Deterra Royalties (DRR) John Tumazos Very Independent Research Virtual Metals Conference 2025 summary

Business model and strategy

• Operates a low-risk royalty model focused on bulk, base, and battery metals, providing top-line exposure and high margins.

• Maintains a disciplined, patient growth strategy, reinvesting strong cash flows into value-accretive assets and recycling capital from non-core disposals.

• Focuses on acquiring royalties in Australia, North America, and select South American and European markets, targeting developed mining jurisdictions.

• Avoids early-stage exploration, preferring projects near construction or production, and maintains a small, efficient team with a Denver office to enhance North American deal flow.

• Portfolio management emphasizes cost inflation resistance and limited exposure to capital and operating costs.

Portfolio highlights and financial performance

• Mining Area C (MAC) royalty is the flagship asset, generating record revenues and capacity payments after a major expansion.

• FY2025 revenue reached AUD 260 million (~$170 million), with underlying EBITDA of AUD 250 million and a 75% dividend payout ratio.

• Thacker Pass lithium royalty acquired, with a $13 million buyback expected, $3.5 billion in project funding secured, and significant future production optionality.

• Other assets include copper and lithium royalties in the U.S., Africa, and Peru, plus mineral sands projects in Australia, with diversified exposure across iron ore, lithium, copper, and precious metals.

• Recent divestments of non-core gold and silver assets generated strong returns, with $124 million in sales and IRRs above 30%.

Asset and market outlook

• Mining Area C is the world’s largest iron ore mine, with a nameplate capacity of 145 million tons and decades of expected life, delivering record production and capacity payments.

• Revenue is primarily driven by iron ore pricing, with volumes expected to remain stable in the medium term.

• Thacker Pass is under construction, with phase I funded, future phases planned to expand lithium output up to 160,000 tons/year, and production expected to start in late 2027.

• The lithium project is de-risked by government support and strong offtake agreements, offering long-life, low-cost exposure and significant expansion potential.

• Ongoing focus on value-accretive opportunities and near-term milestones in multiple projects.