Trident Post-Mortem

June 12 I exited Trident at 0.40 for around a -20% loss. June 13 they got an all cash offer for 0.49, which had I sold a day later would have brought me to roughly breakeven.  Unlucky timing, but what else happened?

Revising the Original Thesis

The initial thesis on Trident was that if in production Sonora (Ganfeng) or Thacker Pass (Lithium America) would be worth more than their market cap. Sonora royalty was in litigation in court and I liked their chances of winning in court.  Thacker Pass permitting was blocked in court and I liked their chances of winning.  I figured if they lost both the other assets would backstop the value somewhat and minimize my losses.

Sonora got nationlized by Mexico, so we never got to see if they would have prevailed in court.  That's a zero.

Thacker Pass got permitted and is under construction. It will be a few years before it starts production, but I think at that time it would be worth more than their current market cap.

During my holding period the price of lithium dropped like a lead balloon.  So despite Thacker Pass being in construction the market's perceived value of it dropped.

Why I Sold Early

I thought there was still value in Trident, but it would require holding until Thacker Pass was in production a few years from now. Meanwhile I was seeing other potential lithium investments trading way down and the relative valuation became hard to ignore.

In particular I was adding to my position in Lithium Royalty Corp $LIRC.TO and it was pretty clear to me that at current prices I'd rather own more of that than continue to hold Trident.

Deterra

Deterra has a nice iron or royalty, but were undersized as a royalty company and it can be hard to ride the commodity swings of a single commodity. With the acqusition of Trident they will be diversified in commodity and start to have the scale they need to justify their overhead. It was a smart acquisition on their part.