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Deterra Royalties Ltd (AU:DRR)
ASX:DRR
Australian Market

Deterra Royalties Ltd (DRR) AI Stock Analysis

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AU

Deterra Royalties Ltd

(Sydney:DRR)

Rating:75Outperform
Price Target:
AU$4.50
▲(16.58%Upside)
Deterra Royalties Ltd's strong financial performance, characterized by high profitability and low leverage, is a key factor in its overall score. Technical analysis presents a neutral stance, while valuation metrics are attractive, offering a reasonable entry point for investors. Earnings call insights highlight operational strengths but also underline challenges with revenue impact from market conditions. The combined assessment positions the stock as a moderately attractive investment opportunity.

Deterra Royalties Ltd (DRR) vs. iShares MSCI Australia ETF (EWA)

Deterra Royalties Ltd Business Overview & Revenue Model

Company DescriptionDeterra Royalties Limited operates as a royalty investment company in Australia. It is also involved in the management and growth of a portfolio of royalty assets across bulk commodities, base, and battery metals. The company holds interest in a portfolio of six royalties over the Mining Area C, Yoongarillup/Yalyalup, Eneabba, Wonnerup, and St Ives. Deterra Royalties Limited was incorporated in 2020 and is headquartered in Perth, Australia.
How the Company Makes MoneyDeterra Royalties Ltd generates revenue primarily through its portfolio of royalty agreements. These agreements entitle the company to receive a percentage of the revenue or profit generated from the production of natural resources, such as iron ore, by mining companies. The royalties are typically structured as either a percentage of revenue (gross revenue royalties) or a percentage of profits (net profits interests), providing Deterra with a stable and predictable income stream. A key component of Deterra's revenue is its interest in the Mining Area C (MAC) royalty, derived from one of the world's largest iron ore operations owned by BHP Group. This royalty arrangement provides substantial earnings due to the scale and productivity of the mining operations. Additionally, Deterra may seek to expand its portfolio by acquiring new royalty interests, supported by its strong cash flow and industry relationships, thereby enhancing its revenue potential.

Deterra Royalties Ltd Earnings Call Summary

Earnings Call Date:Feb 17, 2025
(Q2-2025)
|
% Change Since: -6.99%|
Next Earnings Date:Aug 13, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong production and integration success with new acquisitions, alongside strategic progress in key projects like Thacker Pass. However, there were challenges with reduced EBITDA and iron ore pricing impacting revenues. Overall, the company maintained a strong financial position and optimistic outlook.
Q2-2025 Updates
Positive Updates
Record Production from Key Assets
Mining Area C reported record production and sales tons after the South Flank expansion reached nameplate capacity. This underpinned strong revenues for the company.
Successful Gold Offtake Integration
The first-time revenue from gold offtake contracts contributed significantly to the company's income, covering incremental debt costs from recent investments.
Thacker Pass Progress
The U.S. Department of Energy loan closed for Thacker Pass, with additional investment from General Motors securing CapEx for Phase 1. An updated report from Lithium Americas highlighted a significant increase in reserves and resources.
Strong Financial Position
Net profit for the period was $63.9 million with a fully franked interim dividend of $0.09 per share, representing approximately 75% of net profit after tax.
Trident Portfolio Exceeding Expectations
Trident assets have exceeded expectations in financial contribution and development progress, particularly with the Thacker Pass project.
Negative Updates
Decrease in Underlying EBITDA
Underlying EBITDA was $106 million, down 7% compared to the previous year, mainly due to lower iron ore pricing.
MAC Royalty Revenue Decline
MAC royalty revenue decreased by 12% compared to the previous year, primarily due to a 22% decrease in realized iron ore prices.
Higher Effective Tax Rate
The effective tax rate increased due to non-tax deductible Trident transaction costs, impacting the statutory net profit.
Company Guidance
During the call, Deterra Royalties provided several key metrics and insights regarding their financial performance and strategic outlook for the first half of fiscal year 2025. The company reported a net profit of $63.9 million and declared a fully franked interim dividend of $0.09 per share, representing approximately 75% of reported net profit after tax. Underlying EBITDA for the period was $106 million, which marked a 7% decrease from the previous year, primarily due to a 22% decrease in realized iron ore prices. However, this was offset by stronger volumes from Mining Area C and new revenue sources, including $7 million from recently acquired gold offtake contracts. The integration of the Trident portfolio was completed, with Trident being cash flow positive during the period. The balance sheet remains strong, with a net debt of $308 million and a weighted average interest rate of 5.84%. Deterra's strategy focuses on value accretive investments in high-quality, long-life assets, particularly in established mining jurisdictions and sectors like bulk commodities and battery materials. The company is optimistic about its development projects, including the Thacker Pass lithium project, which has seen significant progress in terms of funding and resource expansion.

Deterra Royalties Ltd Financial Statement Overview

Summary
Deterra Royalties Ltd showcases robust profitability with high net margins and minimal leverage, indicating financial stability. However, inconsistent revenue growth and a decline in total assets suggest challenges in sustaining growth.
Income Statement
85
Very Positive
Deterra Royalties Ltd shows strong profitability with a consistent gross profit margin of 100% due to its business model. The company also maintains robust net profit margins, peaking at 64.40% in the latest year. Revenue growth, however, has been inconsistent, with a slight increase of 4.92% from the previous year following a decline from the earlier year, indicating some volatility in revenue generation. Overall, the company's income statement reflects strong profitability but some challenges in sustaining revenue growth year-over-year.
Balance Sheet
78
Positive
The company exhibits a strong balance sheet with a minimal debt-to-equity ratio, reflecting low leverage and financial stability. The equity ratio has slightly increased, indicating a solid equity base relative to assets. Return on equity (ROE) remains high at 192.78%, showcasing efficient use of equity to generate profits. However, a decrease in total assets and stockholders' equity over the years suggests the need for strategic growth investments.
Cash Flow
80
Positive
Deterra Royalties Ltd demonstrates strong cash flow management, with consistent free cash flow generation and a high operating cash flow to net income ratio of 1.10 in the latest period. The free cash flow to net income ratio also remains positive, highlighting effective conversion of profits into cash. Despite a decline in operating cash flow in the latest year, the company continues to maintain a healthy liquidity position.
BreakdownTTMJun 2024Jun 2023Jun 2022Jun 2021
Income Statement
Total Revenue233.86M240.51M229.26M265.15M145.21M
Gross Profit222.68M231.43M220.34M257.12M140.24M
EBITDA220.39M225.56M219.34M256.78M140.37M
Net Income140.08M154.89M152.46M178.46M94.26M
Balance Sheet
Total Assets102.36M101.29M115.19M153.49M89.09M
Cash, Cash Equivalents and Short-Term Investments24.94M31.06M29.49M27.46M24.21M
Total Debt537.00K497.00K186.00K248.00K311.00K
Total Liabilities20.04M20.94M23.05M34.87M27.37M
Stockholders Equity82.32M80.35M92.14M118.63M61.72M
Cash Flow
Free Cash Flow133.68M170.09M182.23M127.81M82.12M
Operating Cash Flow133.68M170.18M182.32M127.81M82.17M
Investing Cash Flow-265.81M-88.00K-89.00K-10.00K-24.45M
Financing Cash Flow112.47M-168.52M-180.20M-124.56M-33.51M

Deterra Royalties Ltd Technical Analysis

Technical Analysis Sentiment
Positive
Last Price3.86
Price Trends
50DMA
3.73
Positive
100DMA
3.69
Positive
200DMA
3.72
Positive
Market Momentum
MACD
0.02
Negative
RSI
61.95
Neutral
STOCH
80.58
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:DRR, the sentiment is Positive. The current price of 3.86 is above the 20-day moving average (MA) of 3.76, above the 50-day MA of 3.73, and above the 200-day MA of 3.72, indicating a bullish trend. The MACD of 0.02 indicates Negative momentum. The RSI at 61.95 is Neutral, neither overbought nor oversold. The STOCH value of 80.58 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AU:DRR.

Deterra Royalties Ltd Peers Comparison

Overall Rating
UnderperformOutperform
Sector (44)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
AUDRR
75
Outperform
AU$2.04B14.57152.73%4.66%-10.00%-16.51%
44
Neutral
C$979.74M-6.70-13.35%2.68%17.20%-32.62%
$1.29B-54.57%
$1.14B22.62-4.52%
$1.07B7.2110.39%2.01%
$2.14B1,408.33-36.53%12.28%
AUNIC
57
Neutral
AU$3.19B17.84-7.32%4.11%-6.64%-209.78%
* Basic Materials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AU:DRR
Deterra Royalties Ltd
3.86
0.02
0.52%
ADMLF
Adriatic Metals Shs Chess Deposit Interests Repr 1 Sh
3.70
1.18
46.83%
BQSSF
Boss Energy
2.84
0.26
10.08%
ILKAF
Iluka Resources Limited
2.58
-1.84
-41.63%
IPGDF
IGO
2.72
-1.15
-29.72%
AU:NIC
Nickel Mines Ltd.
0.73
-0.04
-5.19%

Deterra Royalties Ltd Corporate Events

Aware Super Becomes Substantial Holder in Deterra Royalties
Jul 4, 2025

Deterra Royalties Ltd has announced that Aware Super Pty Ltd, as trustee of Aware Super, has become a substantial holder with a 5.14% voting power in the company. This development indicates a significant interest from Aware Super in Deterra Royalties, potentially impacting the company’s shareholder dynamics and signaling confidence in its future prospects.

The most recent analyst rating on (AU:DRR) stock is a Hold with a A$4.00 price target. To see the full list of analyst forecasts on Deterra Royalties Ltd stock, see the AU:DRR Stock Forecast page.

Cooper Investors Ceases Substantial Holding in Deterra Royalties
Jul 2, 2025

Cooper Investors Pty Limited has ceased to be a substantial holder of Deterra Royalties Ltd as of July 1, 2025. This change in substantial holding could impact Deterra’s shareholder structure and influence within the market, potentially affecting stakeholder interests and the company’s strategic direction.

The most recent analyst rating on (AU:DRR) stock is a Hold with a A$3.70 price target. To see the full list of analyst forecasts on Deterra Royalties Ltd stock, see the AU:DRR Stock Forecast page.

Deterra Royalties Director Increases Shareholding
May 30, 2025

Deterra Royalties Ltd has announced a change in the director’s interest, with Alexander Morrison acquiring 2,700 ordinary fully paid shares through an on-market trade. This acquisition reflects the director’s increased investment in the company, potentially signaling confidence in the company’s future performance and stability, which could positively impact stakeholders’ perception.

The most recent analyst rating on (AU:DRR) stock is a Hold with a A$4.00 price target. To see the full list of analyst forecasts on Deterra Royalties Ltd stock, see the AU:DRR Stock Forecast page.

Deterra Royalties Reports Progress at Thacker Pass Lithium Project
May 16, 2025

Deterra Royalties Limited announced significant progress at the Thacker Pass Lithium Project in Nevada, USA, where it holds a 4.8% gross revenue royalty. The project, operated by Lithium Americas Corporation, has commenced major construction with substantial capital investments and plans for large-scale lithium carbonate production. This advancement underscores Deterra’s strategic position in the lithium market, potentially enhancing its revenue streams and market influence.

The most recent analyst rating on (AU:DRR) stock is a Hold with a A$4.00 price target. To see the full list of analyst forecasts on Deterra Royalties Ltd stock, see the AU:DRR Stock Forecast page.

Cooper Investors Acquires Substantial Stake in Deterra Royalties
May 14, 2025

Deterra Royalties Limited has announced that Cooper Investors Pty Limited has become a substantial holder in the company as of May 13, 2025. Cooper Investors now holds 26,460,470 ordinary shares, representing a 5.0028% voting power in Deterra Royalties. This development indicates a significant investment by Cooper Investors, potentially impacting Deterra’s market positioning and stakeholder interests.

The most recent analyst rating on (AU:DRR) stock is a Buy with a A$4.50 price target. To see the full list of analyst forecasts on Deterra Royalties Ltd stock, see the AU:DRR Stock Forecast page.

Deterra Royalties Reports Revenue Growth and Strategic Milestones
Apr 29, 2025

Deterra Royalties Limited reported a 4% increase in portfolio revenue for the March 2025 quarter, driven by strong iron ore royalties from Mining Area C and record margins from gold offtakes. The company also highlighted the fully funded Phase 1 of the Thacker Pass Lithium Project, which is set to capitalize on the growing demand for lithium by 2027. These developments underscore Deterra’s strategic focus on building a diversified royalty portfolio, enhancing its industry positioning and providing stable returns for stakeholders.

Deterra Royalties Director Increases Shareholding
Apr 23, 2025

Deterra Royalties Ltd announced a change in the interest of its director, Leanne Heywood, who acquired 6,500 ordinary fully paid shares through on-market trades, increasing her indirect holdings to 8,000 shares. This acquisition reflects a strategic move by the director, potentially signaling confidence in the company’s future prospects and stability, which may positively influence stakeholder perceptions and market positioning.

Deterra Royalties Announces Change in Substantial Holder Interests
Apr 17, 2025

Deterra Royalties Ltd has announced a change in the interests of a substantial holder, with State Street Global Advisors Europe Limited and State Street Bank and Trust Company being key entities involved. This change in voting power and relevant interests could impact the company’s governance and decision-making processes, potentially influencing its strategic direction and stakeholder relations.

Deterra Royalties Ltd Appoints New Director with Significant Shareholding
Apr 16, 2025

Deterra Royalties Ltd has announced the appointment of Alexander Morrison as a director, effective April 16, 2025. Mr. Morrison holds 22,000 ordinary fully paid shares through the Alexander and Roberta Morrison Revocable Living Trust, indicating a significant personal investment in the company. This appointment could potentially influence the company’s strategic direction and stakeholder interests, given Mr. Morrison’s vested interest in the company’s performance.

Deterra Royalties Ltd Strengthens Board with New Appointments
Apr 13, 2025

Deterra Royalties Ltd has announced the appointment of Mr. Alex Morrison and Ms. Leanne Heywood as independent non-executive directors, effective April 16, 2025. These appointments are expected to strengthen the board’s expertise in royalties, mining capital allocation, and financial management, complementing the existing board members’ skills and aiding in succession planning. The new directors bring extensive experience from various roles in the mining sector, which could enhance Deterra’s strategic positioning and operational flexibility.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 28, 2025