Trident Royalties have secured the acquisition of a new royalty over the Sonora Lithium project located in Mexico owned by Bacanora Lithium. Trident says they now have ‘exceptional lithium exposure’ through their portfolio of royalties.
The royalty will provide Trident Royalties with a 1.5% gross royalty of the mine which is the advanced development stages and in stage 1 of production will be worth US$14.4 million per annum in royalty revenue to Trident, if Lithium remained at current spot prices of $55,000 per tonne.
Stage 2 is expected to provide Trident with US$28.9 million per annum in revenue.
Studies of the Sonora mine found an open pit Mineral Reserve of 4.5Mt LCE and interestingly, the Feasibility Study published by Bacanora in 2018 forecasts an initial mine life of 19 years but utilises only around 770kt of the LCE reserve, meaning there is scope for production well past 19 years.
The Sonora Lithium acquisition bolsters Trident’s exposure to Lithium and further justifies Trident as a Lithium share to watch in 2022.
Trident Royalties also owns a royalty over the Thacker Pass Lithium project in North America.
“Like Thacker Pass – over which Trident holds an existing Gross Revenue Royalty – Sonora is a globally significant lithium asset which is anticipated to be the next meaningful North American lithium mine, with early construction works already underway and first production anticipated for the second half of 2023. With the potential to have both the Sonora and Thacker Pass royalties in the Trident portfolio, shareholders in Trident would have exceptional lithium exposure covering Tier 1 assets, both targeting very near-term production, and therefore cash flows to Trident, in 2023 (assuming completion occurs) and 2024 respectively,” said Adam Davidson, Chief Executive Officer and Executive Director of Trident.
“I want to highlight that this transaction showcases Trident’s creative energy and ability to work collaboratively with counterparties. Working jointly with the Estate’s advisors, Trident has structured a transaction that secures the right to acquire a Tier 1 royalty while avoiding exposure to any associated litigation risk. By the time Trident’s full acquisition consideration is paid, construction at Sonora should be well advanced and cash flow imminent, with revenue visibility long into the future.”
Trident Royalties shares rose 2.5% to trade at 40.5p and near the stock’s all time highs.