Deterra Royalties (DRR) M&A announcement summary

Deal rationale and strategic fit

• Acquisition of a 1.75% net smelter royalty over the Santa Cruz Copper Project in Arizona for US$74.15 million aligns with the strategy to diversify and grow the royalty portfolio, adding a third core asset alongside iron ore and lithium.

• Santa Cruz is a large-scale, low-cost, long-life underground copper project in a tier one jurisdiction, supporting long-term copper demand trends from electrification and decarbonisation.

• Ivanhoe Electric is an experienced operator, and the project offers significant expansion potential.

Financial terms and conditions

• Purchase price is US$74.15 million, funded from existing debt facilities.

• The royalty rate is 1.68% for the first six years of production, then 1.57% thereafter, covering 84% of PFS reserves.

• Ivanhoe Electric has a right to buy back 25% of the royalty for approximately US$20 million, with Deterra retaining receipts prior to buyback.

• Right of first offer on an additional 0.25% royalty interest.

Synergies and expected cost savings

• Acquisition is accretive to net asset value, earnings, and cash flow per share once in production.

• Modernised royalty agreement includes enhanced information, access, and audit rights, providing a competitive advantage.

• Provides additional upside through potential conversion of resources into reserves within the royalty area.