Deterra Reports $112.3M Revenue, 94% EBITDA Margin, Declares 9c Dividend

Financial Overview Amid Market Volatility

Deterra Royalties Limited (ASX: DRR) closed the half-year ended 31 December 2024 with total revenue of $112.3 million, down 6% from the prior corresponding period. This decline primarily reflects a 22% drop in iron ore prices, despite record sales volumes from its cornerstone Mining Area C (MAC) royalty asset in Western Australia.

Mining Area C delivered a record 68.7 million wet metric tonnes (mwmt) in sales, up 13% year-on-year, generating $103.7 million in revenue. This volume growth partially offset the price headwinds, underscoring the resilience of Deterra’s royalty model leveraged to BHP’s iron ore operations.

Strategic Diversification via Trident Acquisition

A significant highlight was the contribution from the recently completed acquisition of Trident Royalties PLC, which added $7.9 million in revenue from a diversified portfolio including gold offtake contracts and lithium royalties. This acquisition marks a strategic pivot towards broadening commodity exposure beyond iron ore, mitigating price volatility risks.

Notably, Trident’s flagship asset, the Thacker Pass lithium project in Nevada, USA, represents the world’s largest measured lithium reserve. Deterra holds an effective 4.8% gross revenue royalty (GRR) over Thacker Pass, which is poised for phased production commencing in 2027, supported by major partners including General Motors and the US Department of Energy.

Robust Profitability and Capital Management

Underlying EBITDA stood at $105.9 million with a robust margin of 94%, reflecting operational efficiency despite one-off acquisition costs related to Trident. Net profit after tax was $63.9 million, down 19% year-on-year, impacted by lower iron ore prices and increased financing costs from debt drawn to fund the acquisition.

Deterra declared a fully franked interim dividend of 9.0 cents per share, representing a payout ratio of 74.5% of net profit after tax. This dividend policy aligns with the company’s commitment to return a minimum of 50% of NPAT to shareholders, balancing income distribution with prudent capital management.

Outlook and Strategic Positioning

CEO Julian Andrews emphasised the company’s focus on building a diversified royalty portfolio to reduce exposure to commodity price swings while capturing growth optionality. The integration of Trident’s assets and the development progress at Thacker Pass are expected to enhance long-term shareholder value.

With net cash of $5.5 million and undrawn credit facilities of $186 million, Deterra maintains financial flexibility to pursue further value-accretive investments. The company’s strategy to invest patiently and discipline in royalties and streams across bulk, base, battery, and precious metals positions it well amid evolving market dynamics.