(Sharecast News) – Mining royalty and streaming company Trident Royalties is to spend $10m on buying a royalty on a lithium project in Utah, expected to deliver $110m for Trident over the next decade.
Trident is buying a 2% royalty in the Paradox Lithium Project, an advanced stage lithium brine project and flagship asset for Australia-listed Anson Resources.
Anson’s definitive feasibility study last September outlined a phase-one operation producing an initial 13,074 tonnes of lithium carbonate each year for the first 10 years of the project’s predicted 23-year life.
At spot prices of $35,000 per tonne of lithium carbon equivalent, Trident’s royalty is expected to pay out $11 per annum for the first 10 years.
Trident pointed out that these estimates were solely based on an initial resource estimate of 239,000 tonnes, but this has since been upgraded to 346,109 tonnes, and the project’s economics will be updated shortly.
“For a modest initial cash outlay, we have secured exposure for shareholders to a well funded, highly attractive project with a pathway to cash generation and significant growth potential,” said Trident’s chief executive Adam Davidson. “The Paradox project reinforces our strong position in battery materials, and introduces exposure to direct lithium extraction, which could play a significant role in future lithium supply.”
Trident is paying the $10m for the royalty in three tranches: $1.5m upfront; $3.5m upon the start of commercial production and receipt of the first royalty; and $5m on the second anniversary.