Proactive Investors - Trident Royalties PLC (LON:TRR) said it is disappointed by the developments in Mexico announced by partner Ganfeng Lithium, which has revealed that its lithium concessions that comprise the Sonora lithium project have been cancelled.
Ganfeng has filed for recourse with the Mexican Secretary of Economy after the country's mining directorate (DGM) cancelled the concession, as the company believes its Mexican subsidiaries have complied with their obligations as required by local law.
Ganfeng said cancelling the concessions violates both Mexican law and international law, though it believes the cancellations issued by the DGM are not final.
Trident chief executive Adam Davidson said the developments "add risk to the transaction in addition to the ongoing litigation in Alberta, whereby the validity of the royalty is being challenged.
"We were cognizant of these risks at the time of the original transaction and structured the deal accordingly to protect against both political and litigation risk, such that we may recover our initial $2.5 million secured loan.
"We will continue to monitor the situation carefully and, at the present time, intend to maintain our rights in respect of the asset."
Trident noted that conditions requiring it to provide funding in respect of its 50%-owned Sonoroy joint venture to enable it to complete the acquisition of a 3% royalty "remain at Trident's discretion and includes a provision that, at the time of funding, no changes in Mexico's regulatory regime materially affects the Sonora project and that ongoing litigation regarding the royalty is favorably resolved".
If it elects to exit the joint venture, its initial US$2.5 million loan made to Sonoroy will be due six months from notification of termination.