

The loan term was extended by one year to December 2025, and scheduled quarterly payments had been deferred until June 2024.

Instead of a cash restructuring fee, the company agreed to extend the term of the warrants held by Macquarie by 12 months.

With estimated pro forma cash of about $35m, Trident said it was in a strong position to pursue new opportunities and capitalise on current weakness in traditional debt and equity markets, particularly in non-precious metals commodities.

“The disposal of these gold royalties has delivered an impressive gross return of 140% on invested capital in two years, creating significant value for shareholders,” said chief executive officer Adam Davidson.

“The receipt of the proceeds and restructuring of our debt, creates an even stronger platform for future growth and value creation.”

Davidson said the company was “encouraged” by the recent performance of its paying royalties, with record quarterly receipts of $3.5m delivered in the fourth quarter of 2022.

“With approximately $35m ready to be deployed on additional opportunities, Trident is in a strong position to expand its portfolio further with value accretive and strategically attractive opportunities in 2023.”

At 1518 GMT, shares in Trident Royalties were down 2.68% at 54.5p.

Reporting by Josh White for Sharecast.com.