Trident Royalties PLC (LON:TRR) has acquired a 60% stake in an existing royalty stream from the Thacker Pass project, the largest lithium reserve in the US.
Orion Mine Finance sold the royalty for US$28mln, which Trident will meet through cash of US$26mln and US$2mln in shares. The closing of the deal was confirmed by Trident on Friday afternoon.
The cash element is being largely funded by a placing and subscription of Trident shares at 34p per share to raise £20.2mln with a retail offer through PrimaryBid.com to bring in up to a further £0.5mln.
Alan Davidson, Trident's chief executive, said the placing was oversubscribed and completed without a discount to the market price, underlining the strength of Trident's investment case.
Thacker Pass is operated by Lithium Americas and the miner has a partial buyback option over the royalty that Trident expects to be exercised and will mean it receives US$13.2mln.
The deposit currently contains reserves of 3.1Mt Lithium Carbonate Equivalent with an anticipated mine life of 46 years based on these reserves.
Total resources however are estimated at 8.3Mt and Trident said there is substantial scope to increase the reserves through further exploration, adding the royalty will be a cornerstone asset for Trident complementing an existing portfolio of copper, iron ore and gold royalties.
Trident noted that this is its second transaction with Orion following the pending acquisition of a portfolio of royalties over the Pukaqaqa Copper Project announced in December 2020.
Davidson added: "The Thacker Pass lithium royalty will be the twelfth, and by far the largest, royalty acquisition announced in Trident's first ten months since being admitted to trading on AIM.
"Thacker Pass, which will become a cornerstone asset for Trident, will bring the addition of lithium, a key battery metal, to our portfolio alongside existing exposure to iron ore, copper and gold.
"This will provide an important new dimension to Trident as we continue to build a portfolio of royalties to broadly mirror the commodity exposure of the global mining sector, with battery metals representing an increasingly significant component of the industry.
"Thacker Pass is a globally significant lithium asset and one of the largest known lithium deposits in North America. Its location in Nevada is of strategic importance, being close to both key mining infrastructure as well as potential customers.
"Thacker Pass has key permits in place to facilitate the commencement of construction anticipated for late 2021 / early 2022 and is being taken into production by an experienced project developer. On completion of the transaction, the royalty will be highly accretive for Trident, adding another quality asset with line-of-sight to long-term sustainable cash flows."