AIM-listed diversified mining royalty and streaming company Trident Resources is acquiring a royalty from Moxico Resources over copper production from its operating Mimbula copper mine and associated stockpiles, located in Zambia’s prolific Copperbelt Province.
Trident Resources, soon to be renamed Trident Royalties, entered into a gross revenue royalty (GRR) with Moxico Resources in exchange for a cash consideration of US$5 million and Trident is entitled to royalty payments on production commencing from 1 July 2020 and extending in perpetuity.
Moxico will use the proceeds of the transaction to fund the continued ramp-up of the Mimbula mine, as well as for general working capital purposes. Royalty payments to Trident will be made on a quarterly basis.
Moxico has a highly experienced board and management team led by former Rio Tinto chief executive Alan Davies, who has assembled a strong team of proven mine operators with significant experience in the Zambian Copperbelt.
Mimbula has a significant JORC (2012) compliant measured and indicated resource of 69.8 Mt grading 0.96% total copper (TCu) for 668 000 t of contained copper and an inferred resources of 14.2 Mt grading 0.92% TCu as at August 2019. The asset is currently ramping-up production, having sold its first London Metal Exchange registered Grade A copper with a 99.99% purity in June 2020.
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 hectares.
The GRR rate will be 1.25%, decreasing to 0.3% upon $5 million being paid on the royalty, with a subsequent decrease to 0.2% once the royalty has been paid on 575 000 t 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.
If, in a given quarter during the minimum payment schedule period, Moxico makes GRR payments in excess of the quarterly minimum amount, it may carry over the excess amount to any subsequent quarter in which the GRR amount is less than the minimum payment schedule amount.
“We are delighted to announce the acquisition of a cash generative royalty over the Mimbula Mine, a long-life asset with favourable production and cost profiles,” says Trident CEO and executive directorAdam Davidson.
“The royalty will provide our investors with exposure to an attractive commodity produced from an asset located in a prolific region in the Zambian Copperbelt, operated by an experienced management team.
“In addition, the royalty is structured attractively such that Trident will rapidly recover its invested capital, while retaining long-life exposure to the growth of the asset. We are very pleased to have concluded transactions on two cash generative royalties within a short time frame and I look forward to reporting further on our progress as we continue to build a diversified portfolio of mining royalties and streams,” Davidson concludes.