TNR Gold Corp (TSX-V:TNR, OTC:TRRXF). announced that it is considering strategic options for the sale of a portion of its net smelter return (NSR) royalty involving the Mariana Lithium project.
The company holds a 2% NSR on the project.
International Lithium Corp (TSX-V:ILC). (ILC) in October 2021 had announced the completion of the sale to Ganfeng Lithium of ILC's remaining 8.58% stake in Litio Minera Argentina S.A., the owner of the Mariana Lithium project in Argentina.
The deal included confirmation that Ganfeng's subsidiary, Litio Minera Argentina Corp. (LMA), would assume all rights or obligations that ILC had in respect to the Mariana property.
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TNR said it “wishes to work constructively and co-operatively” with Litio Minera Argentina, as it relates to TNR's possible sale of a portion of the NSR royalty not subject to any buy-back rights of Litio Minera Argentina.
Litio Minera Argentina has the right to purchase from TNR 1% of the NSR royalty for aggregate payment of $1 million at any time within 240 days of "Commencement of Commercial Production" as defined in the underlying agreement.
"We have seen Ganfeng Lithium consolidate 100% of the Mariana Lithium Project and both TNR Gold and Ganfeng Lithium's subsidiary LMA have acknowledged LMA's responsibility to pay the 2% NSR royalty on the commencement of Commercial Production at the Mariana Lithium Project, and LMA has assumed the right to the repurchase of 50% of the NSR royalty (that is 1%),” said TNR CEO Kirill Klip in a statement.
“Ganfeng has successfully advanced Mariana Lithium to the construction stage. This is after a 55% increase in the measured and indicated resource estimate from the previously announced 2020 resource estimate at Mariana. We extend our congratulations to Ganfeng and salute the people of Argentina on the successful approval of the Environmental Impact Report by the Salta regional government in Argentina and approvals for the construction of a plant with a designed annualized capacity of 20,000 tonnes per annum of lithium chloride.”
Klip noted that the likely project expenditure to bring the Mariana project to full production is about US$600 million.
"We believe that our royalty holdings are undervalued, and their appropriate values are not reflected in the Company's share price. We have received significant industry interest in our assets and the Company is working on potential new strategic partnerships to provide benchmarks for the market valuations of our royalty holdings. Such strategic transactions may potentially allow us to substantially improve our working capital position,” he said.
"TNR does not have to contribute any capital for the development of the Mariana Project. The 2.0% NSR royalty on the entire Mariana Project with Ganfeng Lithium is an important part of TNR's portfolio, (TNR holds a 0.2% NSR on behalf of a shareholder). Lithium Minera Argentina retains the buyback right on 1.0% of the NSR royalty as described herein. The essence of our business model is to have industry leaders like Ganfeng Lithium as operators on the projects that will potentially generate royalty cashflows to contribute significant value for our shareholders."
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