Who is Deterra Royalties and what does it do?
Deterra is a listed mining royalties company that is bringing the mining royalties business model to Australia. We manage a portfolio of mining royalty assets for the benefit of our shareholders and look to acquire new royalties in a disciplined and value accretive way.
This business model and has been applied very successfully in other markets, particularly in the North American market, but Deterra is the first mining royalty company of scale to list on the ASX.
What is a mining royalty?
What is a royalty company?
Why are royalty companies a better way to invest in resources?
Does Deterra pay a dividend?
What is the difference between a royalty and a stream?
A mining royalty provides its owner with a percentage of revenue from the mine in exchange for an upfront payment. A stream provides its owner with the right to purchase a proportion of metal produced from the mine at a discount to the prevailing spot price, again in exchange for an upfront payment.
Although there are important differences, broadly a royalty and a stream have a similar economic effect, providing financial exposure to production volume and commodity pricing over a period with limited exposure to operating costs, margins or capital costs, in exchange for an upfront payment
What are Bulks, Base and Battery Metals?
Deterra focuses on these commodities that are all central to modern civilisation and our daily lives. Deterra’s main royalty is over iron ore, a bulk commodity, which is used to make the steel in everything from our buildings and bridges, through to the cars we drive. Base and battery metals are future facing commodities that are key ingredients to our high tech world. They are expected to face increasing demand as major global thematics such as the clean energy revolution and the electrification of transport change the way we live.
Does Deterra have a competitive advantage by focusing on Bulks, Base and Battery Metals?
Deterra differs from many of its North American peers by focusing on royalties within Bulks, Base and Battery Metals rather than gold. The globally listed mining royalty universe has a total market capitalisation of around ~US$65B1, with ~90% of that market capitalisation focused on gold royalties.
30% of the world’s royalties2 are in Bulks, Base and Battery metals and being pursued by only ~10% of the mining royalty company universe. Deterra believes there is therefore a competitive advantage to focus on these commodities.