Trident Royalties PLC (AIM:TRR), the mining royalty and streaming company, has raised roughly £30.2mln (about US$40mln) from the issue of 84mln shares at 36p each.
The proceeds will partly fund the acquisition of a portfolio of cash generative gold offtake contracts. The acquisition was announced by Trident yesterday after trading had finished in London.
Trident is paying US$69.75mln – US$9.75mln in Trident shares, the rest in cash – to funds managed by Orion Resource to buy the portfolio. Following the deal, Orion will have a 9.96% stake in Trident.
Trident estimates that the acquired portfolio will generate average annual revenue of US$14.3mln per year between 2023-2026, with an expected average annual revenue of US$6.3mln from 2027-2035.
In 2022, revenue is expected to be about US$13.3mln as production is ramped up at the Blyvoor gold mine and expansions come into effect at the Los Filos gold mine.
It is Trident's largest deal to date and according to the company represents a step-change transaction as it shifts the weighting of the portfolio towards precious metals and cash generative assets, complementing Trident's existing base metals, battery metals and iron ore exposure.
The significantly enhanced cash flow profile is expected to support an appropriate dividend policy in due course, Trident said.
"For Trident and our shareholders, the impact of the acquisition of this portfolio of producing gold offtake streams cannot be overestimated. The offtakes cover seven producing gold mines operated by five counterparties in six countries, which immediately increases our number of producing royalties and streams by 350%. This acquisition, our largest to date by far, materially increases scale and diversification and importantly demonstrates further support for our business model from Orion, which will substantially increase its shareholding in Trident,” said Adam Davidson, the chief executive officer of Trident.
"The acquired portfolio of gold offtake streams gives direct exposure to high-quality producing gold assets, significantly increasing our precious metals exposure and complementing our existing portfolio of gold, lithium, copper and iron ore royalties. Crucially, the material and immediate income from the acquired assets gives us clear visibility on sustainable, well-diversified cash flows beyond 2035. With this, we can now look at the possibility of an appropriate dividend policy in due course which will provide regular returns on investment to our shareholders,” Davidson said.
As well as tapping the equity market, Trident has entered into a new US$40mln debt facility with Macquarie Bank and has retired its existing US$10mln debt facility with Tribeca. Trident said the switch will significantly reduce borrowing costs.
“The new US$40 million debt facility with Macquarie is, I believe, testament to the progress we have made, and reputation we have built, in a short period of time and will dramatically reduce our borrowing costs. With this and the proposed placing, we will be well capitalised to execute on further pipeline opportunities,” Davidson said.
Shares in Trident were up 1.3% at 38.5p in early deals.