MIDAS SHARE TIPS UPDATE: Lithium boosts Trident royalties
Thacker Pass in Nevada is home to the largest lithium deposit in the United States and one of the largest in the world. After several years of obtaining regulatory approval, construction of a mine has begun and first sales are expected in 2026.
Once operational, the mine should produce around 80,000 tonnes of lithium per year, generating almost $2.5 billion in annual revenue at current prices.
Thacker is a source of considerable enthusiasm in certain American circles. Lithium is a crucial component of electric car batteries, China dominates the market and President Biden is interested in moving production closer to home.
Thacker has a central role to play and auto giant General Motors signaled its support with a $650 million investment earlier this year.
Two years ago, Trident Royalties signed a royalty deal with the owners of Thacker Pass, giving the AIM-listed company 1.05 per cent of annual revenue, equivalent to $25 million at current prices.
Take control: Lithium is a crucial component in electric car batteries
Trident has come a long way since it went public in May 2020. Back then, CEO Adam Davidson had a royalty deal to his name, an iron ore project in Australia.
Today, there are 20 royalty agreements covering a variety of base and precious metals, including gold, silver and copper, as well as lithium. The projects cover the entire mining world, from the United States and Canada to Mexico and Brazil and areas of Africa.
More than half of the sites are already in production. The remainder is under construction or at a relatively early stage, but the combination is designed to generate a steady stream of income for many years.
Last week, Davidson showed that the strategy was paying off. Royalty income soared 45 percent in the first half of 2023, with further growth expected this year and in the future. Davidson also sold a group of gold royalties for $15.5 million, after paying $6.25 million for them two years ago.
And in recent weeks, two new royalty deals have been completed: a lithium deal in Utah and a gold deal in Mali, which may seem risky but is reassuringly close to a large, established U.S. mine.
Midas Verdict: Midas recommended Trident Royalties in 2021 at 34p. The shares have risen 29 per cent to 43.5p since then, but should continue to gain ground. Davidson and finance chief Richard Hughes have spent more than £200,000 of their own money buying shares in recent months. Investors should take note.
Traded in: AIM Heart: TRR Contact: tridentroyalties.com or 001 757 208 5171