Trident Royalties has recently completed the acquisition of an existing lithium royalty on projects located in the Paradox Basin in Utah, United States. The deal, which was finalized with Atherton Resources, entails a total consideration of $10 million.
The Deal: A Closer Look
The mining royalty and streaming company announced on Monday that the acquired royalty amounts to 2.50% of the net smelter return. This refers to the net revenue received by the mine owner from sales, after transportation and refining costs have been deducted.
Additionally, Trident Royalties stands to gain 2% of net sales if Anson Resources, the owner of the projects, decides to sell any property within the basin.
Promising Financial Prospects
With spot prices hovering around $35,000 per metric ton of lithium-carbonate equivalent, Trident Royalties estimates that the royalty will generate a yearly payment of approximately $11 million during the first 10 years.
The payment will be split into three tranches, with $1.5 million in cash upon closing, followed by $3.5 million in the second tranche, and finally $5 million in the third.
Strengthening Battery Materials Position
Trident Royalties' Chief Executive, Adam Davidson, expressed his confidence in the Paradox project. He believes that it will not only solidify the company's standing in the battery materials sector but also provide exposure to direct lithium extraction, which has the potential to significantly contribute to future lithium supply.