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A diversified royalty
company mirroring the
commodity exposure of
the global mining sector
Trident Royalties plc
Annual Report & Accounts 2020
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Our aim is to become
a leading international
royalty and streaming
company investing in
high-quality projects
focused on base,
precious and battery
metals and bulk
materials (excluding
thermal coal)
For more information please visit
https://www.tridentroyalties.com
Financial Statements
46 Independent Auditor’s report
50 Consolidated statement of
comprehensive income
51 Consolidated statement of
financial position
52 Consolidated statement of
changes in equity
53 Consolidated statement of cash flows
54 Company statement of financial position
55 Company statement of changes in equity
56 Company statement of cash flows
57 Notes to the financial statements
Overview
01 Our performance
02 Our portfolio
04 Our strategy and Business model
Strategic Report
08 Chairman’s statement
10 Chief Executive Officer’s statement
12 Operational overview
20 Operational review
26 ESG report
27 Section 172 statement
28 Risk Management
30 Financial review
Corporate Governance
34 Board of Directors
35 Senior management
36 Directors’ report
38 Corporate governance statement
42 Remuneration report
43 Directors’ responsibility statement
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Overview
Our Performance
The Group maintains
a low overhead
model supporting
increased scale and
delivering results for
our shareholders
US$1.65m
Pre-tax profit
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Iron Ore
Koolyanobbing
59%
Lithium
Thacker Pass
12
Royalties acquired
4
Commodities
4
Jurisdictions
Trident portfolio by commodity
by acquisition price
Gold
Lake Rebecca
Spring Hill
Warrawoona
Talga Talga
Mosquito Creek
Bullfinch
10%
14%
17%
Copper
Mimbula
Pukaqaqa
Base Metals
Battery Metals
Precious Metals
Bulks and Industrial
Trident Royalties plc Annual Report & Financial Statements 2020
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Overview
Our Portfolio
A diversified
portfolio of
commodities
and
geographical
locations
2
Producing Royalties
4
Commodities
Base Metals
Battery Metals
Precious Metals
Bulks and Industrial
02
Trident Royalties plc Annual Report & Financial Statements 2020
Thacker Pass Lithium
USA
Overview
Thacker Pass is the largest
known lithium resource in
the USA and is owned by
Lithium Nevada Corp a US
corporation and wholly-
owned subsidiary of
Lithium Americas. Trident
recently acquired a 60%
interest in a royalty in
the mine.
Read more on p.25
Pukaqaqa Copper
Peru
Overview
Based in the Huancavelica
region in Peru, Pukaqaqa
Copper Project is a
pre-development stage
copper asset. Trident
acquired a portfolio of
three existing royalties
over the project.
Read more on p.23
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Mimbula Copper
Zambia
Overview
The Mimbula Mine
is based in Zambia and
is operated by Moxico
Resources Plc. Trident own
a 1.25% Gross Revenue
Royalty in the mine.
Read more on p.21
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Warrawoona Gold
Australia
Spring Hill Gold
Australia
Overview
Located in Australia’s North
Territory and operated by
private group PC Gold Pty,
Trident retain a variable
gold price royalty over the
production of the Spring
Hill Gold Project.
Read more on p.24
Overview
Based in Western Australia
the Warrawoona royalty
covers exploration licence
E45/3381, which forms
part of the broader
Warrawoona Gold Project,
owned and operated by
ASX-listed Calidus
Resources. Trident hold a
1.5% Net Smelter Royalty
over the Eastern part of
the mine.
Read more on p.24
Koolyanobbing Iron Ore
Australia
Lake Rebecca Gold
Australia
Overview
Trident own a 1.5% free on
board revenue royalty
covering part of the
producing Koolyanobbing
Iron Ore Operation in
Western Australia. The mine
is currently operated by
Mineral Resources Ltd.
Read more on p.20
Overview
Trident acquired an
existing 1.5% gold royalty
over tenement E28/1610,
which hosts the entirety of
the million ounce Lake
Rebecca Gold Project in
Western Australia and is
currently operated by
Apollo Consolidated Ltd.
Read more on p.22
Trident Royalties plc Annual Report & Financial Statements 2020
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Overview
Our Strategy and Business Model
Delivering
value for our
shareholders
Delivering value for our
shareholders – Trident has
rapidly established itself as
a diversified mining royalty
company, providing investors
with exposure to base,
precious, and battery metals,
as well as bulk materials
(excluding thermal coal).
Key components of Trident’s
strategy include:
Constructing a royalty
portfolio to broadly mirror
the commodity exposure
of the global mining sector
with a bias toward
producing assets.
Acquiring royalties in
resource-friendly
jurisdictions worldwide.
Targeting attractive small-
to-mid size transactions
which are often overlooked
in a royalty space that is
typically dominated by
large players.
Leveraging the experience
and networks of
management, Board and
advisers, all of whom have
deep industry connections
and strong transactional
experience.
Active deal-sourcing that
focuses on royalties held
by natural sellers such as:
closed-end funds, prospect
generators, junior and
mid-tier miners.
Maintaining a low-
overhead model which
can support the increasing
scale of the business
without a commensurate
increase in operating costs.
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What we do
Trident believes that the acquisition and aggregation of individual royalties and streams has
the potential to deliver strong returns for shareholders as assets are acquired on terms reflective
of single asset risk compared with the lower risk profile of a diversified, larger-scale portfolio,
including diversity as to geography (lowering geopolitical risks) and commodity exposure.
Once scale has been achieved, Trident expects strong cash generation to support an attractive
dividend policy, providing investors with a desirable mix of inflation protection (through exposure
to commodities), capital growth and income, with returns enhanced through conservative levels
of leverage.
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Create value
through the
aggregation of
assets
Attractive
dividend policy
once scale
achieved
INFLATION
PROTECTION
DIVIDEND
INCOME
CAPITAL
GROWTH
Boost returns
by introducing
conservative
leverage
Add scale
through
accretive scrip
transactions
Trident Royalties plc Annual Report & Financial Statements 2020
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Strategic Report
Page Title
Iron ore is one
of the most integral
commodities to the
global economy
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Strategic Report
Page Title
Strategic Report
08 Chairman’s statement
10 Chief Executive Officer’s statement
12 Operational overview
20 Operational review
26 ESG report
27 Section 172 statement
28 Risk management
30 Financial review
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Strategic Report
Chairman’s Statement
With a foundation
of high-quality
royalties that will
bear fruit for our
investors over the
short, medium and
long-term, Trident is
positioned for
growth
It gives me great pleasure to deliver my inaugural Chairman’s
Statement for Trident Royalties, in its new guise, following its
successful evolution from a cash shell to diversified mining royalty
company. Trident is a company which, over the past 12 months,
has formulated and executed its new business model and
strategy thus enabling investors to capitalise on the new
commodities “supercycle” being forecast by many analysts
and commentators.
Our business model has not simply evolved by being in the right
place at the right time; its strength lies in careful and considered
value-building through the acquisition of royalties and streams to
deliver exposure to commodity prices as a percentage of mining
turnover, with multiple upside opportunities.
Mining investors often quote the phrase that “everything is either
mined or grown”. Whilst simplistic, there is a certain wisdom to
this statement as it clearly demonstrates our continued reliance
on raw materials for every element of our modern lives.
However, the mining industry, and perhaps more importantly,
global demand dynamics, have changed fundamentally in the
past 20 years. This evolution is accelerating, driven by broader
recognition across the globe, by policy makers, governmental
bodies, and capital markets, that electrification is happening
on a scale that was not anticipated even 10 years ago.
Accordingly, it is fuelling a market for key commodities such
as lithium, graphite, and cobalt, and also renewing demand
for other technology metals including copper and nickel.
This changing dynamic has also had a profound impact on
commodities such as iron ore, the price of which soared in 2020,
as companies and governments internationally look to recalibrate
their infrastructure to support this new age of electrification.
Similarly, precious metals continue to deliver high returns for
investors; the gold price was certainly one of the winners in 2020
and despite a retrace in early 2021, we are comfortable in our
exposure to quality gold assets and may look to expand our
portfolio of gold royalties in the future.
Commodities across the spectrum have been impacted by
improved market sentiment, with the likes of Goldman Sachs
declaring its expectation for long term growth and strong
commodity prices. Encouraged by comments such as these,
investors have been flocking to FTSE mining giants, some of
which have presented new and attractive dividend policies in
recent weeks. However, previous supercycles have also taught
us that alongside increasing metal spot prices, operating costs
can also surge putting pressure on margins, essentially denying
investors the full advantage of positive commodity movements.
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With this in mind, a key benefit of the royalties and streaming
business model becomes apparent, as royalties provide an
alternative way to gain exposure to commodity prices - whilst
being largely insulated from the issues associated with direct
equity ownership. These issues, which are often aggravated during
commodity bull runs, include operating cost increases, capital cost
overruns, equity dilution and misguided M&A as businesses look
to expand near term production notwithstanding potential long
term value destruction.
Royalties and streams also provide additional tangible benefits
to retail and institutional investors alike, as they are considered
high yielding investments ranking senior in the capital structure
and often secured and traded at attractive valuation multiples.
Furthermore, the scale and commodity diversity which a royalty
and streaming model can offer, inherently enhances value, with
the opportunity to receive long term returns whilst retaining the
optionality and agility to flex in line with market trends and
demand fundamentals.
Portfolio diversification is a key pillar of our growth strategy as
we look to broadly mirror the commodity exposure of the global
mining sector, while competitors are predominately precious
metals focused. As well as providing a key differential compared
to our peers, this portfolio diversification also seeks to lower risk
and mitigate revenue volatility.
During the year under review, and in the first months of 2021,
we have made significant progress to this end and now have
royalties spanning copper, iron ore, gold and most recently,
lithium, a key battery metal. This adds an enormously valuable
and strategically important dimension to our business as we
ultimately look to establish a balanced, diversified portfolio
to represent the exposure of the global mining sector.
Our ability to build this portfolio, over a relatively short space
of time, is attributable to the active deal sourcing model that
we have developed: acquiring existing assets from natural sellers
as well as writing new royalties and streams. We have a global
mandate, targeting royalties in resource-friendly jurisdictions
worldwide, while competitors are heavily weighted to the
Americas, which has also resonated with investors and
generated interest in our business across the equity
capital market.
This was most recently demonstrated through the approximately
£20.67m fundraising, which was supported by new and existing
shareholders, in conjunction with the Thacker Pass Lithium Project
royalty acquisition. This fundraising, together with the equity
placing conducted in May 2020 in conjunction with our admission
on AIM, provided Trident with the ability to execute multiple value
accretive transactions which have laid the foundations for this
period of rapid growth for our business.
Indeed, the Thacker Pass transaction should be seen as a
significant step change for Trident and one which represents
a major milestone on the path to achieving critical mass, more than
doubling the capital deployed by Trident to date. Once this scale
and critical mass have been achieved, we expect strong cash
generation to support an attractive dividend policy, providing
investors with a desirable mix of inflation protection (through
exposure to commodities), capital growth and income. I believe
that we are well on our way to achieving this after delivering a
commendable performance in 2020 and into Q1 2021, despite
the significant headwinds of the COVID-19 pandemic.
The strength of our business model is now clear to see:
led by our CEO Adam Davidson, alongside his highly skilled and
professional team, with a foundation of high-quality royalties that
we believe will bear fruit for our investors over the short, medium,
and long-term, Trident is positioned for rapid growth with minimal
expansion to our cost base.
I would like to take this opportunity to thank our shareholders,
both long-standing and loyal backers and those new to the
register, along with my fellow Board members and our executive
team for their support and look forward to reporting on our
progress over the coming months as we embark on this next
truly exciting period in our development.
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James Kelly
Non-Executive Chairman
12 April 2021
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Strategic Report
Chief Executive Officer’s Statement
The business has
achieved a number
of important
milestones during
the last year
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Trident Royalties plc Annual Report & Financial Statements 2020
2020 was a landmark year which saw the genesis of Trident
Royalties as a new London listed mining royalty and streaming
company. As an experienced resources investor myself, I have
watched numerous TSX-listed royalty companies consistently
outperform mining equities over the past decade. The market
awareness for the compelling investment proposition offered by
royalty companies is therefore not a new phenomenon; however,
until recently, there has been a clear gap in the royalty universe.
This was the driving force behind our decision to establish
a mining royalty business which differentiates itself through:
1. a listing in London and a global investment mandate targeting
attractive assets in resource-friendly jurisdictions worldwide –
while most listed mining royalty and streaming companies
have a primary listing on the TSX, with heavy focus on assets
in the Americas;
2. a strategy to build a balanced, diversified portfolio reflecting
the global mining sector (excluding thermal coal) – while the
royalty and streaming industry is otherwise dominated by
peers which are predominately precious metals focused; and
3. a broad and flexible approach to transaction quantum,
initially targeting attractive small-to-mid sized transactions
thus capitalising on opportunities which may be overlooked
by larger royalty companies.
With this investment philosophy in place, we announced
our maiden royalty acquisition in March 2020 alongside
our intention to move our listing to AIM and change of name
to “Trident Royalties”.
Our decision to move to AIM, which is frequently cited as the world’s
most successful growth market, was preceded by a £16.0m fundraise
(before expenses) completed at the end of May 2020. At the time this
was the largest equity placing associated with a new listing in any
sector across the London markets following the beginning of the
COVID-19 pandemic, which had decimated global markets in late
February and early March. This was, I believe, a truly outstanding
achievement and served as a measure of the appetite that investors
had for our strategy and their confidence in our ability to execute.
Recent coverage has highlighted that AIM has weathered the market
volatility better than many other exchanges. The value of the AIM all-
share index grew by 22% in the year to 31 January 2021, whereas the
FTSE all-share index fell by 10%. Investors have clearly identified AIM
as an incubator for ambitious companies such as Trident, and the
Board recognises that AIM is a more suitable market and regulatory
environment for our business, particularly during this high growth
phase of our development.
Within a space of weeks from its admission to AIM, Trident secured
its second royalty agreement, a staged Gross Revenue Royalty over
production from the operating Mimbula copper mine and associated
stockpiles (the “Mimbula Mine”) located in Zambia’s prolific
Copperbelt Province. Through this royalty, Trident is entitled to royalty
payments on production from 1 July 2020 and extending in
perpetuity. The asset is currently ramping-up production, having sold
its first LME registered Grade A copper with a 99.99% purity in June
2020. The Mimbula Mine has a large, well-defined JORC (2012)
compliant total Mineral Resource of 84m tonnes of ore grading
0.95% copper for a total of 798,000 tonnes of contained copper
at a 0.3% cut-off and significant exploration upside potential.
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The Mimbula Mine royalty represented Trident’s second cash
generative royalty, building on the acquisition of a 1.5% free on board
revenue royalty over part of the Koolyanobbing Iron Ore Operation in
Western Australia, which completed in June 2020. The royalty covers
part of the Deception Pit at Koolyanobbing, which is owned and
operated by Mineral Resources Limited, and which contains a JORC
compliant Reserve of 9.3Mt @ 59.9% Fe and Resource (inclusive of
Reserves) of 19.5Mt @ 59.9% Fe.
Two of the Pukaqaqa royalties are to be acquired from a wholly-owned
subsidiary of Orion Resource Partners (“Orion”) while the third is via the
acquisition of the Peruvian holding company. Orion is the same firm
from which Trident acquired its largest royalty to date over the Thacker
Pass Lithium Project and which is now a significant shareholder in the
Company. The Thacker Pass transaction, which was agreed post
period end on 19 March 2021, alongside a £20.67m fundraise, was
Trident’s seventh and most substantial transaction.
As well as significant scale, being the largest lithium reserve and
resource in the United States with a conceptual mine life of 46 years,
it also brought commodity diversity to our portfolio as lithium is a key
battery mineral. This transaction comprised the acquisition of a 60%
interest in a gross revenue royalty (“GRR”) over Thacker Pass for
US$28.0m, which is subject to a partial buy-back which Trident expects
to be exercised by the operator during the first year of operation,
for proceeds to Trident of US$13.2m, resulting in a net cost to Trident
of US$14.8m. The key permits are now in place at Thacker Pass and
construction is targeted to commence in late 2021 or early 2022, with
Phase 1 production expected to start ramping up in 2024. Further
details of these acquisitions are set out in the operational review below.
This royalty acquisition added an important new dimension
to the Trident portfolio in terms of commodity, geography and scale,
but perhaps more critically, it has demonstrated that Trident is now
establishing critical mass. This critical mass is vital as it will deliver
improved access to capital, material revenue growth with fixed
overheads and will support accretive initiatives such as a progressive
dividend policy and access to lower-cost leverage. Thacker Pass can
therefore be viewed as a catalyst for a period of rapid growth and that
is exactly what the Trident Board is looking to achieve. We have a small
and motivated group of executives dedicated to executing Trident’s
growth strategy and have a healthy pipeline of potential additional
acquisitions currently under consideration. 2021 will be a highly active
phase for our company as we capitalise on the positive momentum
that we have generated, carefully deploy the capital that we have
raised, and direct it towards opportunities which will deliver the long-
term capital growth, dividend income and an inflation hedge for
our investors.
On behalf of the executive team, I would like to extend my thanks
to our shareholders, partners and the Board for their vision, support
and commitment as we look to a period of high impact news flow
and delivery.
Adam Davidson
Chief Executive Officer
12 April 2021
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Diversifying our burgeoning royalty portfolio was an early objective for
the Board, and in July 2020 Trident completed its first precious metals
royalty through an opportunistic acquisition of a royalty over the Spring
Hill Gold Project in Australia’s Northern Territory. This royalty provides
for a fixed payment of A$13.30 per ounce of gold produced from
Spring Hill. Trident structured the transaction to minimise full payment
of consideration until particular production milestones are achieved,
whilst retaining uncapped exposure to the growth of the asset.
Australia is a jurisdiction which remains appealing to Trident, with
Western Australia ranked as the top jurisdiction in the world for mining
investment, based on the Investment Attractiveness Index, in the 2019
Fraser Institute Annual Survey of Mining Companies.
Further Australian gold exposure was achieved with the acquisition
of a portfolio of four gold royalties over the Talga Project (operated
by Novo Resources), the Warrawoona Project (operated by Calidus
Resources), the Mosquito Creek Project (operated by Nimble
Resources) and the Bullfinch Project (operated by Torque Metals).
These projects, which are at various stages of development from
exploration to in-construction, are important elements of Trident’s
disciplined and targeted acquisition strategy of straddling both early-
stage royalty assets, which have been proven to generate significant
equity value for stakeholders of royalty companies, together with cash
generative royalties providing immediate revenue.
Building on Trident’s precious metals exposure in Australia, the
Company acquired a significant 1.5% Net Smelter Return (“NSR”)
over the Lake Rebecca Gold Project, a high-quality resource stage
asset which has demonstrated the potential for fast-track development
by a highly credible operator, Apollo Consolidated. The Lake Rebecca
royalty is expected to provide material and long-term revenue
commencing in 2023 with significant upside potential to both scale
and mine life. Trident believes that Lake Rebecca is on track to support
a circa 90-100koz/a operation and will become a key element of
Trident’s growth. Lake Rebecca demonstrates Trident’s ability to not just
source attractive deals, but also to pay the right price when compared
to some of the more expensive royalty deals concluded by our peers.
The last royalty acquired during the financial year (which was
completed on 9 April) truly diversified Trident’s geographic reach,
with the acquisition of a portfolio of three royalties over the Pukaqaqa
Copper Project in Peru, which is majority-owned and operated by
NYSE- and TSX-listed Nexa Resources. Pukaqaqa is a cornerstone
project within Nexa´s growth pipeline and comprises 34 concessions
covering 11,125.87 ha located in the Huancavelica region of Peru,
an established mining district. Pukaqaqa is an advanced stage project
with a Mineral Resource Estimate including a Measured and Indicated
Resource of 309m tonnes at 0.41% Cu (approximately 1.26m tonnes
of contained copper), with an additional Inferred Resource of 40.1m
tonnes at 0.34% Cu for 136,340 tonnes contained copper. The most
recent technical report contemplates an open-pit mining operation to
feed a 30,000 tonne-per-day processing plant to produce copper and
molybdenum concentrates over a 19-year mine life highlighting the
significant scale anticipated once in production.
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Strategic Report
Operational Overview
Lithium
Lithium is used in rechargeable
batteries, which consumes
more than three-quarters of
lithium production
59%
Percentage of lithium in
Trident portfolio
Lithium is a predominantly used in the manufacture
of lithium ion batteries and batteries for electric vehicles,
mobile phones, laptops and other electronic devices.
Current mainstream battery chemistries include lithium
as a consistent and key component.
Trident is exposed to lithium though its recent acquisition
of 60% of a royalty over the Thacker Pass operation in Nevada,
which is the largest known lithium resource in the United States.
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Strategic Report
Operational Overview
Copper
The major application
of copper is for electrical
wiring
17%
Percentage of copper in
Trident portfolio
Copper is an essential commodity for the global transition
to a low-carbon future as it plays a key role in electrification
and power generation - including renewable energy and
electric vehicles.
Trident is exposed to copper through its royalty over the
Pukaqaqa pre-development asset in Peru and the operating
Mimbula Mine in Zambia.
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Strategic Report
Operational Overview
Gold
Throughout history, gold has
been seen as a special and
valuable commodity and acts
as a store of wealth
14%
Percentage of gold in
Trident portfolio
Gold can act as a hedge against inflation and deflation alike,
and is vital in any diversified portfolio.
Trident is exposed to gold through its royalty over the 1Moz Lake
Rebecca asset and a collection of smaller assets in Australia.
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Strategic Report
Operational Overview
Iron ore
Iron ore is one of the
most integral commodities
to the global economy
10%
Percentage of iron ore in
Trident portfolio
Iron ore is the primary raw material used to make steel.
Steel is a strong, long-lasting and cost-efficient material,
and is the backbone of global infrastructure.
Trident is exposed to iron ore through its royalty over part
of the Koolyanobbing operation in Western Australia.
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Trident owns a 1.5% free on board revenue royalty covering part
of the producing Koolyanobbing Iron Ore Operation in Western
Australia. The royalty is over tenement ML77/1259 which covers
part of the Deception Pit at Koolyanobbing. Trident estimates up
to 75% of the Deception Pit may contain mineralisation over which
payment would be made under the Koolyanobbing royalty.
Koolyanobbing is operated by Mineral Resources which acquired
the asset from Cliffs Natural Resources in 2018. Since its acquisition,
Mineral Resources has materially increased production at
Koolyanobbing from 6Mtpa in 2018 to an annualised rate
of 11Mtpa as of Feb 2020. Additional capital expenditure is
anticipated to further increase production. Mineral Resources
has previously announced its intention to build a long-life iron
ore export business in the Yilgarn region utilising the company’s
industry innovative approach to mine development.
The royalty provides Trident with attractive exposure to a
significant and growing iron ore asset, operated by an innovative
and renowned operator with a strong balance sheet in a world-
class jurisdiction. As a royalty over an operating asset, the royalty
provides access to material cashflow which assists in bringing scale
and diversification to Trident’s growing royalty portfolio.
During the year Trident received US$1.67m in royalty income
which represents a 35% return on the cash invested to date.
Strategic Report
Operational Review
Production Assets
Iron ore
Koolyanobbing
Australia
Key facts
Location: Western Australia
Operator: Mineral Resources (ASX: MIN)
Commodity: Iron ore
Mine Type: Open pit
Stage: Production
Royalty: 1.5% free on board
Total Resource: 9.3Mt @ 59.9% Fe reserve and
19.5Mt @59.9% resource
9.3Mt @ 59.9% Fe
Reserve
1.5%
Royalty (Free on Board)
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Copper
Mimbula
Zambia
Key facts
Location: Zambia
Operator: Moxico Resources Plc (private)
Commodity: Copper
Mine Type: Open pit
Stage: Production
Royalty: Gross Revenue Royalty 1.25%
Total Resource: 93.7Mt @ 0.97% TCu
Trident owns a 1.25% GRR over all copper produced from the
Mimbula Mine in Zambia, which is operated by Moxico Resources
Plc. The GRR will decrease to 0.3% upon US$5.0m being paid on
the royalty, with a subsequent decrease to 0.2% once the royalty
has been paid on 575,000 tonnes of copper. In addition, the GRR
is subject to a Minimum Payment Schedule in which the higher
of the minimum amount, or the GRR amount, are due; specifically:
No required minimum payments on production
in 2020 (GRR rate still applies);
• Minimum payments of US$375,000 per quarter in 2021;
• Minimum payments of US$500,000 per quarter in 2022; and
• Minimum payments of US$750,000 in each of the first two
quarters of 2023.
At current copper prices, Moxico’s long-term production profile
is expected to exceed that required for the Minimum Payment
Schedule. The GRR is applicable to production from the Mimbula
Mine, comprising of 100% of production from licences 21816-HQ-
LML (Mimbula), 8440-HQ-SML (Zuka), and on 50% of the production
from licence 8514-HQ-SML (OB18). The licences collectively cover
1,271 ha. Mimbula is located adjacent to the Konkola Copper
mining complex and has excellent access to infrastructure.
Mimbula has JORC (2012) in-situ Measured and Indicated
Resources of 69.8Mt grading 0.96% total copper (“TCu”) for
approximately 668,000 tonnes of contained copper and an
Inferred Resources of 14.2Mt grading 0.92% TCu for approximately
130,000 as at August 2019. In addition, the Company has a non-
compliant Resource on the Zuka licence of 7.3Mt grading 1.1% TCu
for 80,400 tonnes of contained copper. A 0.3% cut-off has been
used to calculate all mineral resources. The Company has a
strategic, life-of-mine tolling agreement with Konkola Copper
Mines (“KCM”) in which the oxide ores are currently being
processed through the Nchanga Tailings Leach Plant (“TLP”),
producing LME Grade A copper cathode.
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Strategic Report
Operational Review
Pre-development Assets
Gold
Lake Rebecca
Australia
Key facts
Location: Western Australia
Operator: Apollo Consolidated (ASX: AOP)
Commodity: Gold
Mine Type: Open pit
Stage: Pre-development
Royalty: 1.5% NSR
Total Resource: 27.1 Mt @ 1.2g/t Au for 1.035Moz Au
1.035Moz
Au Resource
1.5%
Net smelter royalty
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Trident Royalties plc Annual Report & Financial Statements 2020
Trident acquired an existing 1.5% NSR gold royalty over the
production of the Lake Rebecca Gold Project located in
Western Australia.
Lake Rebecca has a JORC (2012) compliant published Resource
of over 1Moz at a cut-off grade of 0.5g/t across 3 deposits within
wholly contained pit shells, and is being actively progressed
towards development by Apollo Consolidated Limited (“Apollo”) –
a well-funded, ASX listed mining company. Lake Rebecca provides
Trident with an uncapped precious metal royalty, in an attractive
jurisdiction with material upside beyond the maiden resource
announced in early 2020.
The Royalty covers E28/1610 which hosts the entirety of the plus
million-ounce Maiden JORC (2012) Mineral Resource Estimate
(MRE) announced by Apollo on 10th February 2020. The Lake
Rebecca Gold Project comprises three distinct deposits: Rebecca,
Duchess and Duke. Rebecca is hosted on the north- eastern
periphery of the E28/1610 tenement with Duchess and Duke
nearer to the centre of the tenement area and located
approximately 4km from Rebecca. Apollo has identified the 4km
corridor between Rebecca & Duchess/Duke as highly prospective
and has been the target of recent step-out drill programmes.
Apollo has also commenced the process of converting this to a
mining lease. The royalty also covers the newly discovered Cleo
mineralised zone which is located 1.5km west of the Rebecca
deposit. This recently drilled zone has intercepted some significant
gold intercepts and remains open at depth.
The Lake Rebecca deposits are located on the eastern margin of
the Norseman-Wiluna Greenstone Belt at the southern end of the
Laverton Tectonic Zone. Broadly defined as structurally associated
orogenic gold deposits, the gold mineralisation is hosted by broad
zones of disseminated, pyrite and pyrrhotite, sulphides associated
with deformation and silicification in dominantly granite and gneiss
hosts rocks.
Trident considers there is good potential of Apollo achieving
material resource tonnage increases and resource classification
upgrades to the current Mineral Resource Estimate as well as
having the potential to outline new exploration upside, within the
wider tenement covered by the royalty zone.
Infill drilling since the completion of the February MRE has
intersected wide high-grade zones, most notably within the south
Jennifer structure of the Rebecca deposit, this structure together
with the accompanying Maddy and Laura structures have the
potential to add mineralisation to the optimised in-pit Mineral
Resources. The current block model shows these higher-grade
structures also contain significant mineralised material below the
current pit shell and Apollo reports that the Rebecca mineralised
corridor remains open over its more than 1.7km strike length.
Apollo is expected to publish an updated mineral resource
estimate in Q2 2021 which is expected to incorporate the
successful drilling programme described above.
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Copper
Pukaqaqa
Peru
Key facts
Location Peru
Operator Nexa Resources (TSX:NEXA)
Commodity Copper, Molybdenum
Mine Type Open pit
Stage Pre-development
Royalty (sliding scale NSR): Over 3 royalties
Total Resource: 349.1Mt @ 0.40% Cu
Trident acquired a portfolio of three existing royalties over the
Pukaqaqa Copper Project, a pre-development stage copper asset
located in the Huancavelica region in Peru. The Pukaqaqa Project
comprises 34 concessions covering 11,125.8ha and containing
NI 43-101 compliant Measured and Indicated Resources of 309m
tonnes at 0.41% Cu (approximately 1.26m tonnes of contained
copper), with an additional Inferred Resource of 40.1m tonnes
at 0.34% Cu for 136,340 tonnes contained copper.
The project is being advanced by NYSE- and TSX-listed
Nexa Resources, an established South America-focused mid-tier
producer with five operating base metals mines (plus an additional
mine under construction) and three operating smelters in Peru and
Brazil. The most recent technical report contemplates an open-pit
mining operation to feed a 30,000 tonne-per-day processing plant
to produce copper and molybdenum concentrates over an initial
19-year mine life. Nexa has allocated a total of US$16m towards
advancing the project over the last three years.
Trident believes there exists significant potential to expand and
upgrade the sizeable mineral resource inventory through drilling
along strike and down-dip, as well as with additional infill drilling.
Additionally, there are up to seven named exploration targets
situated within a 6km radius from the existing deposit, adding
potential mine life to the operation. There is also potential for the
skarn deposit to overlay large scale copper porphyry mineralisation.
Based on the current resource and at a processing rate of 30,000
tonnes-per-day, Trident believes that Pukaqaqa has the potential
to produce around 35,000 tonnes of copper per year, along with
potential molybdenum, gold, and silver credits.
Trident’s first all-share consideration deal helps grow the portfolio
while adding a renowned royalty investor, Orion Resource Partners,
to the shareholder register. The acquisition was completed after the
year-end and consequently been treated as a capital commitment
in these financial statements.
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Royalties
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Strategic Report
Operational Review
Pre-development
Gold
Spring Hill
Australia
Key facts
Location Australian Northern Territory
Operator PC Gold Pty (private)
Commodity Gold
Mine Type Open Pit
Stage Pre-development
Royalty Fixed rate A$13.30 per oz (where the
Total Resources 8.8Mt @ 1.26g/t Au for 355koz
gold price is > A$1,500/oz)
Gold Royalties
Western Australia
Key facts
Location Western Australia
Operator Various
Commodity Gold
Project Various
Stage Pre-development
Royalty (NSR) Various
Talga Talga
The royalty covers granted Mining Lease M45/618 which is owned
and operated by TSX listed Novo Resources Corporation. Located
in the Pilbara region of Western Australia, historical drilling has
identified shallow dipping, near-surface gold zones including 7m @
14.4g/t Au and 3m @ 24.8g/t Au.
24
Trident Royalties plc Annual Report & Financial Statements 2020
Spring Hill is located within the highly prospective Pine Creek
region in Australia’s Northern Territory, which has historically
produced over 3Moz of gold across multiple deposits and contains
more than 10Moz of undeveloped Resources. Gold contained at
Spring Hill is freely leachable via conventional processing methods
and contains a material proportion of gravity recoverable gold
which is susceptible to low capital cost gravity concentration and
leaching techniques.
Spring Hill has a JORC (2012) compliant open pit Inferred
Mineral Resource Estimate of 8.79Mt grading 1.26g/t Au for
355,000 ounces of contained gold at 0.5g/t Au cut-off, as at January
2017. In addition, Spring Hill has an Exploration Target of 119,000 –
734,000 ounces supported by mineralisation open at depth and
along strike. The project is strategically located within 30km of an
existing gold processing plant which successfully processed Spring
Hill material in 2017.
The Spring Hill Gold Royalty provides Trident with attractive
exposure to a strategically located and growing gold asset.
The asset is operated by an experienced team in a favourable
jurisdiction for mining and permitting activities continue to progress
successfully with the final recommendation report completed by
the Australian permitting authorities on 23 December 2020.
Warrawoona
The royalty covers exploration licence E45/3381, which forms part
of the broader Warrawoona Gold Project, owned and operated
by ASX-listed gold developer Calidus Resources. The royalty zone
covers the down dip extension of the 1Moz orebody at Klondyke
and is estimated to contain a portion of the Indicated and Inferred
Resource. Calidus recently applied to convert this portion of the
royalty area to a Mining Lease. Calidus published the results of a
study in September 2020 which contemplated an 90koz/annum
operation at Warrawoona at a pre-production capital cost of
A$120M and AISC of US$1,290/oz. Construction of the project
has been fully funded and begun in Q1 2021.
Mosquito Creek
The royalty covers exploration licence E46/1035 which was
acquired by Nimble Resources in November 2017. The royalty
zone sits to the north east of the Millennium Mill acquired by
Novo, is considered prospective for gold as evidenced by
historical workings, soil and rock geochemistry and previous
drilling. In February of 2021, Nimble entered into a JV agreement
with Calidus. The tenement sits 85km from Warrawoona and along
strike from mineralised trends identified on adjacent tenements.
Bullfinch
The royalty covers Mining Leases E77/2222, E77/2251, E77/2350
which is owned and operated by Torque Metals. Torque recently
delisted from the Sydney Stock Exchange and after undertaking
a capital raising which included funding to advance drilling at the
Bullfinch Project. Torque is currently intending to list on the
Australian Stock Exchange (ASX) and undertake a A$5.0m
fundraise. The royalty tenements are located in the prospective
Yilgarn goldfields, located within 70km of two existing processing
plants. Trident notes that some of the Torque Metals are subject to
a forfeiture application at the time of the acquisition. The acquisition
was completed after the year-end and consequently has been
treated as a capital commitment in these financial statements.
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Operational Review
Asset acquired after the reporting date
Lithium
Thacker Pass
Nevada USA
Key facts
Location Nevada USA
Operator Lithium Americas Corp (TSX:LAC)
Commodity Lithium
Mine type Open pit
Stage Pre-development
(fully funded and permitted)
Total Resource 385Mt @ 2,917 ppm for
6Mt lithium carbonate
Royalty Gross Revenue Royalty (1.75%
following buy-back – 60%
attributable to Trident)
46 year
Mine life
Fully funded and permitted
Primed for development
On 19 March 2021, Trident announced the acquisition of a 60%
interest in a GRR over the Thacker Pass Lithium Project from Alnitak
Holdings LLC a special purpose vehicle indirectly owned by Orion
Mine Finance (which retains ownership of the remaining 40%) for
US$28.0m. The project is the largest known lithium reserve and
resource in North America and is 100% owned and operated by
Lithium Americas Corp. The acquisition was completed on the
same day.
Thacker Pass currently contains CIM compliant Mineral Reserves
of 3.1Mt Lithium Carbonate Equivalent (“LCE”), the largest lithium
reserve in the United States, with a mine life of 46 years based on
Reserves. With the Total Resources amounting to circa 8.3Mt LCE
plus further as yet undrilled exploration targets, there is significant
additional resource upside to potentially provide further reserve
conversion to increase the mine life or support a production
expansion.
The key terms of the royalty are as follows:
• A gross revenue royalty on all mineral products generated at the
mine of 8% (4.8% attributable to Trident) until US$22.0m is paid,
after which the GRR drops to 4%.
• The GRR may be reduced to 1.75% (1.05% attributable
to Trident) at any time by the operator making a one-time
payment of US$22.0m (US$13.2m attributable to Trident).
• Trident notes that the PFS assumes the US$22.0m buyback
is completed within the first year of operation.
Prior to the acquisition of the royalty, Orion had engaged with other
parties in respect of a possible sale of the royalty. One unsuccessful
bidder has commenced legal proceedings in Ontario, Canada,
against Orion Resource Partners – further detail is given in note 25.
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Further details of the Group’s
royalties are provided on its website
at www.tridentroyalties.com.
Trident Royalties plc Annual Report & Financial Statements 2020
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Strategic Report
Environmental, Social and Governance Report (“ESG”)
Social Initiatives
Across 2020, we continually monitored the social governance
within the companies we invested in. Positive social and community
relationships are essential to profitable, sustainable and successful
mining activities.
We acknowledge that, whilst our activities have little direct contact
with communities, we can still positively influence the social practices
and policies of companies in which we conduct business with.
We therefore endeavour to ensure that the companies we work with
have appropriate procedures in place to facilitate this engagement.
More specifically, our investment decision process for potential asset
purchases involves due diligence relating to the full range of issues,
including the social and community aspects of the project. When
conducting due diligence into potential investments, we typically
assess the community initiatives put in place by the company and
the engagement that they have with indigenous peoples.
Governance Initiatives
We endeavour to only finance businesses that are respectful
of their staff, support gender equality, and build safe and inclusive
environments for them to work within. Therefore, when conducting
the due diligence into potential investments we typically assess the
following aspects as part of our governance:
• Safety records
• Workplace standards, protections and policies
Internal Governance
We strive to create a safe and healthy working environment
for the wellbeing of our staff, and to create a trusting and respectful
environment, where all members of staff are encouraged to feel
responsible for the reputation and performance of the Group.
Our Board contains personnel with a good history of running
businesses that have been compliant with all relevant laws and
regulations and there have been no instances of non-compliance
in respect of environment matters.
QCA Corporate Governance Code
We adhere to the QCA Corporate.
We strive to comply with the highest levels of ESG and use it as
a foundation for our investments. We seek to only invest in royalties
or streams where the asset owner runs safe, efficient, cost-effective
mines and projects; as well as compliance with environmental
protection policies, community development, transparency and
governance while minimising the potential for harmful impacts
from its operations to the lowest levels reasonably expected.
Also, as a minimum, we will insist on full compliance by investee
businesses with anti-bribery and corruption, and anti-slavery
legislation and regulation. We believe that our commitment
to these principles will make us an investment partner of choice.
Considering our approach to ESG and, in particular, our dedication
towards environmental standards, the directors within the firm have
decided not to seek any royalty or stream investments in thermal
(or energy) coal assets.
Environmental
The nature of our investments is such that we do not directly
operate any of our properties underlying its royalty portfolio and,
consequently, we cannot always influence how the projects are
operated. Nevertheless, a responsible approach to a project’s
environmental impact and its sustainability management is essential
to the success of the project over its life. Therefore, as part of our
investment decision process, we carefully consider the environmental
aspects of any potential asset purchase during the due diligence
phase. We typically engage with consultants who have the requisite
expertise to ensure that it can consider any risks in this regard.
When conducting the due diligence of a potential investment’s
environmental impact we typically analyse the following:
• Whether the operator is committed to the principles
of the International Council on Mining and Metals or
other relevant standards
• Water management and reduction plans within the firm
• Other environmental programmes and initiatives put in
place by the operator, including carbon reduction and
biodiversity protection
Environmental Highlights Across Our Investments
Our newly acquired Thacker Pass royalty highlights our continued
commitment towards investing in royalties and streams within
companies that consider their environmental impact. The Thacker
Pass lithium project which is 100% owned by Lithium Nevada Corp,
a US corporation and wholly owned subsidiary of Lithium Americas,
recently announced that it has joined a coalition made up of 30
founding companies to launch the Zero Emission Transportation
Association, an organisation dedicated to achieving 100% electric
vehicle sales in the United States by 2030.
Notably, another of our royalty investments Mimbula Copper
Project also reached a significant environmental milestone in April
2020, as it produced the first copper cathode from the processing
of surface material at the KCM Tailings Leach Plant. In March 2020
Mimbula Copper also had their Environmental & Social Impact
Assessment approved, maintaining Moxico’s commitment to
environmental protection.
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Strategic Report
Section 172 Statement
This section serves as our section 172(1) statement and should be read in conjunction with the Operational Review on pages 20-25
of this report and the Company’s Corporate Governance Statement on pages 38-41 of this report. Section 172 of the Companies Act 2006
requires Directors to act in a way that they consider, in good faith, would most likely promote the success of the Company for the benefit of
its members as a whole, taking into account the factors listed in section 172 in regard to:
(a) the likely consequences of any decision in the long term;
(b) the interests of the Company’s employees;
(c) the need to foster the Company’s business relationships with suppliers, customers and others;
(d) the impact of the Company’s operations on the community and the environment;
(e) the desirability of the Company maintaining a reputation for high standards of business conduct; and
(f) the need to act fairly between members of the Company.
The Board views engagement with our shareholders and wider stakeholder groups as essential work. We are aware that we need
to listen to each stakeholder group, so that we can understand specific interests, and foster effective and mutually beneficial relationships.
By understanding our stakeholders, we can build their needs into the decisions we take.
The Board considers and discusses information from across the organisation to help it understand the impact of the Company’s operations,
and the interests and views of our key stakeholders. It also reviews strategy, financial and operational performance, as well as information
covering areas such as key risks, and legal and regulatory compliance. This information is provided to the Board through reports sent in
advance of each Board meeting, and through in-person presentations. As a result of these activities, the Board has an overview of
engagement with stakeholders, and other relevant factors, which enables the Directors to comply with their legal duty under section 172 of
the Companies Act 2006. The following table acts as our section 172(1) statement by setting out the key stakeholder groups, their interests
and how Trident Royalties Plc has engaged with them over the reporting period.
Stakeholders
Aims and Objectives
How Trident Engages
Investors
Our shareholders play an important role in
supporting our Company. We recognise the
importance of the activities and outcomes of
stewardship and regularly engage with investors
on our financial performance, strategy and
business model.
• Annual and Interim reports
• Regular portfolio and trading updates
• RNS Announcements
• Investor relations section on website
• Webcasts
• AGM
• Social Media
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Employees
4 individuals are employed directly on a full
time basis within the Company and are vital
to the success of its activities.
• The team is small and highly integrated
with daily dialogue between the team and
the Chief Executive Officer.
• Direct engagement to the Board to ensure
the Company’s values and purpose are upheld
• Workforce remuneration policies focused on
long term engagement and retention.
Counterparties
and Operators
Trident aims to have direct communication with the
operators of the underlying assets in which it invests
either through a direct contractual arrangement – or
more ad-hoc methods.
• The team will conduct site visits where possible
• Direct communication with senior personnel from
the operator
• Ongoing monitoring of developments through
public announcements
Community
As a royalty and streaming company, Trident does not
operate any of the underlying assets within its portfolio.
While this limits the direct involvement the Company
has with the communities impacted by the operations
underlying the portfolio, the Board, led by the Chief
Executive Officer, engages with the mine operators
seeking to influence and encourage compliance with
relevant environmental, social and governance standards.
• Through dialogue with the operator to understand
updates on key community and environmental
milestones and incidents.
On behalf of the Board
James Kelly
Non-Executive Chairman
12 April 2021
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Strategic Report
Risk Management
The Board has overall responsibility for the management and maintenance of systems and processes to manage and mitigate risk and
ensure delivery of the Group’s strategic priorities. The Board does not consider that given the current size of the Group, that a separate Risk
Committee is required and that risk management is sufficiently governed by the Board, its sub-committees and the senior management
team. The management of risk is subject to regular review by the Board and changes will be implemented as necessary and as the Group
continues to grow.
The Chief Executive Officer and senior management are responsible for the day-to-day implementation of the risk management process
and provide regular feedback to the Board for consideration. The Group assesses each risk and the requirement for mitigation, taking into
account the appetite for the impact of the risks on the strategic objectives of the business.
A short statement on the impact of Covid-19 is given in the Directors Report.
Risks and uncertainties
The following section provides an overview of the principal risks and uncertainties that have the potential to impact the implementation
of the Group’s strategy and business model.
Risk and Description
Business Impact
Mitigation
Medium
Medium
The Board and executive team closely monitor the
market and pays attention to general macro trends.
Royalty Acquisitions
The growth and viability of the Group
is dependent on its ability to successfully
identify and acquire royalties. The availability
of potential royalties which meet the Group’s
investing policy will depend, inter alia, on the
state of the world economy, general business
conditions, commodity prices, mining sector
appetite, alternative sources of finance and
financial markets generally.
The Group targets all of the natural resources
sector (except for thermal coal) accordingly it
considers that it has a wide number of options
available for investment compared to a number
of its precious metal peers.
In addition, the Group has an extremely active
network of Directors, employees and consultants
that ensures that it generates numerous pipeline
opportunities which may lead to investments by
the Group.
The Group considers that its target investments are
often overlooked by other royalty company’s that
are either solely focused on precious metals or are
looking for larger investments.
Management considers that it is well placed to
attract small/medium-sized operators that are
looking for funding or early exits in the case of
secondary royalties.
Management is in regular contact with both
the producing assets and those in development.
The current operations are all on sound financial
footing with either consistent production or paths
to production.
The best way the Group can mitigate dependence
upon any one operator is to expand and diversify
its royalty portfolio to ensure a well-balanced
source of income by location and commodity.
The Group’s overheads remain low and ensures a
cash buffer of at least 12 months costs in the event
of operator default.
Medium
Competition
The Group will compete with a large number
of funds and other royalty or stream companies
for investments. Some of its competitors are
substantially larger and have considerably
greater financial resources than the Group.
Competitors may have a lower cost of capital
and many have access to funding sources that
allows them to make offers in excess of that
Trident is willing to pay.
Medium / High
Portfolio Diversification
The Group has completed royalties
investments during the year – with a further 7
committed at the reporting date. 2 of the
royalties are in production and paying –
however should there be a failure of
an operator, or any dispute relating to any
given royalty this may have a disproportionate
and material adverse effect on the financial
position and prospects of the Group at this
stage of development.
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Risk and description
Business Impact
Mitigation
Investment Decisions
Prior to making or proposing any royalty
acquisition or financing, the Group will
undertake legal, financial and commercial
due diligence on potential transactions to a
level considered reasonable and appropriate
by the Group. However, these efforts may not
reveal all material facts or circumstances which
could have a material adverse effect upon the
value of the royalty. Any due diligence process
involves subjective analysis and there can be
no assurance that due diligence will reveal all
material issues related to a potential royalty
transaction or asset owner.
Key Personnel
The Group is dependent upon the services
of a small number of key management
personnel who are highly skilled and
experienced. The Group’s ability to manage
its activities will depend in part on the efforts of
these individuals. The Group faces competition
for qualified personnel, and there can be no
assurance that the Group will be able to retain
such personnel.
Medium
Medium
The Trident Board has enacted strict investment
criteria that avoids overly competitive bidding,
or a transaction for transactions sake approach.
The Board constructively challenges the executive
team on the due diligence process.
In addition, the executive team consists of a highly
experienced and professional team that has
demonstrated a track record of successful
investments. The team has considerable technical,
financial and tax expertise to identify fatal flaws and
uses equally professional third party consultants
when appropriate.
Medium
The Board will continually review its incentive
schemes to ensure that its key personnel are
rewarded appropriately.
The Group is subject to number of financial risk including capital risk, commodity price risk, credit risk, liquidity risk and foreign exchange
risk. Full details are provided in note 21.
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Strategic Report
Financial Review
Fund-raise
In the 2019 Annual Report the Chairman and CEO announced
that the Group was to pursue a new strategy focused on building
a diversified mining royalty and streaming company. In order to
facilitate this strategy Trident cancelled its shares from the Official
List of the London Stock Exchange and was admitted to the AIM
Market on 2 June 2020. At the same time the Group issued 80m
new shares at £0.20 raising net cash proceeds of £14.88m
(~US$18.60m). Combined with its existing cash of US$4.0m,
the Group commenced deploying its capital with the acquisition
of a number of royalty assets.
Royalty Acquisitions
The Group acquired the following royalties during the year:
• Koolyanobbing iron ore 1.5% FOB revenue royalty covering
part of the producing Koolyanobbing Iron Ore Operation
located in Western Australia for A$6.65m plus costs (US$4.80m);
• Mimbula copper staged gross revenue royalty over production
from the operating Mimbula Copper Mine located in Zambia
for US$5.00m;
• Spring Hill gold fixed royalty covering production from the
Spring Hill Gold Project located in Australia’s Northern Territory
for A$1.00m plus costs (US$0.77m) payable in stages; and
• Lake Rebecca gold 1.5% net smelter royalty over production
from the Lake Rebecca Gold Project located in Western Australia
for A$8.00m plus costs (US$5.62m).
In addition, the Group entered into binding, conditional
agreements to acquire:
• Pukaqaqa copper sliding scale royalty (1-2% net smelter)
over production from the Pukaqaqa copper development
operation in Peru for US$3m payable in equity; and
• West Australian gold royalties over a variety of tenements
and projects for A$0.8m, payable in cash and equity.
These acquisitions had not completed prior to the end
of the financial year.
Reporting Currency
The Group has a presentational reporting currency of the US dollar.
The Australian subsidiary TRR Services Australia, which directly
owns some of the Group’s royalty assets, has a functional currency
of Australian dollar. Accordingly, the Group is subject to foreign
exchange gains and losses when reporting consolidated balances
and results. In addition, the subsidiary has an intercompany loan
balance with the parent company denominated in US dollar which
results in gains and losses in the income statement.
During the year, the Australian dollar strengthened against the
US dollar by approximately 8% increasing the value of those assets
and liabilities denominated subject to conversion. All other
subsidiaries of the Group have US dollar functional currencies.
Statement of Financial Position
Royalty intangible assets consist of US$12.35m cost, less US$1.33m
amortisation for total net book value of US$11.02m representing
the Koolyanobbing, Spring Hill and Lake Rebecca acquisitions
detailed above. Translation at the year end exchange rate resulted
in an increase in value to the asset of US$1.01m.
Royalty financial instruments were valued at US$7.45m
representing the fair value of the Mimbula copper project in
Zambia. The royalty financial instrument has been designated as
fair value through profit and loss with the fair value gains and losses
recognised in “revaluation of royalty financial assets” line item in the
income statement. The royalty was acquired for US$5.0m and
US$0.07m royalty income was received in the year and a fair value
increase of US$2.53m was recognised in the income statement.
Trade and other receivables totalling US$0.78m (2019: US$0.01m)
includes US$0.31m in respect of 4th quarter 2020 royalty income
due from Koolyanobbing and Mimbula receivable after the year-
end. Other receivables also include US$0.18m in respect of legal
fees and cash consideration for the Pukaqaqa and Talga
transactions signed before the year-end but not complete and
US$0.26m in respect of VAT repayable in the UK following
registration with HMRC.
Trade and other payables totalling US$0.34m (2019: US$0.04m)
consisted predominantly of trade payables, social security and
taxation and accruals with all amounts within agreed payment terms.
Deferred contingent consideration of US$0.46m represents
A$0.60m contingent payment due on the Spring Hill project based
on the operator meeting certain production targets. The amount
has been treated as due > 1 year representing managements’
assessment of when the project will become operational and the
targets achieved.
Income Statement
Profit after taxation was US$1.71m (2019: US$0.69m loss) and basic
earnings per share of 2.45c (2019: (3.13c). The results were affected
by the fair value gain on the Mimbula copper project of US$2.53m
following its acquisition in June 2020. In addition, the Group made
a foreign exchange gain totalling US$1.39m (2019: US$0.31m loss)
mainly as a result of the retranslation of an intercompany loan
balance between the parent company and the Australian
subsidiary; and the conversion of cash balances denominated
in non-US dollar currencies.
The Group incurred listing, broking and other advisory charges
on its admission to AIM totalling US$1.86m of which US$0.20m was
charged to the income statement and the balance to share premium.
The Group generated royalty income from its Koolyanobbing asset
of US$1.67m, which equated to 35% of the royalty purchase price,
in the year. The amortisation charge was US$1.19m and total Group
overheads of US$2.53m (2019: US$0.69m) of which US$0.99m
related to employment costs; resulting in an operating loss of
US$2.06m (2019: US$0.38m).
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Cashflow
Net cash increased in the year by US$2.32m (2019: US$0.38m
decrease). Financing inflows were US$18.60m (2019: US$nil)
from the equity fund raise; which were invested US$15.06m (2019:
US$nil) in building the royalty intangible and financial assets
portfolio, and US$1.26m (2019: US$0.38m) in operating activities.
In addition, the Group made foreign exchange gains on the cash
totalling US$0.52m (2019: US$0.30 loss) for a final cash figure as
at 31 December 2020 of US$6.97m (2019: US$4.14m).
Taxation
The corporation tax rates in the UK, US and Australia are 19%, 21%
and 30% respectively. During the year the Group undertook a
transfer pricing review and implemented an appropriate profit
allocation methodology. The Group has recognised a current tax
expense of US$0.12m (2019: US$nil) in relation to the UK and US
entities and a deferred tax credit of US$0.17m (2019: US$nil) in
relation to losses in the Australian subsidiary and other temporary
differences for a net income tax credit of US$0.05m (2019: nil).
Events Occurring After the Reporting Date
Subsequent to the year-end the Group announced an equity
fund raise totalling £20.67m (US$28.30m) in order to complete
the acquisition of the Thacker Pass lithium project in Nevada for
US$28.00m. Consideration was payable in cash US$26.00m and
US$2.00m in new Trident shares issued at £0.34 on 24 March 2021.
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Corporate Governance
The major application
of copper is for electrical
wiring
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Corporate Governance
34 Board of Directors
35 Senior management
36 Directors’ report
38 Corporate governance statement
42 Remuneration report
43 Directors’ responsibility statement
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Corporate Governance
Board of Directors
Executive Director
Non-Executive Directors
James Kelly
Non-Executive Chairman
Albert Gourley
Non-Executive Director
Helen Pein
Non-Executive Director
Mark Potter
Non-Executive Director
Adam Davidson
Executive Director &
Chief Executive Officer
Adam Davidson has over 10 years’
experience in the natural
resources sector, most recently
with Resource Capital Funds
(“RCF”), a leading mining focused
private equity firm. Adam has
been a member of RCF’s
investment team since 2014.
Prior to RCF, he held positions with
BMO Capital Markets in Metals &
Mining Equity Research and with
Orica Mining Services in Strategic
Planning. He has extensive mining
capital markets experience across
a breadth of jurisdictions and
commodities. Adam began his
career with T. Rowe Price and also
served in the U.S. Marine Corps.
Adam is a graduate of the
Australian Institute of Company
Directors and previously served
as a Non-Executive Director of
private gold producer RG Gold.
He earned his MBA from the
College of William & Mary and
completed a post-graduate in
Mining Studies from the University
of Arizona.
James Kelly has close to 20 years’
experience in the mining and
natural resource industry, with
extensive experience in corporate
finance, strategy and capital
allocation. Mr Kelly was a senior
member of the Xstrata plc group
business development team and,
following the merger with
Glencore plc, was part of the team
which founded Greenstone
Resources LP, a mining private
equity fund focused on post-
exploration development assets.
Mr Kelly served as an Executive
Director of ASX listed Cradle
Resources Limited from May 2016
to July 2017 having been
appointed a Non-Executive
Director in February 2016. Mr Kelly
is a Fellow of the Institute of
Chartered Accountants of England
and Wales and holds a BA (Hons)
from University College London.
Al Gourley is the London Managing
Partner of Fasken Martineau, an
international law firm, where his
practise focuses on finance and
asset transactions in the natural
resource industry. Mr. Gourley has
served as a director of several TSX,
TSX-V and AIM mining and mineral
exploration companies, including
a company that was acquired by
Franco-Nevada for its gold royalty
on the Newmont Ahafo Mine in
Ghana. Mr. Gourley has direct
mining industry experience having
worked for the Noranda Group
(1992 to 1995) and having served
as CEO of an AIM-listed industrial
mineral producer (2011 to 2012).
Mr. Gourley is a member of the
Solicitors Regulatory Authority
(England and Wales), a member
of the Ontario Law Society and
Chairman of the Board of the
World Association of Mining
Lawyers (WAOML), whose Advisory
Council he led from the date of its
formation in 2014 until 2018. Mr.
Gourley holds a BBA from Schulich
School of Business and an LLB from
the University of Ottawa.
Helen Pein has had a successful
career spanning more than 30
years as an economic geologist
in the natural resource sector.
Helen is currently a director of
Pan Iberia Ltd. (UK) and founder
member of Panex Resources Pty.
Ltd. (Mauritius and SA) a private
company focusing on finding
and developing global mining
projects. Helen was formerly
a director and shareholder of
Pangea Exploration (Pty) Ltd
for 20 years. She was part of the
executive team which was directly
responsible for the discovery and
evaluation of a number of world
class gold and mineral sands
deposits throughout Africa
(Burnstone, Tuluwaka, Buzwagi,
Corridor Sands and Kwale).
From 2012, Pangea was affiliated
to Private Equity Company,
Denham Capital International,
providing asset analysis and
technical evaluation of mining
investments in Africa. Helen is a
recipient of the Gencor Geology
Award and Fellow of the
Geological Society of South Africa
and member of the International
Society for Economic Geologists.
She holds a B.Sc. Geoscience and
a B.Sc. Geology (Hons) (Cum
Laude), from the University of
Stellenbosch SA. Helen sits on
both the Nomination and
Remuneration Committees.
Mark Potter is a director and Chief
Investment Officer of AIM listed
Metal Tiger Plc, a listed investment
company for exploration and
development stage mining
companies. In addition, Mark is
Non-Executive Chairman of ASX
listed Artemis Resources Ltd, Non-
Executive Director of AIM listed
Thor Mining plc, and is the
Founder and Partner of Sita
Capital Partners LLP, an investment
advisory firm specialising in
investments in the mining industry.
Mark was formerly a director and
Chief Investment Officer of Anglo
Pacific Group plc, a London listed
natural resources royalty company,
where he successfully led a
turnaround of the business
through acquisitions, disposals
of non-core assets, and successful
equity and debt fundraisings.
Prior to Anglo Pacific, Mark was a
founding member and Investment
Principal for Audley Capital
Advisors LLP, a London based
activist hedge fund, where he
was responsible for managing its
natural resources investments.
Mark invested over US$300m
during the period 2005 to 2012
in the mining sector, realising
proceeds of over US$900m.
The Audley European
Opportunities Fund was
nominated by Eurohedge as a
top performing hedge fund in the
event-driven space for 2006, 2007
and 2010.
Prior to Audley Capital, Mark
worked in corporate finance for
Salomon Smith Barney (Citigroup)
and Dawnay, Day, a private equity
and corporate finance advisory
boutique during which time he
completed over US$2 billion of
M&A, equity and debt
transactions. Mark holds an MA
degree in Engineering and
Management Studies from Trinity
College, University of Cambridge.
Mark serves as Chairman of the
Audit Committee and sits on the
Remuneration and Nominations
Committees
Committee membership
James serves as Chairman of the
Nominations Committee and sits
on the Audit and Remuneration
Committees.
Al serves as Chairman of the
Remuneration Committee and sits
on the Audit and Nominations
Committees
Helen sits on both the Nomination
and Remuneration Committees.
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Senior Management
Senior Management
Martin Page
Chief Financial Officer
Tyron Rees
Vice-President
Corporate Development
Julien Bosché
Vice-President
Investments
Mr Rees has over 10 years’
experience in the natural
resources sector, most recently
with Resource Capital Funds (RCF),
a mining focused private equity
firm. Prior to RCF, Tyron held
various roles with Sandfire
Resources and Newmont
Goldcorp in a technical capacity
as a Metallurgical Engineer.
Tyron is a graduate of the
Australian Institute of Company
Directors, is a CFA Charterholder,
holds a Master of Finance from
Charles Sturt University and
graduated with a Bachelor of
Engineering in Minerals
Engineering.
Julien Bosché has over a decade
of experience in the natural
resources sector across
commodities, jurisdictions, project
stage, and investment types. Prior
to his most recent work as an
independent advisor, he was with
Pala Investments (“Pala”), a leading
metals and mining focused
investment firm. Prior to Pala,
Julien held roles in the
International Finance
Corporation´s mining division in
Washington, D.C. and the M&A
group in Citigroup´s investment
banking division in New York.
Martin Page has over 10 years’
experience in the natural
resources sector, most recently
as CFO of Toro Gold Limited,
a West African gold producer,
that was sold to Resolute Mining
in July 2019 for US$300m.
Martin was a member of Toro’s
senior executive team that guided
the Group through the latter
stages of its development and
subsequent divestment to
Resolute. Prior to Toro, he was
CFO at Curzon Resources, a
privately backed natural resources
investment firm and before that as
Head of Finance at Amara Mining
plc; a West African gold operator.
Martin has extensive experience
developing and leading finance
functions in both the capital and
private markets.
Martin began his career in practice
and is a qualified Chartered
Accountant with over 15 years
post qualification experience.
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Corporate Governance
Directors’ Report
The Directors of the Company present their report, together with
the audited Group financial statements of Trident Royalties plc for
the year ended 31 December 2020.
Principal Activities
The Group’s principal activity is to invest in mining royalties across
the natural resources sector. Its current activities are located in the
United Kingdom, Australia, US, Zambia and Peru. Trident is
domiciled and incorporated in the England and Wales with
registration number 11328666.
Review of Business
A review of the current and future development of the Group’s
business is given in the Strategic Report on pages 7 to 31 which
forms part of, and by reference is incorporated in, this Directors’
Report.
The Group’s Financial Risk Management objectives and policies are
discussed in note 21. The principal risks and uncertainties faced by
the Group are set out on pages 28 and 29.
Results and Dividends
The results of the Group for the year ended 31 December 2020 are
set out in the Consolidated Statement of Comprehensive Income.
The Directors do not recommend the payment of a dividend for
the year.
Directors and Directors’ Interests
The Directors who served during the year to date are as follows:
Adam Davidson
Al Gourley (appointed 4 May 2020)
James Kelly
Helen Pein (appointed 18 September 2020)
Mark Potter
The direct and beneficial shareholdings of the Board
in the Company as at 31 December 2020 were as follows:
Share held at Share held at
31 December 31 December
2020 2019
Adam Davidson 95,000 65,000
Al Gourley* 5,000,000 -
James Kelly 355,000 140,000
Helen Pein - -
Mark Potter 75,000 -
* 2,700,000 shares held directly and 2,300,000 shares held through Albert C Gourley
Professional Corporation, a corporation controlled by Mr. Gourley
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Trident Royalties plc Annual Report & Financial Statements 2020
Substantial Shareholders
As at 9 April 2021, the total number of issued Ordinary Shares with
voting rights in the Company was 178,102,362. The Company has
been notified of the following interests of 3 per cent or more in its
issued share capital.
Number of % of issued
Shareholder ordinary shares share capital
LIM Asia Special Situations
Master Fund Limited 26,578,837 14.92
Ponderosa Investments
(WA) Pty Limited 16,154,288 9.07
Regal Funds Management
Pty Limited 13,183,800 7.40
Amati UK Smaller Companies Fund 12,647,058 7.10
Orion Resource Partners 11,091,747 6.23
Tribeca Investment Partners
Pty Limited 8,412,081 4.72
Al Gourley* 5,800,000 3.26
Illwela Pty Limited 5,389,380 3.03
Jetosea Pty Limited 5,365,040 3.01
* 2,700,000 shares held directly and 3,100,000 shares held through Albert C Gourley
Professional Corporation, a corporation controlled by Mr. Gourley
Changes in Share Capital
Details of transactions during the year, and subsequent to the year-
end, that increased the share capital of the Company are detailed
in note 19. As at 31 December 2020, 105,362, 556 ordinary shares
of 1p were in issue.
AGM Notice
A separate communication will be sent to shareholders and
published on the Group’s website regarding the 2021 AGM.
Corporate Governance
The Group has set out its full Corporate Governance Statement on
pages 38 to 41. The Corporate Governance Statement forms part of
this Directors’ report and is incorporated into it by cross reference.
Greenhouse Gas Disclosures
The Group is an investment company, with 4 full time employees
and the Board of Directors and no head office, and therefore has
minimal carbon emissions. It is not practical to obtain emissions
data and as such none is disclosed. Further information of the
Group’s environmental impact is give in its Environmental and
Social Governance Statement on page 26.
Supplier Payment Policy
It is the policy and normal practice of the Group to make payments
due to suppliers in accordance with agreed terms and conditions,
generally 30 days. Where suppliers offer early settlement discounts,
these may be taken advantage of.
Directors’ Insurance
During the year, Directors and Officers Liability Insurance was
maintained for Directors and other Officers of the Group.
Events Occurring After the Reporting Date
Events since the balance sheet date are included in note 25.
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Section 172 Statement
A statement of how the Board has performed its duties under
section 172 of the Companies Act 2006 can be found on page
27 of the Strategic Report.
Political Donations
During the year, the Group did not make any political donations.
Disclosure of Information to Auditors
The Directors confirm that:
• So far as each Director is aware, there is no relevant audit
information of which the Company’s auditor is unaware; and
• The Directors have taken all steps that they ought to have taken
as Directors in order to make themselves aware of any relevant
audit information and to establish that the auditors are aware of
that information.
Auditor
A resolution proposing the re-appointment of PKF Littlejohn LLP
as auditor is contained in the Notice of Annual General Meeting
and will be put to shareholders at the Annual General Meeting.
This Directors’ Report has been approved by the Board
and signed on its behalf by:
James Kelly
Non-Executive Chairman
12 April 2021
Going Concern
The financial position of the Group and cash flows as at
31 December 2020 are set out on pages 51 and 53. The Group
meets its day-to-day working capital and other funding requirements
with its current cash, raised through equity placings and revenue from
its cash generating royalties. The Group actively manages its financial
risks as set out in note 21 and operates Board-approved financial
policies, that are designed to ensure that the Group maintains an
adequate level of headroom and effectively mitigates financial risks.
On the basis of current financial projections (at least 12 months
from the date of the approval of the financial statements), the
Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence, and meet
its liabilities as they fall due, for the foreseeable future. Accordingly,
the Directors consider it appropriate to adopt the going concern
basis in preparing these financial statements.
COVID-19
In the light of COVID-19, we take this opportunity to confirm our
commitment to the health and safety of our employees, consultants
and advisors. Non-essential travel has been eliminated and the
appropriate social distancing protocols are being observed.
The Group has not been made aware of any significant issues at
the operations in which it has made investments. Whilst the mining
sector as a whole has been affected by Covid – mainly in respect to
their supply chains – their very nature (usually self-contained mine
sites) has been such that mitigation of Covid is easier than in other
industries. The Board continues to monitor the impact of COVID-19
on the ability of the Group to continue to pursue its strategy and will
make appropriate changes should they be required. There is not
considered to be any material impacts on the reporting financial
position and results of the Group as a result of COVID-19 as at the
reporting date.
Brexit
The UK completed its withdrawal from the EU effective 1 January
2021. The Group has no current trading with the EU bloc and holds
no assets in the region. Whilst future investment in the region
cannot be ruled out there is currently no material impact on the
Groups investments as a result of Brexit.
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Corporate Governance
Corporate Governance Statement
The Company is committed to maintaining the highest standards
in corporate governance throughout its operations and to ensure
all of its practices are conducted transparently, ethically and
efficiently. The Company believes scrutinising all aspects of its
business and reflecting, analysing and improving its procedures will
result in the continued success of the Company and deliver value to
shareholders. Therefore, and in accordance with the AIM Rules for
Companies, the Company has chosen to formalise its governance
policies by complying with the UK’s Quoted Companies Alliance
Corporate Governance Code 2018 (“QCA Code”).
The 10 principles set out in the QCA Code are listed below, with
an explanation of how the Company applies each of the principles
and the reason for any aspect of non-compliance.
Principle
Trident Response
Establish a strategy and business model which promote
long-term value for shareholders
Seek to understand and meet shareholder needs and
expectations
Take into account wider stakeholder and social
responsibilities and their implications for long term success
Embed effective risk management, considering both
opportunities and threats, throughout the organisation
The strategic vision of the Company is explained in the Strategic
Report on pages 7 to 31. The Company’s strategy follows the well
understood royalty company model, however it seeks to create
value through the acquisition of attractive and robust royalties in
commodities and jurisdictions which are inherently less
competitive relative to those with a precious metal focus.
The Board is committed to maintaining good communications
and having constructive dialogue with its shareholders.
Institutional shareholders and analysts have the opportunity
to discuss issues and provide feedback at meetings with the
Company. In addition, all shareholders are encouraged to attend
the Company’s Annual General Meeting and any other General
Meetings that are held throughout the year.
The Board recognises that the long-term success of the
Company will be enhanced by good relations with different
internal and external groups and to understand their needs,
interest and expectations, the Board has established a range
of processes and systems to ensure that there is ongoing two-
way communication, control and feedback processes in place
with which to enable appropriate and timely response.
The Board maintains a risk register and regularly reviews the
risks to which the Company is exposed and ensures through its
meetings and regular reporting that these risks are minimised as
far as possible whilst recognising that its business opportunities
carry an inherently high level of risk.
Maintain the Board as a well-functioning, balanced team led
by the Non-Executive Chairman
The Board’s composition and structure is discussed elsewhere
in this corporate governance section together with a table of
Board committee attendance.
Ensure that between them the Directors have the necessary
up-to-date experience, skills and capabilities
The complementary skills and experience of the Board
are included on page 34.
Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement
Review of the Company’s progress against the long-term strategy
and aims of the business provides a means to measure the
effectiveness of the Board. This progress is reviewed in Board
meetings held at least four times a year. The Chief Executive
Officer’s performance is reviewed once a year by the rest of the
Board and measured against a definitive list of short, medium
and long-term strategic targets set by the Board.
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Principle
Trident Response
Promote a corporate culture that is based on ethical values
and behaviours
The corporate culture of the Company is promoted through its
employees and contractors and is underpinned by compliance
with local regulations and the implementation and regular review
and enforcement of various policies including a Share Dealing
Policy and Code, Anti-Corruption and Anti-Bribery Policy, Matters
Reserved for the Board, Code of Business Ethics, Employee
Leave Policy, Expenses Policy, Whistle Blowing Policy, Grievance
Redressal and Disciplinary Policy, Social Media Policy and Media
and Communications Policy so that all aspects of the Company
are run in a robust and responsible way.
Maintain governance structures and processes that are fit for
purpose and support good decision-making by the Board
The Company’s governance structures are predominantly
its Committees as noted below.
Communicate how the Company is governed and is
performing by maintaining a dialogue with shareholders and
other relevant stakeholders
The Company’s financial and operational performance is
summarised in the Annual Report and the Interim Report,
with regular updates provided to stakeholders in other forums
through the year, including press releases and regular updates
to the Company’s website.
Board Composition
The Board is comprised of a diverse group of experienced
Directors, both from the UK and abroad, each with a wealth of
expertise and a depth of knowledge appropriate to their role.
Many have worked across a variety of jurisdictions and have
extensive business and financial experience in the sector in which
the Group operates. As at 31 December 2020, the Board of the
Company consisted of the Non-Executive Chairman, the Chief
Executive Officer and three Non-Executive Directors. Three of the
Non-Executive directors are considered to be independent and
ensure the Board independence requirement. All the Non-
Executive Directors are independent in character and judgement
and have the range of experience and calibre to bring
independent judgement on issues of strategy, performance,
resources and standards of conduct which is vital to the success
of the Group. The Board believes that there is an adequate balance
between the Non-Executive and Executive Director, both in number
and in experience and expertise, to ensure that the Board operates
independently of executive management.
The Company constantly keeps under review the constitution
of the Board and may seek to add more members as required
as the Company grows and develops.
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Board Role and Objectives
In leading the Company, the Board defines the purpose
of the Company and makes key decisions in relation to strategic
matters to deliver this. The Board is also responsible for making key
decisions about financial planning, review of financial performance,
setting the cultural tone for the Group, review of operational
matters, the governance framework, investments and Director
appointments. In doing so, the Board draws on each Director’s
unique skillset and wide range of experience in the natural
resources sector, financial and operational aspects of businesses,
public markets and of different geographies around the world.
The Board retains ultimate accountability for good governance
and maintains full and effective control over the Company.
The Company holds regular Board meetings (approximately
once a month) at which financial, operational and other reports
are considered and, where appropriate voted on. The Board is
responsible for the Group’s strategy, performance, key financial
and compliance issues approval of any major capital expenditure
and the framework of internal controls.
Currently, due to the restrictions on travel and gatherings in the
context of COVID-19, the Board is meeting by video-conference
and doing so for regular updates to be able to closely monitor and
consider developments in the Group and more widely during this
period. As well as the Executive Directors, senior management are
invited to attend and present at meetings of the Board and its
Committees where appropriate.
All Directors devote ample time in order to discharge their duties
both at and outside of Board meetings. The Board is well briefed
in advance of meetings and receives high-quality, comprehensive
reports to ensure matters can be given thorough consideration.
All Directors on the Board have access to, and the support of,
the Company Secretary who acts as secretary to the Board and
its Committees, reporting directly to their Chairs, advising on,
and assisting on compliance with, relevant governance regulations
and procedures. In addition, all Directors have unrestricted access
to the Company’s external advisers.
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Corporate Governance
Corporate Governance Statement
continued
Board Committees
As described above Trident draws from the principles of the
QCA Code for guidance in structuring its governance framework.
The Board is supported by three Committees, specifically the Audit,
Remuneration and Nomination Committees. These standing
Committees focus on the areas of the Group’s operation which the
Board views as having key importance to the Group’s shareholders
and other stakeholders.
Audit Committee
The Audit Committee comprises Mark Potter as Chairman
and James Kelly and Al Gourley.
The Audit Committee reviews reports from management and from
PKF Littlejohn LLP (“PKF”), the Company’s statutory auditor, relating
to the interim and annual accounts and to the system of internal
financial control.
The Audit Committee is responsible for assisting the Board’s
oversight of the integrity of the financial statements and other
financial reporting, the independence and performance of PKF,
the regulation and risk profile of the Company and the review and
approval of any related party transactions. The Audit Committee
may hold private sessions with management and PKF without
management present. Further, the Audit Committee is responsible
for making recommendations to the Board on the appointment of
PKF and the audit fee and reviews reports from management and
PKF on the financial accounts and internal control systems used
throughout the Company.
The Audit Committee meets at least two times a year and is
responsible for ensuring that the Company’s financial performance
is properly monitored, controlled and reported. The Audit
Committee is responsible for the scope and effectiveness of the
external audit and compliance by the Company with statutory and
other regulatory requirements.
The Audit Committee also reviews arrangements by which the
staff of the Company and the Company may, in confidence,
raise concerns about possible improprieties in matters of financial
reporting or other matters and ensure that arrangements are
in place for the proportionate and independent investigation
of such matters with appropriate follow-up action.
Where necessary, the Audit Committee obtains specialist external
advice from appropriate advisers.
Remuneration Committee
The Remuneration Committee comprises Al Gourley, as Chairman,
and James Kelly and Mark Potter.
The Remuneration Committee is responsible for considering all
material elements of remuneration policy, the remuneration and
incentivisation of Executive Directors and senior management (as
appropriate) and to make recommendations to the Board on the
framework for executive remuneration and its cost. The role of the
Remuneration Committee is to keep under review the Company’s
remuneration policies to ensure that the Company attracts, retains
and motivates the most qualified talent who will contribute to the
long-term success of the Company. The Remuneration Committee
also reviews the performance of the Chief Executive Officer and
sets the scale and structure of his remuneration, including the
implementation of any bonus arrangements, with due regard
to the interests of shareholders.
The Remuneration Committee is also responsible for granting
options under the Company’s share option plan and, in particular,
the price per share and the application of the performance
standards which may apply to any grant, ensuring in determining
such remuneration packages and arrangements, due regard is
given to any relevant legal requirements, the provisions and
recommendations in the AIM Rules and The QCA Code.
The Remuneration Committee:
• determines and agrees with the Board the framework or broad
policy for the remuneration of the Chief Executive Officer;
• determines the remuneration of Non-Executive Directors;
• determines targets for any performance-related pay schemes
operated by the Company;
• ensures that contractual terms on termination and any payments
made are fair to the individual, the Company, that failure is not
rewarded and that the duty to mitigate loss is fully recognised;
• determines the total individual remuneration package of the
Chief Executive Officer, including bonuses, incentive payments
and share options;
• is aware of and advises on any major changes in employees’
benefit structures throughout the Company;
• ensures that provisions regarding disclosure, including pensions,
as set out in the (Directors’ Remuneration Policy and Directors’
Remuneration Report) Regulations 2019, are fulfilled; and
• is exclusively responsible for establishing the selection criteria,
selecting, appointing and setting the terms of reference
for any remuneration consultants who advise the
Remuneration Committee.
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Nominations Committee
The Nominations Committee comprises James Kelly as Chairman,
Helen Pein and Mark Potter.
The Nominations Committee shall be responsible for considering
all criteria for new Executive and Non-Executive Director
appointments, including experience of the industry in which
the Company operates and professional background. Specifically,
the Nominations Committee:
• is responsible for identifying and nominating for the approval
of the Board, candidates to fill Board vacancies as and when
they arise;
• evaluates the balance of skills, knowledge, experience
and diversity of the Board and, in the light of this evaluation,
prepares a description of the role and capabilities required
for a particular appointment;
• reviews annually the time required from the Non-Executive
Directors and assess whether each Non-Executive Director
is spending enough time to fulfil their duties;
• considers candidates from a wide range of backgrounds;
• gives full consideration to succession planning in the course
of its work, taking into account the challenges and opportunities
facing the Company, and the skills and expertise therefore
needed on the Board, reporting to the Board regularly;
• regularly reviews the structure, size and composition (including
the skills, knowledge and experience) of the Board and make
recommendations to the Board with regard to changes;
• keeps under review the leadership needs of the Company,
both executive and non-executive, with a view to ensuring the
continued ability of the Company to compete effectively in the
marketplace;
• makes a statement in the annual report about its activities, the
process used for appointments and explains if external advice or
open advertising has not been used, the membership of the
Nominations Committee, number of Nominations Committee
meetings and attendance over the course of the year;
• ensures that on appointment to the Executive and Non-Executive
Directors receive formal letters of appointment setting out clearly
what is expected of them in terms of time commitment,
committee service and involvement outside Board meetings;
• considers and makes recommendations to the Board about the
re-appointment of any Non-Executive Director at the conclusion
of their specified term of office or retiring in accordance with the
Company’s Articles of Association; and
• considers and make recommendations to the Board on any matter
relating to the continuation in office of any Director at any time.
Board and Committee Attendance
The table below sets out the number of Board Committee meetings held during the year ended 31 December 2020 and each Director’s
attendance at those meetings.
Director
James Kelly
Adam Davidson
Al Gourley*
Helen Pein*
Mark Potter
Total meetings
* all meetings attended since appointment.
Board Nominations
Committee
1
-
-
1
1
1
Meetings
14
14
7
3
13
14
Audit Remuneration
Committee
2
-
2
-
2
2
Committee
1
-
1
-
1
1
Further information about the Group’s approach to Corporate Governance is provided on the Company’s website at
www.tridentroyalties.com.
Approved on behalf of the Board on 12 April 2021
Adam Davidson
Chief Executive Officer
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Corporate Governance
Remuneration Report
The table below sets out the total remuneration in respect of qualifying services for both Executive and Non-Executive Directors
for the year ended 31 December 2020.
2020
2020
Base salary Annual bonus
US$’000
US$’000
2020
Total
US$’000
2019
Total
US$’000
Executive Director:
Adam Davidson
Non-Executive Directors:
Al Gourley (appointed 4 May 2020)
James Kelly
Helen Pein (appointed 18 September 2020)
Mark Potter
Sam Quinn (resigned 4 November 2019)
C Olowoyo (resigned 10 October 2019)
Directors’ aggregate emoluments
230
30
63
11
33
-
-
391
144
-
67
-
24
-
-
211
374
30
130
11
57
-
-
602
52
-
35
-
2
12
11
112
The aggregate emoluments of the highest paid Director totalled US$0.37m (2019: US$0.05m). No Director has a service agreement
with the Company that is terminable on more than twelve months’ notice.
The Executive Director can earn up to a maximum bonus of 50% of salary based on personal performance as assessed by the Board.
In 2020, the Executive Director earned 100% (2019: nil) of the maximum bonus potential based on 15 months service since appointment
totalling US$0.14m (2019: nil). James Kelly the Non-Executive Chairman and Mark Potter were awarded one-off bonuses of US$0.07m
(2019: nil) and US$0.02m (2019: nil) respectively payable in cash and shares; following the fund raise and admission to AIM. Subsequent
to the 2020 year-end, the Non-Executive Chairman and Non-Executive Directors were awarded bonuses of GBP£25k and GBP£15k
respectively, payable 2/3 in shares and 1/3 in cash. The shares total will be calculated by reference to the 5 day VWAP following release
of this Annual Report.
The Executive Director has a rolling service contract that is subject to twelve months’ notice. On 1 January 2021, the Executive Directors base
salary was increased from US$0.23m to US$0.25m per annum. No Director accrued benefits under a pension scheme during the year – and
no additional benefits in kind were received.
Non-Executive Directors
Each Non-Executive Director appointment is subject to periodic renewal, in terms of the Company’s Articles of Association, at the AGM.
For Non-Executive Directors, these engagements can be terminated by either party on six months’ notice.
On 1 January 2021, the Non-Executive Directors signed updated letters of appointment. Under the terms of these letters, the Non-
Executive Directors are entitled to an annual fee totalling GBP£30k, plus a further fee of GBP£15k payable 2/3 in shares and 1/3 in cash
(the share total will be calculated by reference to the 5 day VWAP following release of the Annual Report), plus GBP£5k for each Committee
they chair. The Non-Executive Chairman is entitled to an annual fee totalling GBP£60k plus a further fee of GBP£25k payable 2/3 in shares
and 1/3 in cash (the share total will be calculated by reference to the 5 day VWAP following the release of the Annual Report).
Directors Option Awards
During the period 1,875,000 Options were granted to Adam Davidson, all of which vest and become exercisable in equal tranches on the
second, third and fourth anniversaries of the date of grant (2 June 2020) and are exercisable at 20 pence, 24 pence and 28 pence respectively.
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Corporate Governance
Directors’ Responsibility Statement
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulations.
Company law requires the directors to prepare financial statements
for each financial year. Under that law the directors have elected to
prepare the financial statements in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006. Under company law the directors must not
approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the group and
company and of the profit or loss of the group and company
for that year.
In preparing these financial statements, the directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• state whether, for the group and company, international accounting
standards in conformity with the requirements of the Companies
Act 2006 have been followed, subject to any material departures
disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and
company will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the group and
company’s transactions and disclose with reasonable accuracy
at any time the financial position of the group and company,
and enable them to ensure that the financial statements comply
with the Companies Act 2006. They are also responsible for
safeguarding the assets of the group and company, and hence
for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company’s website. Legislation in the United Kingdom governing
the preparation and dissemination of the financial statements may
differ from legislation in other jurisdictions.
The company is compliant with AIM Rule 26 regarding
the company’s website.
The directors confirm that they have complied with the above
requirements in preparing the financial statements.
Approved on behalf of the Board on 12 April 2021
Adam Davidson
Chief Executive Officer
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Financial Statements
Lithium is used in
rechargeable batteries,
which consumes more
than three-quarters of
lithium production
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Financial Statements
46 Independent Auditor’s report
50 Consolidated statement of comprehensive income
51 Consolidated statement of financial position
52 Consolidated statement of changes in equity
53 Consolidated statement of cash flows
54 Company statement of financial position
55 Company statement of changes in equity
56 Company statement of cash flows
57 Notes to the financial statements
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Financial Statements
Independent Auditor’s Report
to the members of Trident Royalties plc
Opinion
We have audited the financial statements of Trident Royalties Plc (the “parent company”) and its subsidiaries (the “group”) for the year
ended 31 December 2020 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Parent
Company Statements of Financial Position, the Consolidated and Parent Company Statements of Changes in Equity, the Consolidated
and Parent Company Statements of Cash Flows and notes to the financial statements, including significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable law and international accounting standards in conformity with
the requirements of the Companies Act 2006 and as regards the parent company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2020
and of the group’s and parent company’s profit for the year then ended;
• the group financial statements have been properly prepared in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006;
• the parent company financial statements have been properly prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006 and as applied in accordance with the provisions of the
Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director’s use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt
the going concern basis of accounting included a review of budgets for 12 months from the sign off date including checking the mathematical
accuracy of the budgets and discussion of significant assumptions used by the management and comparing these with current year and post
year end performance. We have also reviewed the latest available post year end management accounts, bank statements, regulatory
announcements, board minutes and assessed any external industry wide factors which might affect the group and the company.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the group’s or parent company’s ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for materiality determine
the scope of our audit and the nature, timing and extent of our audit procedures. The materiality applied to the group financial statements
as a whole was set at US$250,000 (2019 US$14,200), with performance materiality set at US$175,000 (2019 US$11,360) and triviality
threshold set at US$12,500 (2019 US$ 710). We agreed that we would report to Those Charged with Governance all misstatements below
the triviality threshold that we believe warrant reporting on qualitative grounds.
Materiality has been calculated as 1% of the benchmark of gross assets, which we have determined, in our professional judgement, to be
the principal benchmark within the financial statements relevant to members of the group in assessing financial performance. As the group
has acquired royalty investments in the year and this represents the most significant balance in the group financial statements, we consider
gross assets to be the best indicator of the group performance as a whole and most relevant to the users of the financial statements.
The change in the underlying business activities means that materiality has changed significantly from the prior year.
The materiality applied to the parent company financial statements was US$48,000 (2019 US$12,600), based on 2% of expenses.
The performance materiality was US$33,600 (2019 US$10,080). Trident Services Australia Pty Limited was audited to a materiality
of US$50,000 (2019 US$4500), based on 1% of gross assets, with performance materiality being $35,000 (US$3,600).
All other components are considered as not material or significant for audit purposes and have been audited at a level below group materiality.
There were no misstatements identified during the course of our audit that were individually, or in aggregate, considered to be material.
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Our approach to the audit
As part of designing our audit, we determined materiality and assessed the risk of material misstatement in the Financial Statements.
In particular, we looked at areas involving significant accounting estimates and judgement by the directors and considered future events
that are inherently uncertain such as the impairment of intangible assets and assumptions used in calculating the fair value of financial assets.
We also addressed the risk of management override of internal controls, including among other matters consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.
The Group has 5 trading companies within the consolidated financial statements, two based in the UK, one based in Europe, one based
in Australia and one in the US. We identified two significant components, the parent company, Trident Royalties Plc and TRR Services
Australia Pty Ltd, which were subject to a full scope audit by the group audit team with relevant sector experience from the London office.
In addition, we identified components which were not significant to the group and performed an audit of specific account balances
and classes of transactions to ensure that balances which were material to the group were subject to audit procedures.
The approach gave the audit team the 100% coverage on revenue, 98.5% coverage on gross assets and 98.6% coverage on profit for the year.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements
of the current year and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the overall audit strategy, the allocation of Royalties in the audit; and directing the efforts
of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
Key audit matter
How our scope addressed this matter
Accounting treatment and recoverability of royalty interest assets
(refer to note 13 and 2).
Our work in this area included;
• A review of the accounting treatment applied by the entity
At 31 December 2020, investments in royalty interest assets
represented US$18.4m (69.9%) of the Group’s total assets. The
investments comprise upfront payments for royalty entitlements,
including associated direct acquisition costs. The group accounts
for investments in royalty interest assets in one of two ways;
Financial assets at FVTPL; or intangible assets.
Where indicators of impairment exist, value in use calculations
are performed and compared to carrying value. The estimated
recoverable amount is subjective due to the inherent uncertainty
involved in forecasting and discounting cash flows. Where royalty
interest assets are not yet revenue generating, management
assess whether there are any indicators of impairment, having
regard to progress of the underlying exploration project towards
commercial mining activity and other publicly available
information regarding successful progression of the project,
securing funding, etc. There is the risk that royalty interest assets
have not been correctly valued and classified in accordance with
the requirements of IFRS.
We have assessed this to be a key audit matter because of the
financial significance of these assets to the Group combined
with the requirement for management to use their judgment
in assessing the recoverability of the assets.
including the accounting policies adopted by the Group for
compliance with IFRS;
• A review of the asset acquisition accounting treatment
including contingent consideration for compliance with IFRS;
• Re-performance of amortisation charges during the year and
review of the useful economic lives;
• Verification of ownership of the royalty interests
and corroboration to the agreements;
• An assessment of each royalty interest for indicators
of impairment;
• Reviewing the valuation methodology for each type of
investment held and ensuring that the carrying values are
supported by sufficient and appropriate audit evidence; and
• Reviewing the associated disclosures in the financial statements.
Key observations
We concluded that treatment adopted by management was
in line with the requirements of IFRS and we did not note any
indicators of impairment on royalty interest assets.
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Financial Statements
Independent Auditor’s Report
to the members of Trident Royalties plc
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report
thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the group and parent
company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course
of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you
if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the group and parent
company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
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Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to
which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the group and parent company and the sector in which they operate to identify laws and regulations that
could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through
discussions with management, application of audit knowledge and experience of the sector.
Our audit procedures were designed to ensure the audit team considered whether there were any indications of non-compliance by
the group and parent company with those laws and regulations. The group and parent company are subject to laws and regulations that
directly affect the financial statements including financial reporting legislation, distributable profits legislation, and taxation legislation and
we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
In addition, the group and parent company are subject to many other laws and regulations where the consequences of non-compliance
could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation.
We identified the following areas as those most likely to have such an effect: fraud; bribery and corruption and employment law recognising
the nature of the group and parent company’s investments. Auditing standards limit the required audit procedures to identify non-
compliance with these laws and regulations to enquiry of the Directors and other management and inspection of regulatory and legal
correspondence, if any. During our audit we did not identify actual or suspected non-compliance with laws and regulations.
We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the
non-rebuttable presumption of a risk of fraud arising from management override of controls, that the recognition of revenue and
posting of unusual journals represented a risk and we designed audit procedures in response to this.
As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which
included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law
or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware
of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves
intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone,
other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Zahir Khaki (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
12 April 2021
15 Westferry Circus
Canary Wharf
London E14 4HD
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Year ended
9 month
period to
31 December 31 December
2019
US$’000
-
-
-
(380)
(380)
2020
US$’000
1,668
(1,193)
475
(2,529)
(2,054)
2,528
(204)
21
(20)
1,383
1,654
53
1,707
17
112
129
1,836
-
-
-
-
(309)
(689)
-
(689)
-
5
5
(684)
Notes
3
12
4
13
7
8
9
9
10
2.45
(3.13)
Trident Royalties AR_20_FS_AW.qxp_Trident Royalties_AR 19/04/2021 16:23 Page 50
Financial Statements
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2020
Continuing operations
Royalty related revenue
Amortisation of royalty intangible assets
Gross profit
Administrative expenses
Operating loss
Revaluation of royalty financial assets
AIM listing fees
Finance income
Other finance costs
Net foreign exchange gains/(losses)
Profit/(loss) before taxation
Income tax
Profit/(loss) attributable to owners of the parent
Other comprehensive income
Items that may be subsequently reclassified to profit and loss:
Deferred tax relating to items that have or may be reclassified
Exchange gains on translation of foreign operations
Other comprehensive income for the period, net of tax
Total comprehensive income attributable to owners of the parent
Earnings per share:
Basic and diluted earnings per share (U.S. cents)
The notes on pages 57 to 72 are an integral part of these financial statements.
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Financial Statements
Consolidated Statement of Financial Position
As at 31 December 2020
Non-current assets
Royalty intangible assets
Royalty financial assets assets at fair value through profit and loss
Deferred tax asset
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Total current liabilities
Non-current liabilities
Contingent consideration
Total non-current liabilities
Total liabilities
Net assets
Equity attributable to owners of the parent
Share capital
Share premium
Share-based payments reserve
Foreign exchange reserve
Retained earnings
Total equity
31 December 31 December
2019
US$’000
2020
US$’000
Notes
12
13
9
16
17
18
9
18
19
19
20
11,018
7,453
210
18,681
778
6,971
7,749
26,430
335
122
457
464
464
921
-
-
-
-
11
4,135
4,146
4,146
44
-
44
-
-
44
25,509
4,102
1,335
23,288
63
89
734
25,509
328
4,787
-
(23)
(990)
4,102
The notes on pages 57 to 72 are an integral part of these financial statements.
The financial statements were approved and authorised for issue by the Board on 12 April 2021 and are signed on its behalf by:
Adam Davidson
Director
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Financial Statements
Consolidated Statement of Changes in Equity
For the year ended 31 December 2020
Balance at 30 April 2019
Share
capital
US$’000
326
Share
premium
US$’000
4,759
Share
based
payments
reserve
US$’000
-
Foreign
exchange
reserve
US$’000
2
Retained
earnings
US$’000
(301)
Total
US$’000
4,786
Loss for the period
Other comprehensive income for the period
Total comprehensive income for the period
-
2
2
-
28
28
Balance at 31 December 2019
328
4,787
Profit for the year
Other comprehensive income:
Deferred tax
Exchange gains on translation of foreign operations
Total comprehensive income
-
-
-
-
-
-
-
-
Transaction with owners owners in their
capacity as owners:
Issue of share capital
Cancellation of deferred shares
Share issue costs
Share-based payment charge
Total transactions with owners,
recognised directly in equity
1,046
(39)
-
-
20,119
39
(1,657)
-
1,007
18,501
Balance at 31 December 2020
1,335
23,288
The notes on pages 57 to 72 are an integral part of these financial statements.
-
-
-
-
-
-
-
-
-
-
-
63
63
63
-
(25)
(25)
(23)
-
-
112
112
-
-
-
-
-
(689)
-
(689)
(990)
1,707
17
-
1,724
-
-
-
-
-
(689)
5
(684)
4,102
1,707
17
112
1,836
21,165
-
(1,657)
63
19,571
89
734
25,509
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Financial Statements
Consolidated Statement of Cash Flows
for the year ended 31 December 2020
Cash flow from operating activities
Profit/(loss) before taxation
Revaluation of royalty financial assets
AIM listing fees
Finance income
Other finance costs
Net foreign exchange gains/(losses)
Amortisation of royalty intangible asset
Share-based payments charge
Net cash used before changes in working capital
Increase/(decrease) in payables
Increase in receivables
Net cash used in operating activities
Cash flows from investing activities
Payments for acquisition of royalty intangible assets
Payments for acquisition of royalty financial assets at fair value through profit and loss
Cash received from royalty financial asset
Finance income
Net cash used in investing activities
Cash flows from financing activities
Issue of share capital
Share issue costs and AIM listing fees
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents during the year/period
Cash at the beginning of year/period
Effect of foreign exchange rate
Cash and cash equivalents at the end of the year/period
The notes on pages 57 to 72 are an integral part of these financial statements.
Notes
13
12
17
Year ended
9 month
period to
31 December 31 December
2019
US$’000
2020
US$’000
1,654
(2,528)
204
(21)
20
(1,383)
1,193
63
(798)
257
(714)
(1,255)
(10,063)
(5,000)
22
21
(15,020)
20,080
(1,484)
18,596
2,321
4,135
515
6,971
(689)
-
-
-
-
309
-
-
(380)
(2)
(1)
(383)
-
-
-
-
-
-
-
-
(383)
4,821
(303)
4,135
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Financial Statements
Company Statement of Financial Position
As at 31 December 2020
Non-current assets
Investment in subsidiaries
Royalty financial assets at fair value through profit and loss
Amount due from subsidiary undertakings
Deferred tax asset
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Share-based payments reserve
Foreign exchange reserve
Retained earnings
Total equity
31 December 31 December
2019
US$’000
2020
US$’000
Notes
14
13
15
9
16
17
18
9
19
19
20
113
7,453
10,089
29
17,684
405
6,547
6,952
24,636
162
27
189
24,447
1,335
23,288
63
(23)
(216)
24,447
-
-
88
88
11
4,120
4,131
4,219
37
-
37
4,182
328
4,787
-
(23)
(910)
4,182
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the Parent Company Statement
of Comprehensive Income. The profit/(loss) for the Parent Company for the year was US$0.67m (31 December 2019: US$0.61m loss).
The notes on pages 57 to 72 are an integral part of these financial statements.
The financial statements were approved and authorised for issue by the Board on 12 April 2021.
Adam Davidson
Director
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Financial Statements
Company Statement of Changes in Equity
For the year ended 31 December 2020
Balance at 30 April 2019
Share
capital
US$’000
326
Share
premium
US$’000
4,759
Share
based
payments
reserve
US$’000
-
Foreign
exchange
reserve
US$’000
2
Retained
earnings
US$’000
(301)
Total
US$’000
4,786
Loss for the period
Other comprehensive income for the period
Total comprehensive income for the period
-
2
2
-
28
28
Balance at 31 December 2019
328
4,787
Profit for the year
Other comprehensive income:
Deferred tax
Total comprehensive income for the year
Issue of share capital
Cancellation of deferred shares
Share issue costs
Share-based payment charge
Total transactions with owners,
recognised directly in equity
-
-
-
1,046
(39)
-
-
-
-
-
20,119
39
(1,657)
-
1,007
18,501
Balance at 31 December 2020
1,335
23,288
The notes on pages 57 to 72 are an integral part of these financial statements.
-
-
-
-
-
-
-
-
-
-
63
63
63
-
(25)
(25)
(23)
-
-
-
-
-
-
-
-
(609)
-
(609)
(910)
677
17
694
-
-
-
-
-
(609)
5
(604)
4,182
677
17
694
21,165
-
(1,657)
63
19,571
(23)
(216)
24,447
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Year ended
Year ended
31 December 31 December
2019
US$’000
2020
US$’000
692
(2,528)
204
(21)
(201)
20
(321)
63
(2,092)
110
(342)
(2,324)
(5,000)
22
21
(113)
(9,641)
529
(14,182)
20,080
(1,484)
18,596
2,090
4,120
337
6,547
(609)
-
-
-
-
-
309
-
(300)
(10)
-
(310)
-
-
-
-
(88)
-
(88)
-
-
-
(398)
4,821
(303)
4,120
Trident Royalties AR_20_FS_AW.qxp_Trident Royalties_AR 19/04/2021 16:23 Page 56
Financial Statements
Company Statement of Cash Flows
for the year ended 31 December 2020
Notes
Cash flows from operating activities
Profit/(loss) before taxation
Revaluation of royalty financial asset
AIM listing fees
Finance income
Intercompany interest received
Other finance costs
Net foreign exchange gains/(losses)
Share-based payments charge
Net cash used before changes in working capital
Increase/(decrease) in payables
Increase in receivables
Net cash used in operating activities
Cash flows from investing activities
Payments for acquisition of royalty financial assets at fair value through profit and loss
Cash received from royalty financial asset
Finance income
Investment in subsidiary
Loans to granted to subsidiary undertakings
Loan repayments from subsidiary undertakings
Net cash used in investing activities
Cash flows from financing activities
Issue of share capital
Share issue costs and AIM listing fees
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents during the year/period
Cash at the beginning of year/period
Effect of foreign exchange rate
Cash and cash equivalents at the end of the year/period
The notes on pages 57 to 72 are an integral part of these financial statements.
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Financial Statements
Notes to the financial statements
1. GENERAL INFORMATION
Trident Royalties plc is a company incorporated and domiciled in the United Kingdom. The Company is a public limited company,
which is listed on AIM of the London Stock Exchange, incorporated and domiciled in England and Wales. The address of the registered
office is 2 Stone Buildings, Lincoln’s Inn, London, WC2A 3TH.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set out below. The policies have been
consistently applied throughout the year/period presented, unless otherwise stated.
Basis of preparation
The Group’s consolidated financial statements and the Parent Company financial statements have been prepared in accordance
international accounting standards in conformity with the Companies Act 2006.
The financial statements have been prepared under the historical cost convention except for financial assets at fair value through profit and
loss account and contingent consideration which are measured at fair value. The principal accounting policies adopted are set out below.
The Group financial statements are presented in US Dollars ($) and rounded to the nearest thousand.
The preparation of the Group financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher
degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are
explained below.
Going concern
The financial position of the Group and cash flows as at 31 December 2020 are set out on pages 51 and 53. The Group meets its day-to-day
working capital and other funding requirements with its current cash, raised through equity placings and revenue from its cash generating
royalties. The Group actively manages its financial risks as set out in note 21 and operates Board-approved financial policies, that are
designed to ensure that the Group maintains an adequate level of headroom and effectively mitigates financial risks.
On the basis of current financial projections (at least 12 months from the date of approval of the financial statements), the Directors have a
reasonable expectation that the Group has adequate resources to continue in operational existence, and meet its liabilities as they fall due,
for the foreseeable future. Accordingly, the Directors consider it appropriate to adopt the going concern basis in preparing these financial
statements.
COVID-19
The Group has not been made aware of any significant issues at the operations in which it has made investments. Whilst the mining sector
as a whole has been affected by COVID-19 – mainly in respect to their supply chains – their very nature (usually self-contained mine sites)
has been such that mitigation of COVID-19 is easier than in other industries. The Board continues to monitor the impact of COVID-19 on the
ability of the Group to continue to pursue its strategy and will make appropriate changes should they be required. There is not considered
to be any material impacts on the reporting financial position and results of the Group as a result of COVID-19 as at the reporting date.
Standards, interpretations and amendments to published standards effective from 1 January 2020
There were no new standards or interpretations effective and adopted for the first time for the year beginning on or after 1 January 2020
that had a significant effect on the Group’s or Company’s financial statements.
These include:
• IFRS 3 – (Amendments) Business combinations – definition of a business
• IAS 1 and IAS 8 (Amendments) “Presentation of financial statements” and “Accounting policies, changes in accounting estimates and
errors” – definition of material Conceptual Framework – Amendments to references to the conceptual framework in IFRS Standards
• IAS 12 – Income taxes – clarification of treatment of deferred tax liabilities acquired through business combinations
Standards, interpretations and amendments to published standards not yet effective
The Directors have considered those standards and interpretations, which have not been applied in the financial statements, that are
in issue but not yet effective and do not consider that they will have a material impact on the future results of the Group or Company.
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Financial Statements
Notes to the financial statements
continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Basis of consolidation
The consolidated financial statements present the results of the Company and its subsidiaries as if they formed a single entity.
Intercompany transactions and balances between group companies are therefore eliminated in full.
At 31 December 2020, the consolidated financial statements combine those of the Company with those of its subsidiaries.
Subsidiaries are entities over which the Group has control. Control is achieved when the Group is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less
than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it
has power over an investee, including:
• The contractual arrangement with the other vote holders of the investee;
• Rights arising from other contractual arrangements; and
• The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more
of the three elements of control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during
the year are included in the Group financial statements from the date the Group gains control until the date the Group ceases to control
the subsidiary.
Investments in subsidiaries are accounted for at cost less impairment within the Company financial statements. Where necessary,
adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by
other members of the Group
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker
which is considered to be the Board.
Foreign currency
Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they
operate (their “functional currency”) are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and
liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary
assets and liabilities are recognised immediately in profit or loss.
Exchange gains and losses arising on the retranslation of monetary financial assets are treated as a separate component of the change
in fair value and recognised in profit or loss. Exchange gains and losses on non-monetary OCI financial assets form part of the overall gain
or loss in OCI recognised in respect of that financial instrument.
Translation into presentation currency
The Company’s functional currency changed from British pound (£) to US Dollars (US$) on 1 January 2020. For the comparative period the
Company’s functional currency was British pounds. The Group presents its financial information in US Dollars (US$). The functional currency
of TRR Services LLC and TRR Services Schweiz AG is US$ and the functional currency of TRR Services Australia Pty Ltd is AUD.
• Assets and liabilities for each financial reporting date presented (including comparatives) are translated at the closing rate of that financial
reporting period.
• Income and expenses for each income statement (including comparatives) is translated at exchange rates at the dates of transactions.
For practical reasons, the Company applies average exchange rates for the period.
• All resulting changes are recognised as a separate component of equity.
• Equity items are translated at exchange rates at the dates of transactions.
The following exchange rates were used in the retranslation of these financial statements.
US$/GBP closing rate at financial reporting date
US$/GBP average exchange rate during the reporting period
US$/AUD closing rate at financial reporting date
US$/AUD average exchange rate during the reporting period
58
Trident Royalties plc Annual Report & Financial Statements 2020
At
At
31 December 31 December
2019
1.3114
1.2656
0.6948
0.6839
2020
n/a
n/a
0.7736
0.6948
Trident Royalties AR_20_FS_AW.qxp_Trident Royalties_AR 19/04/2021 16:23 Page 59
Financial Statements
Notes to the financial statements
continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Intangible assets
Royalty arrangements
Royalty arrangements which are identified and classified as intangible assets are initially measured at cost, including any transaction costs,
less provision for impairment where required.
Upon commencement of production at the underlying mining operation intangible assets are amortised on a straight-line basis over
the life of the mine. Amortisation rates are adjusted on a prospective basis for all changes to estimates of the life of mine.
Impairment
At each reporting date, the Group reviews the carrying amounts of its intangible assets to determine whether there is any indication that
those assets are impaired. If such an indication is identified, the recoverable amount of the asset is estimated in order to determine the
extent of any impairment. The recoverable amount is the higher of fair value (less costs of disposal) and value in use. In assessing value
in use, the estimated cash flows are discounted to their present value using a pre-tax discount rate. If the recoverable amount of the asset
is estimated to be less than its carrying value, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is
also recognised in the income statement. Should an impairment loss subsequently reverse, the carrying amount of the asset is increased to
the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would
have been determined had no impairment been recognised. A reversal of an impairment loss is also recognised in the income statement.
Investments
Investment in subsidiaries are recorded at cost less provision for impairment.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
Current tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted in the countries in which the Group
operates by the Statement of Financial Position date and is based on tax taxable profit for the year.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance
sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be
utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the
initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor
the accounting profit.
Deferred tax is calculated at the tax rates that are expected to apply in the year when the liability is settled or the asset is realised. Deferred
tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the
deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current
tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive
income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly
in equity respectively.
Share-based payments
The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount
to be expensed is determined by reference to the fair value of the options granted, excluding the impact of any non-market service and
performance vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are
expected to vest. The total amount expensed is recognised over the vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At each reporting date, the entity revises its estimates of the number of options that are expected
to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit and loss,
with a corresponding adjustment to equity.
Trident Royalties plc Annual Report & Financial Statements 2020
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Financial Statements
Notes to the financial statements
continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Financial instruments
Financial instruments comprise royalty financial assets, cash and cash equivalents, financial assets and liabilities and equity instruments.
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial
instrument and comprise trade and other receivables and trade and other payables respectively.
Cash and cash equivalents
Cash and cash equivalents comprise cash at hand and current and deposit balances at banks.
Trade and other receivables
Trade and other receivables are accounted for under IFRS 9 using the expected credit loss model and are initially recognised at fair value
and subsequently measured at amortised cost less any allowance for expected credit losses.
Royalty financial assets at fair value through profit and loss
Royalty financial assets are recognised or derecognised on completion date where a purchase or sale of the royalty is under a contract,
and are initially measured at fair value, including transaction costs.
All of the Group’s royalty financial assets have been designated as at fair value through profit and loss (“FVTPL”).
The royalty financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses
recognised in the “revaluation of royalty financial assets” line item of the income statement. Fair value is determined in the manner
described in note 13.
Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward-looking
expected credit loss model.
Trade and other payables
Trade and other payables are recognised initially at their fair value and subsequently measured at amortised cost using the effective
interest method.
The Group does not have any third party borrowings.
Equity instruments and reserves description
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.
Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.
Ordinary shares are classified as equity.
Deferred shares are classified as equity but have restricted rights such that they have no economic value.
Share capital account represents the nominal value of the ordinary and deferred shares issued.
The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated
with the issuing of shares are deducted from share premium, net of any related income tax benefits.
Share based payment reserve represents equity-settled share-based employee remuneration until such share options are exercised.
Foreign exchange reserve represents
• differences arising on the opening net assets retranslation at a closing rate that differs from opening rate; and
• differences arising from retranslating the income statement at exchange rates at the dates of transactions at average rates and assets
and liabilities at the closing rate.
Retained earnings include all current and prior period results as disclosed in the Statement of Comprehensive Income.
Revenue recognition
The revenue of the Group comprises mainly royalty income. It is measured at the fair value of the consideration received or receivable
after deducting discounts, value added tax and other withholding tax. The royalty income becomes receivable on extraction and sale
of the relevant underlying commodity, and by determination of the relevant royalty agreement.
Interest income is accrued on a time basis, by reference to the carrying value and at the effective interest rate applicable.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that
an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The Group’s estimate in respect of contingent consideration that may be payable following the acquisition of Royalty Intangible Assets,
is capitalised as an asset acquisition cost. The value of the provision is determined by the amounts deemed payable by management
at the balance sheet date.
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Financial Statements
Notes to the financial statements
continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Critical accounting estimates and judgements
The preparation of the financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.
Although these estimates are based on management’s best knowledge of the amounts, events or actions, actual results ultimately may
differ from these estimates.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances.
Critical accounting judgements
Classification of royalty arrangements: initial recognition and subsequent measurement
The Directors must decide whether the Group’s royalty arrangements should be classified as:
• Intangible assets in accordance with IAS 38 Intangible Assets; or
• Financial assets in accordance with IFRS 9 Financial Instruments
The Directors use the following selection criteria to identify the characteristics which determine which accounting standard to apply
to each royalty arrangement:
Type 1 – Intangible assets: Royalties, are mainly classified as intangible assets by the Group. The Group considers the substance of a simple
royalty to be economically similar to holding a direct interest in the underlying mineral asset. Existence risk (the commodity physically
existing in the quantity demonstrated), production risk (that the operator can achieve production and operate a commercially viable
project), timing risk (commencement and quantity produced, determined by the operator) and price risk (returns vary depending on the
future commodity price, driven by future supply and demand) are all risks which the Group participates in on a similar basis to an owner of
the underlying mineral licence. Furthermore, in a royalty intangible, there is only a right to receive cash to the extent there is production and
there are no interest payments, minimum payment obligations or means to enforce production or guarantee repayment. These are
accounted for as intangible assets under IAS 38.
Type 2 – Financial royalty assets (royalties with additional financial protection): In certain circumstances where the risk is considered too high,
the Group will look to introduce additional protective measures. This has taken the form of minimum payment terms. Once an operation is
in production, these mechanisms generally fall away such that the royalty will display identical characteristics and risk profile to the intangible
royalties; however, it is the contractual right to enforce the receipt of cash which results in these royalties being accounted for as financial
assets under IFRS 9.
Accounting classification
Substance of contractual terms
Accounting treatment
Examples
Royalty intangible assets
Simple royalty with
no right to receive cash other
than through a royalty related
to production
• Koolyanobbing
• Spring Hill
• Lake Rebecca
• Investment is presented as
an intangible asset and
carried at cost less
accumulated amortisation
and any impairment
provision
• Royalty income is recognised
as revenue in the income
statement
• Intangible asset is assessed
for indicators of impairment
at each period end
Royalty financial instruments
Royalty arrangement with a
contractual right to receive cash
(e.g. through a minimum
payment profile)
• Financial asset is recognised
at fair value on the balance
sheet
• Fair value movements taken
• Mimbula
through the income
statement (FVTPL)
• Royalty income is not
recognised as revenue
in the income statement and
instead reduces the fair value
of the asset
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Financial Statements
Notes to the financial statements
continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Going concern
The Group and Company financial statements have been prepared on a going concern basis as the Directors have assessed the Group’s
and Company’s ability to continue in operational existence for the foreseeable future. The operations are currently being funded through
existing cash reserves and royalty income.
The financial statements do not include the adjustments that would result if the Group or Company were not to continue as a going
concern. See Going Concern section on page 45 for more details.
Loans to subsidiaries
Loans to subsidiaries have a carrying value at 31 December 2020 of US$10.1m (2019: US$0.1m). The Directors have assessed the
carrying value to be equal to fair value on the basis that the loans will be recovered once the subsidiaries as they generate cash flow from
their underlying investments in royalty assets. In the event that the underlying value of the royalty asset becomes impaired, and the loans
are not considered to be recoverable, an impairment charge will then be recognised in the Statement of Comprehensive Income.
Key sources of estimation uncertainty
Assessment of fair value of royalty arrangements held at fair value
The Mimbula royalty is held at fair value. Fair value is determined based on discounted cash flow models (and other valuation
techniques) using assumptions considered to be reasonable and consistent with those that would be applied by a market participant.
The determination of assumptions used in assessing fair values is subjective and the use of different valuation assumptions could have
a significant impact on financial results.
In particular, expected future cash flows, which are used in discounted cash flows models, are inherently uncertain and could materially
change over time. They are significantly affected by a number of factors including commodity prices, exchange rate changes and reserves
and resources and timing/likelihood of mines entering production if not already generating income.
The key assumptions relating to the Group’s royalty financial asset classified as fair value through profit or loss is set out in note 13.
Impairment review of intangible assets
Intangible assets are assessed for indicators of impairment at each reporting date with the assessment considering variables such as the
production profiles, production commissioning dates where applicable, forecast commodity prices and guidance from the mine operators.
Where indicators are identified, the starting point for the impairment review will be to measure the expected future cash flows expected from
the royalty arrangement should the project continue/come into production. A pre-tax nominal discount rate is applied to the future cash flows.
The discount rate of each royalty arrangement is specific to the underlying project, making reference to the risk-free rate of return expected on
an investment with the same time horizon as the expected mine life, together with the country risk associated with the location of the
operation. Changes in discount rate are most sensitive to changes in the risk-free rate, country risk premiums and the expected mine life.
The outcome of this net present value calculation is then risk weighted to reflect management’s current assessment of the overall likelihood
and timing of each project coming into production and royalty income arising. This assessment is impacted by news flow relating to the
underlying operation in the year, in conjunction with management’s assessment of the economic viability of the project based on
commodity price projections.
Amortisation
Currently the Group amortises its producing royalty intangible assets on a straight line basis over their estimated useless economic life.
Management regularly review the life of its assets and amortisation rates (and methodology – including units of production if applicable)
may be adjusted for changes to the estimates.
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Financial Statements
Notes to the financial statements
continued
3. BUSINESS AND GEOGRAPHICAL REPORTING
The Group’s chief operating decision maker is considered to be the Executive Board. The Executive Board evaluates the financial performance
of the Group by reference to its diversified portfolio - split between precious, bulk and base metal assets - its reportable segments.
The following individual royalty arrangements are aggregated into the reportable segments:
Precious: Lake Rebecca, Spring Hill
Bulk: Koolyanobbing
Base: Mimbula
Below is a summary of the Group’s results, assets and liabilities by reportable segment as presented to the Executive Board.
Operating profit/(loss) is stated before revaluation of royalty financial instruments, one off costs, finance income and expense
foreign exchange gains and taxation.
Segmental information as at 31 December 2020:
Royalty related revenue
Amortisation of royalty intangible assets
Gross profit
Operating expenses
Total segment operating profit/(loss)
Total segment assets
Total segment liabilities
Precious
US$’000
-
-
-
-
-
Bulk
US$’000
1,668
(1,193)
475
-
475
Base
US$’000
-
-
-
-
-
Other
US$’000
-
-
-
(2,529)
(2,529)
Total
US$’000
1,668
(1,193)
475
(2,529)
(2,054)
7,032
4,246
7,454
7,698
26,430
464
-
-
457
921
As at 31 December 2020 the Group was receiving royalty income from Koolyanobbing (bulk segment) and Mimbula (base segment) which
is accounted for as financial asset (see note 13). All of the segmental assets were additions during the year. A fair value gain of US$2.53m
(2019: nil) was recognised in the base segment.
Segmental information as at 31 December 2019:
Royalty related revenue
Amortisation of royalty intangible assets
Gross profit
Operating expenses
Total segment operating result
Total segment assets
Total segment liabilities
4. EXPENSES BY NATURE
Employee benefit expense (note 6)
Share based payments
Royalty acquisition costs
Legal and professional
Advertising and marketing
Stock Exchange fees
Audit and tax
Other operating expenses
Total operating expenses
Precious
US$’000
-
-
-
-
-
-
-
Bulk
US$’000
-
-
-
-
-
-
-
Base
US$’000
-
-
-
-
-
Other
US$’000
-
-
-
(689)
-
Total
US$’000
-
-
-
(689)
-
-
-
4,146
4,146
44
44
Year ended Period ended
31 December 31 December
2019
US$’000
144
-
-
104
10
8
49
65
380
2020
US$’000
980
63
386
723
144
16
139
78
2,529
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Financial Statements
Notes to the financial statements
continued
5. AUDITOR REMUNERATION
During the year the Company obtained the following services from the auditor:
Fees payable to the auditor for the audit of the Company
Total auditor’s remuneration
Other assurance services pursuant to legislation
Year ended Period ended
31 December 31 December
2019
US$’000
25
25
2020
US$’000
48
48
48
-
Details of the Company’s policy on the use of auditors for non-audit services, the reasons why the auditor was used rather than another
supplier and how the auditor’s independence and objectivity are safeguarded are set out in the Audit Committee Report.
6. EMPLOYEE BENEFIT EXPENSE
Directors’ salary and fees
Employee costs
Social security costs
Share-based payments
Total employee benefit expense
Group
Company
Group
Year ended
Company
Year ended Period ended Period ended
31 December 31 December 31 December 31 December
2019
US$’000
112
24
8
-
144
2020
US$’000
243
33
24
5
305
2020
US$’000
602
314
64
63
1,043
2019
US$’000
112
24
8
-
144
All the wages and salaries were paid to the Directors and senior management. There were no employees in the year/period other than the
Directors and senior management. Further disclosures in respect of Directors’ remuneration are included within the Directors’ Remuneration
Report. The average number of employees (including Directors) during the year was 5 (2019: 2).
7. FINANCE INCOME
Interest from bank deposits
Total
8. FINANCE EXPENSE
Other finance costs
Total
Year ended Period ended
31 December 31 December
2019
US$’000
-
-
2020
US$’000
21
21
Year ended Period ended
31 December 31 December
2019
US$’000
-
-
2020
US$’000
20
20
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Financial Statements
Notes to the financial statements
continued
9. INCOME TAX
Analysis of charge for year:
UK corporation tax
Overseas taxation
Current tax expense
Deferred tax credit in current year
Income tax credit
Factors affecting the tax charge for the year/period:
Profit/(loss) before taxation
Tax on result calculated at UK corporation tax of 19% (2019: 19%)
Tax effects of:
Items non-taxable/deductible for tax purposes:
Non-deductible expenses
Non-taxable income
Temporary and other differences:
Utilisation of losses not previously recognised
Current year losses not recognised
Effect of differences between local and UK tax rates
Other adjustments
Income tax
Year ended Period ended
31 December 31 December
2019
US$’000
2020
US$’000
27
95
122
(175)
(53)
-
-
-
-
-
Year ended Period ended
31 December 31 December
2019
US$’000
2020
US$’000
1,654
314
62
(202)
(160)
-
(35)
(32)
(53)
(689)
(131)
-
-
-
134
(3)
-
-
The Group is subject to taxation in United Kingdom, USA and Australia with applicable tax rates of 19.00%, 21.00% and 30.00% respectively.
The Group does not have any unresolved tax matters or disputes with the tax authorities in the jurisdictions in which it operates.
Deferred taxation
The following are the deferred tax assets and liabilities recognised by the Group and the movements during the year:
Group
At 1 May 2019 and 31 December 2019
Credit/(charge) to income statement
Credit to other comprehensive income
Exchange differences
At 31 December 2020
Company
At 1 May 2019 and 31 December 2019
Credit to income statement
Credit to other comprehensive income
At 31 December 2020
Tax losses
US$000
-
Other
US$000
-
Total
US$000
-
220
-
-
220
(45)
17
18
(10)
175
17
18
210
Tax losses
US$000
-
Other
US$000
-
Total
US$000
-
-
-
-
12
17
29
12
17
29
At 31 December 2020, the Group had no balances in respect of which no deferred asset has been recognised (2019: US$0.80m).
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Financial Statements
Notes to the financial statements
continued
10. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number
of ordinary shares in issue during the period.
Net profit/(loss) attributable to shareholders
Earnings - basic
Earnings - diluted
Year ended Period ended
31 December 31 December
2019
US$’000
(689)
(689)
2020
US$’000
1,707
1,707
The weighted average number of shares in issue for the purpose of calculating basic and diluted earnings per share and basic and diluted
adjusted earnings per share are as follows:
Weighted average number of shares in issue
Basic number of shares outstanding
Dilutive effect of Employee Share Option Scheme
Diluted number of shares outstanding
Earnings per share – basic
Earnings per share - diluted
11. DIVIDENDS
There were no dividends paid or proposed by the Company in either period.
12. ROYALTY INTANGIBLE ASSETS
Group
Cost
At 1 January 2020
Acquisition of Koolyanobbing Royalty
Acquisition of Spring Hill Royalty
Acquisition of Lake Rebecca Royalty
Exchange differences
At 31 December 2020
Accumulated amortisation
At 1 January 2020
Amortisation
Exchange differences
At 31 December 2020
Net book value at 31 December 2020
2020
69,528,254
61,169
69,589,423
2019
22,000,000
-
22,000,000
2.45 c
2.45 c
(3.13) c
(3.13) c
2020
US$’000
2019
US$’000
-
4,797
772
5,632
1,145
12,346
-
(1,193)
(135)
(1,328)
11,018
-
-
-
-
-
-
-
-
-
-
-
Koolyanobbing royalty
On 3 June 2020 the Group acquired a 1.5% free on-board revenue royalty covering part of the producing Koolyanobbing Iron Ore
Operation in Western Australia for a total consideration of A$6.65m (US$4.65m). In addition, A$0.22m (US$0.15m) of directly attributable
costs were capitalised to bring the total cost of the acquisition to A$6.87m (US$4.80m).
Spring Hill royalty
In July 2020 the Group acquired a variable price gold royalty over production from the Spring Hill Gold Project located in Australia’s
Northern Territory. The royalty was acquired for staged consideration of cash and/or equity for total consideration of A$1.0m (US$0.72m)
plus costs of A$0.07m (US$0.05m), of which A$0.4m was paid upon completion and the balance following the satisfaction of certain
production milestones from Spring Hill (see note 18 contingent consideration).
Lake Rebecca royalty
On 24 September 2020 the Group acquired a 1.5% net smelter gold royalty over tenement E28/1610, which hosts the entirety of the million
ounce Lake Rebecca Gold Project, currently owned and operated by ASX-listed Apollo Consolidated Limited in Western Australia. The royalty
was acquired for a total consideration of A$8.00m (US$5.62m), comprising A$7.00m in cash and A$1.00m in new ordinary shares in Trident.
All three intangible assets are directly owned by TRR Services Australia pty, a 100% subsidiary of Trident Royalties plc, whose functional currency
is the Australian dollar and is therefore subject to foreign exchange fluctuations. The Company does not hold any royalty intangible assets.
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Financial Statements
Notes to the financial statements
continued
13. ROYALTY FINANCIAL ASSETS
In July 2020 the Group acquired the Mimbula Royalty from Moxico Resources plc a staged GRR over production from the operating
Mimbula copper mine and associated stockpiles located in Zambia’s prolific Copperbelt Province. The GRR was acquired for cash
consideration of US$5.00m. Trident is entitled to royalty payments on production commencing from 1 July 2020 and extending in
perpetuity. This royalty asset is classified as FVTPL.
Trident will receive either a Minimum Payment (“MP”) or royalty payment, whichever is higher until June 2023. Thereafter, Trident will only
receive royalty payments. The royalty payments are calculated as a percentage of the gross revenue derived from sale of finished copper
and copper concentrate. Per the terms of the agreement, the royalty percentage is calculated as follows:
a. During the MP period, 1.25% of gross revenue;
b. During the period commencing on the day after the expiry of MP period and ending on the date on which royalty payments have
been made to Trident in respect of a total aggregate quantity of no less than 575,000 tonnes of copper cathode or other finished
copper product, 0.3% of gross revenue; and
c. during the period commencing on the day after the expiry of the MP period and continuing for the duration of the agreement,
0.2% of gross revenue.
Group and Company
Fair value
At 1 January 2020
Acquisition of Mimbula
Royalties due or received
Revaluation of royalty financial asset recognised in profit or loss
At 31 December 2020
2020
US$’000
-
5,000
(75)
2,528
7,453
2019
US$’000
-
-
-
-
-
As at 31 December 2020 the Group determined the fair value of Mimbula by calculating the discounted future cash flows of the royalty
with a 12% pre-tax nominal discount rate, resulting in a valuation of US$7.45m. This results in a fair value gain in the income statement of
US$2.53m. The key input assumptions are discount rate and commodity price.
If the discount rate used were to increase or decrease by 2% the valuation effect would be a US$0.43m reduction and a US$0.49m
increase, respectively.
If the commodity price used was to increase or decrease by 10% the valuation effect would be a US$0.44m increase and a US$0.59m
reduction, respectively.
14. INVESTMENTS IN SUBSIDIARIES
Company
Cost
At 31 December 2019 and 1 January 2020
Investment in subsidiary
At 31 December 2020
US$’000
1
112
113
As at 31 December 2020 the Company held interests in the following subsidiary companies:
Country Proportion Registered
registration held office
TRR Services LLC USA 100% 7233 S.Kellerman Way,
Aurora, CO 80016
TRR Services Australia Pty Limited Australia 100% Floor 2, 44A Kings Park Road,
West Perth, WA 6005
TRR Services Schweiz AG Switzerland 100% Grafenauweg 8, 6300 Zug
TRR Services UK Ltd United Kingdom 100% 2 Stone Buildings, Lincoln’s Inn,
London, England, WC2A 3TH
Nature
of business
Service company
Service company
Service company
Service company
Trident Royalties plc Annual Report & Financial Statements 2020
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Financial Statements
Notes to the financial statements
continued
15. AMOUNT DUE FROM SUBSIDIARY UNDERTAKINGS
Company
Loans to subsidiaries
Total
2020
US$’000
10,089
10,089
2019
US$’000
88
88
During the year ended 31 December 2020 the maximum amount owed by the subsidiaries to the Parent Company was US$10.25m (2019:
US$0.09m). The related party loans are unsecured, repayable upon demand and have a 6% interest rate. The fair value of loans to
subsidiaries is the same as their carrying values stated above.
16. TRADE AND OTHER RECEIVABLES
Prepayments and accrued income
Indirect taxes recoverable
Total
Group
2020
US$’000
517
261
778
Company
2020
US$’000
144
261
405
Group
2019
US$’000
11
-
11
Company
2019
US$’000
11
-
11
Due to the short-term nature of the current receivables, their carrying amount is considered to be approximate to their fair value.
17. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Group
2020
US$’000
6,971
Company
2020
US$’000
6,547
Group
2019
US$’000
4,135
Company
2019
US$’000
4,120
All of the Company’s cash and cash equivalents are held in accounts which bear interest at floating rates and the Directors consider their
carrying amount approximates to their fair value. Details of the credit risk associated with cash and cash equivalents is set out in note 21.
18. TRADE AND OTHER PAYABLES
Trade payables
Other taxation and social security
Accrued expenses
Total
Group
2020
US$’000
109
164
62
335
Company
2020
US$’000
107
-
55
162
Group
2019
US$’000
5
7
32
44
Company
2019
US$’000
6
-
31
37
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The Company has financial
risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms. The Directors consider that the
carrying amount of trade payables approximates to their fair value.
Contingent consideration
Group
Contingent consideration
2020
US$’000
464
2019
US$’000
-
Contingent consideration relates to the acquisition of the Spring Hill royalty. A total of A$600k remains payable to the vendor on the
operator meeting certain production milestones. The above amount is managements estimate of the amounts due assuming the operation
meets those production limits that trigger payment of the additional consideration. The amount is discounted and expected due after more
than one year.
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Financial Statements
Notes to the financial statements
continued
19. SHARE CAPITAL AND SHARE PREMIUM
Group and Company
At 1 January 2019
Difference arising on re-translation of opening balances at period end rate
At 31 December 2019
Share issue – placing
Share issue – advisor shares
Share issue – Lake Rebecca
Share issue expenses
Cancellation of deferred shares
At 31 December 2020
Number
of ordinary
shares of 1p
22,000,000
-
22,000,000
80,000,000
1,500,000
1,862,556
-
-
105,362,556
Number
of deferred
shares of 1p
3,000,000
-
3,000,000
-
-
-
-
(3,000,000)
-
Share
capital
US$’000
326
2
328
1,004
19
23
-
(39)
1,335
Share
premium
US$’000
4,759
28
4,787
19,077
358
684
(1,657)
39
23,288
The deferred shares have restricted rights such that they have no economic value and were cancelled in the year.
Share issues during the year:
On 2 June 2020, 80,000,000 ordinary shares were issued for cash at 20p per share.
On 2 June 2020, 1,500,000 ordinary shares were issued to advisors in lieu of services rendered.
On 29 October 2020, 1,862,556 ordinary shares were issued as part of the consideration payable for the Lake Rebecca royalty.
Shares issued subsequent to the year-end
On 24 March 2021, 60,800,000 ordinary shares were issued for cash at 34p per share. A further 4,213,720 ordinary shares were issued
as part of the consideration for the acquisition of the Thacker Pass royalty (see note 25).
On 31 March 2021, 848,059 ordinary shares were issued at 35.98p in order to complete the acquisition of the Western Australian gold
royalties from Talga Resources Limited.
On 8 April 2021, 6,878,027 ordinary shares were issued at 32.03p in order to complete the acquisition of the Pukaqaqa copper royalty
from Bellatrix Limited, a wholly owned subsidiary of Orion Resource Partners.
20. SHARE BASED PAYMENTS
Share options
During the year share options were granted to the Executive Director and Senior Management of the Company. Under IFRS 2 “Share-based
Payments”, the Company considers these to be equity settled share-based payments and determines the fair value of the options issued to
Directors and employees as remuneration and recognises the amount as an expense in the statement of income with a corresponding
increase in equity.
At 31 December 2020, the Company had outstanding options to subscribe for Ordinary shares as follows:
Number of
options granted Vesting date Expiry date
Option exercise price
£0.20 1,041,666 2 June 2021 2 June 2030
£0.24 1,041,667 2 June 2022 2 June 2030
£0.28 1,041,667 2 June 2023 2 June 2030
£0.2965 533,334 20 December 2022 20 December 2030
£0.3558 533,333 20 December 2023 20 December 2030
£0.4551 533,333 20 December 2024 20 December 2030
Total granted during the year 4,725,000
Fair value of
individual option
£
0.0630
0.0608
0.0605
0.126
0.118
0.106
In the year ended 31 December 2019 no share options were granted.
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Financial Statements
Notes to the financial statements
continued
20. SHARE BASED PAYMENTS CONTINUED
The following information is relevant in the determination of the fair value of options granted 2 June 2020:
Option exercise price
Fair value of one option, £
Option pricing model used
Weighted average share price at grant date, £
Weighted average contractual life, years
Expected volatility,%
Expected dividend growth rate,%
Risk-free interest rate (5 year bond),%
£0.20
0.0630
£0.24
0.0608
£0.28
0.0605
Black-Scholes Black-Scholes Black Scholes
0.22
10
45%
0%
0.29%
0.22
10
45%
0%
0.29%
0.22
10
45%
0%
0.29%
The following information is relevant in the determination of the fair value of options granted 18 December 2020:
Option exercise price
Fair value of one option, £
Option pricing model used
Weighted average share price at grant date, £
Weighted average contractual life, years
Expected volatility,%
Expected dividend growth rate,%
Risk-free interest rate (5 year bond),%
£0.2965
0.126
£0.3558
0.118
£0.4551
0.106
Black-Scholes Black-Scholes Black Scholes
0.37
10
45%
0%
0.29%
0.37
10
45%
0%
0.29%
0.37
10
45%
0%
0.29%
Share-based remuneration expense related to the share options granted during the reporting period is included in the administration
expenses line in the consolidated income statement in the amount of US$0.06m (31/12/2019: Nil).
21. FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks which result from its operating and investing activities; market risk (foreign
currency exchange risk and commodity price risk), liquidity risk, capital risk and credit risk. These risks are mitigated wherever possible by the
Group’s financial management policies and practices described below. The Group’s financial risk management is carried out by the finance
team led by the Chief Financial Officer and under policies approved by the Board. Group finance identifies, evaluates and mitigates financial
risks in close co-operation with the Group’s senior management team.
Capital risk
The Group’s objectives when managing capital are:
• to safeguard the Group’s ability to continue as a going concern, so that it continues to provide returns and benefits for shareholders;
• to support the Group’s growth; and
• to provide capital for the purpose of strengthening the Group’s risk management capability
The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns,
taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected
operating cash flows, projected capital expenditures and projected strategic investment opportunities. Management regards total equity as
capital and reserves, for capital management purposes. The Group is not subject to externally imposed capital requirements.
Commodity price risk
The royalty portfolio exposes the Group to commodity price risk through fluctuations in commodity prices of its royalty investments
particularly the prices of iron ore, gold and copper. The Board consider that the strategy of the Group to build a diversified portfolio of
royalty assets that mirrors the global natural resources sector is sufficient mitigation with regard to the exposure to commodity price risk.
Prior to committing to royalty acquisitions the Board obtain independent price forecasts to ensure that such investments are priced in
accordance with consensus pricing. The Group does not hedge against commodity price movements
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Financial Statements
Notes to the financial statements
continued
Credit risk
Credit risk refers to the risk that the Group’s financial assets will be impaired by the default of a third party (being non-payment within the
agreed credit terms). The Group is exposed to credit risk primarily on its cash and cash equivalent balances as set out in note 17 and on
its trade and other receivable balances as set out in note 16. The Group’s credit risk is primarily attributable to its other receivables, being
royalty receivables. It is the policy of the Group to present the amounts in the balance sheet net of allowances for doubtful receivables,
estimated by the Group’s management based on prior experience and the current economic environment. In certain cases, the Group
has the right to audit the reported royalty income.
For banks and financial institutions, only parties with a minimum credit rating of BBB are accepted. The majority of cash is held with
HSBC Bank plc in the UK and household names in the US and Australia.
The Directors have considered the credit exposures and do not consider that they pose a material risk at the present time. The credit risk for
cash and cash equivalents is managed by ensuring that all surplus funds are deposited only with financial institutions with high quality credit
ratings. There are currently no expected credit losses.
Liquidity risk
Liquidity risk relates to the ability of the Group to meet future obligations and financial liabilities as and when they fall due.
The Group currently has sufficient cash resources to facilitate the trade and other payables and contingent consideration when they fall due.
The Group has no borrowings as at 31 December 2020 (2019: nil).
Future expected payments
Group
Trade and other payables within one year
Current tax liabilities within one year
Contingent consideration due > one year
2020
US$’000
336
121
464
2019
US$’000
44
-
-
Foreign exchange risk
The Group is exposed to foreign exchange risk arising from currency exposures, primarily with respect to the United States Dollar,
British Pound (GBP) and the Australian Dollar.
The following table highlights the major currencies the Group operates in and the movements against the US Dollar during the course
of the year:
Movement
British Pound
Australian Dollar
Average rate
2019
1.27
0.68
2020
1.28
0.69
Reporting spot rate
Movement
0.01
0.01
2020
1.37
0.77
2019
1.31
0.69
Movement
0.06
0.08
The Group’s exposure to foreign currency risk based on US Dollar equivalent carrying amounts of monetary items at the reported date:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Contingent consideration
Net exposure
2020
US$’000
US$
6,167
53
(21)
-
6,199
GBP
581
-
(142)
-
439
A$
223
260
(8)
(464)
11
2019
US$’000
GBP
439
-
-
-
439
US$
3,688
-
37
-
3,725
A$
8
-
-
-
8
The royalty financial asset is denominated in US dollar.
The Group does not hedge against foreign exchange movements.
Exchange rate sensitivity
A 10% strengthening of GBP or Australian dollar would have increased equity and profit before tax by the amounts shown below.
The analysis assumes that all other variables, including interest rates, remain constant:
British Pound
Australian Dollar
2020
US$’000
Profit
(84)
105
Equity
-
79
2019
US$’000
Loss
-
-
Equity
-
-
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Financial Statements
Notes to the financial statements
continued
22. FINANCIAL INSTRUMENTS
The Group and Company held the following investments in financial instruments:
Fair value through profit and loss
Royalty financial assets
Cash and cash equivalents
Financial assets at amortised cost
Trade and other receivables
Financial liabilities at amortised cost
Trade and other payables
Contingent consideration
Group
2020
US$’000
Company
2020
US$’000
7,453
6,971
313
171
464
7,453
6,547
10,042
161
-
Group
2019
US$’000
-
4,135
-
37
-
Company
2019
US$’000
-
4,120
88
36
-
Trade and other receivables and trade and other payables excludes all amounts considered to be statutory arrangements
(such as VAT recoverable and corporation tax) and prepayments.
Fair value hierarchy
The Group and Company only has one asset that is measured at fair value - the Mimbula investment that is recognised as a royalty financial asset
at fair value through profit and loss totalling US$7.45m (2019: nil). The asset is deemed to be a level 3 asset under the fair value hierarchy criteria –
some of the inputs for the fair value determination are not based on observable market data (mainly private resource data).
23. RELATED PARTY TRANSACTIONS
Mark Potter (a Non-Executive Director of the Company) is also a director of Thor Mining plc, from whom the Group acquired the Spring Hill
royalty. Mr Potter was not involved in the transaction. There are no other related party transactions, or transactions with Directors that require
disclosure except for the remuneration items disclosed in note 6. The disclosures in note 6 include the compensation of key management
personnel as all employees are considered to be key. The Company’s related parties consist of its subsidiaries and the transactions and
amounts due from them are disclosed in note 14.
24. CAPITAL COMMITMENTS
On 28 August 2020 the Group announced that it had entered into a binding conditional agreement with Talga Resources Limited
to acquire a package of gold royalties in Western Australia for total consideration of A$0.80m comprising A$0.25m in cash and the balance
in new ordinary shares. Completion was conditional, amongst other things, upon the approval of the Australian Foreign Investment Board.
Following satisfaction of outstanding conditions, the acquisition was completed on 30 March 2021.
On 18 December 2020 the Group announced that it had entered into a binding conditional agreement with Bellatrix Limited, a wholly owned
subsidiary of Orion Resource Partners to acquire three existing royalties over the Pukaqaqa Copper Project in Peru for total consideration of US$3.00m
payable in 6,878,027 new ordinary shares of Trident on completion. Completion was conditional, amongst other things, upon the issuance of a tax
certificate from the Peruvian tax authorities. Following satisfaction of outstanding conditions, the acquisition was completed on 8 April 2021.
25. EVENTS OCCURING AFTER THE REPORTING DATE
On 19 March 2021, the Group completed the acquisition of the Thacker Pass lithium royalty for US$28.00m, consideration was payable
by US$26.00m in cash and US$2.00m in new Trident shares issued at 34p on 24 March 2021. The cash component was funded by an
equity raise as described in note 19.
Prior to the Company’s agreed acquisition of the Thacker Pass royalty, Orion Resource Partners had engaged with other parties in respect
of a possible sale of the royalty. One unsuccessful bidder has commenced legal proceedings in Ontario, Canada against Orion Resource
Partners alleging that there was an oral agreement that gave rise to a binding agreement of purchase and sale and is seeking an order for
specific performance in respect of that alleged agreement. Orion Resource Partners has informed the Company that it denies that there was an
oral agreement, believes that the claims lack merit and has indicated that it will vigorously defend the proceedings. Following its due diligence
process, the Company also believes that the allegations lack merit and believes that an award for specific performance has a weak prospect of
success. Notwithstanding this, Trident believes that, in light of the remedy being sought, it may be joined as a party to the existing litigation as a
matter of process, which would not in itself be viewed by the Company as material. Alnitak Holdings LLC (the seller) provided Trident with an
indemnity (subject to customary limitations and exclusions) and which is guaranteed by Orion, in connection with certain potential claims which
may arise in the context of the transaction and in particular in connection with any such claims made against Orion Resources Partners.
26. ULTIMATE CONTROLLING PARTY
The company does not have a single controlling party.
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Company Information
Directors
James Kelly Non-Executive Chairman
Adam Davidson Chief Executive Officer
Al Gourley Non-Executive Director
Helen Pein Non-Executive Director
Mark Potter Non-Executive Director
Company Secretary
Sam Quinn, Silvertree Partners LLP
Registered address
2 Stone Buildings
Lincoln’s Inn
London
England
WC2A 3TH
Independent auditors
PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London
E14 4HD
Appointed brokers
Tamesis Partners LLP
125 Old Broad Street
London, EC2N 1AR
Shard Capital Partners LLP
20 Fenchurch Street
London, EC3M 3BY
Registrars
Neville Registrars
Neville House
Steelpark Road
Halesowen
B62 8HD
Nominated Adviser
Grant Thornton UK LLP
30 Finsbury Square
London, EC2A 1AG
Designed and produced by effektiv
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