Trident Royalties PLC (LON:TRR) has entered into a binding agreement with Fe Limited (ASX:FEL) for the early payment of the second tranche of the consideration for the Koolyanobbing royalty acquisition, in exchange for a A$350,000 discount.
As announced on March 25 and June 3, 2020, the second tranche of the payment for Koolyanobbing required Trident to pay A$3mln on June 4, 2021.
Under the amended agreement, Trident will instead pay A$2.65mln by September 25, 2020, which will satisfy the obligation related to the second tranche fully.
Early repayment of the facility will allow Trident to crystalise an effective annualised 17.5% risk-free return on capital whilst removing the future payment obligation and releasing security currently registered over the Koolyanobbing royalty in favour of Fe Limited.
Trident's royalty portfolio will then be unencumbered, facilitating debt discussions for future royalty acquisitions.
"We are delighted to announce the mutually beneficial early payment of Tranche 2 of the Koolyanobbing royalty acquisition,” Adam Davidson, chief executive of Trident said in a statement.
“The early payment has largely been facilitated by the outperformance of the royalty economics to date, driven by the strong iron ore price and growing volumes from Koolyanobbing. It also provides improved clarity on Trident's cashflow profile and leaves the Company completely unencumbered with respect to future liabilities and security interests."