Trident Royalties PLC (AIM:TRR, OTCQX:TDTRF) noted that 2023 is looking more prospective in terms of potential new transactions, as the widespread postponement of capital raising by mining companies during 2022 has created a backlog of project funding.
Reporting results for the 12 months ended 31 December 2022, the company's chairman, Paul Smith, noted that the "combination of higher interest rates and continued depressed equity prices for mining companies are making royalties an increasingly attractive funding alternative".
While 2022 saw fewer transactions due to economic conditions and pressure on commodity prices, Trident completed the acquisition of a gold offtake portfolio, significantly increasing its cash generation.
In addition, the sale of its Lake Rebecca royalty to Franco-Nevada showcased Trident's ability to access world-class assets, lock in value and recycle capital for the benefit of shareholders. The transaction also allowed the company to renegotiate its debt facility, resulting in a significant reduction in the cost of debt.
Trident emphasised its commitment to cash returns to shareholders, with plans to pay a dividend based on a sustainable percentage of free cash flow as the company adds more cash-generating assets. The focus for 2023 includes further reducing the cost of capital, deploying capital for value and exploring opportunities in base and battery metals.
Adam Davidson, the company's CEO, highlighted significant revenue growth, portfolio diversification and the resilience of the royalty model. Trident's acquisition of gold offtakes and a royalty over the Sonora Lithium Project in Mexico, along with the sale of pre-production gold royalties, contributed to revenue growth and increased available capital.
The CEO also noted the company's commitment to evaluating and developing its approach to environmental, social and governance (ESG) factors.
Looking at the 2022 financials, Trident's net cash decreased during the period, primarily due to financing inflows, investments in acquiring assets, and operating activities. Excluding the net gold trading receivable, the company's net cash as of 31 December 2022 was US$16.58mln (2021: US$45.64mln) with the majority held in US dollars with HSBC Bank and Macquarie Bank.
The company reduced its operating loss to US$1.674mln for the year to 31 December 2022, down from a US$3.682mln loss in 2021, with its basic and diluted loss per share reduced to 1.28 cents, down from 2.15 cents in 2021.
The company also announced that with effect from the beginning of its Annual General Meeting on 29 June 2023, Smith has requested to step down as chairman of the board, given his other business interests. Al Gourley will assume the role as chair of the board. Smith is being retained as a special advisor to the company.