Trident Resources has acquired a gross revenue royalty (GRR) over production from Moxico Resources’ Mimbula copper mine, in Zambia, as well as over associated stockpiles, for $5-million in cash.
Trident is entitled to royalty payments on production starting from July 1 and extending in perpetuity.
Moxico is a private company, which is rapidly establishing itself as a significant Zambian copper producer under the leadership of Alan Davies, former CE of Rio Tinto’s Minerals and Energy division.
The acquisition represents Trident’s second cash-generative royalty following its purchase of a royalty over part of the Koolyanobbing Iron Ore operation in Western Australia operated by ASX-listed Mineral Resources, and is its first transaction since listing on Aim on June 2.
While no production forecasts have been published, using current prices, the minimum payment schedule for Trident’s royalty implies production of over 20 000 t of copper in 2021, rising to more than 27 000 t in 2022 and more than 40 000 t in 2023, says Trident.
The royalty is structured as a GRR, providing direct exposure to copper production without deductions for refining, transport and other costs.
Trident has negotiated a minimum payment schedule, which sees the royalty return the $5-million purchase consideration in a maximum of three years, with minimum quarterly payments. There are no required minimum payments on production for this year, although the GRR rate still applies.
However, Trident will receive minimum payments of $375 000 each quarter in 2021, minimum payments of $500 000 each quarter in 2022 and minimum payments of $750 000 in each of the first two quarters of 2023.
Trident will earn a GRR of 1.25% until it has received $5-million of royalty payments, with the GRR then dropping to 0.3%. It will further decrease to 0.2% after royalties have been received on 575 000 t of copper.