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Highlights

  • The Thacker Pass Lithium Project has secured full funding, strengthening DRR’s portfolio diversification.
  • Despite a decline in revenue (-5.55% YoY) and net profit (-12.96% YoY) in H1 FY25, DRR maintained high margins with a 74.5% payout ratio.
  • DRR’s share price has dropped by 2.43% to AUD 3.62 on 2 April 2025, reflecting a 27.16% decline over the past year

Deterra Royalties Ltd (ASX:DRR) is a diversified resource royalty company providing investors with lower-risk exposure to mining operations. A significant portion of DRR’s revenue comes from BHP’s Mining Area C (MAC) iron ore operations. This operation provides a consistent cash flow. Furthermore, the South Flank project expansion has increased production capacity, resulting in higher royalty earnings.

As a result, DRR maintains profitability with minimal direct investment in mining operations.

Recent Business Developments

On 2 April 2025, DRR shared an update on the Thacker Pass Lithium Project, one of the largest lithium reserves globally. Lithium Americas Corporation (LAC) secured full funding for Phase 1 of the project through a USD 250 million investment from Orion Resource Partners, alongside contributions from LAC (USD 192M) and General Motors (USD 100M). This meets the equity requirements for a USD 2.26 billion U.S. Department of Energy loan. A final investment decision has been made, with Phase 1 expected to be completed by late 2027.

Financial Performance: H1 FY25

In the first half of the financial year 2025 (H1 FY25), the company reported:

  • Revenue: AUD 112.3 million (-5.55% YoY)
  • Underlying EBITDA Margin: 94.0% (-1.05% YoY)
  • Underlying Net Profit After Tax: AUD 68.5 million (-12.96% YoY)

Despite a decline in revenue due to lower iron ore prices, DRR maintained high profit margins and delivered higher production volumes from the South Flank expansion. During the reported period, the company announced a fully franked interim dividend of 9 cents per share, totalling AUD 47.6 million, reflecting a 74.5% payout ratio. Additionally, the Trident acquisition helped diversify DRR’s portfolio, adding revenue from gold offtake agreements.

Company Outlook

Growth Catalysts:
Key growth drivers include the continued ramp-up of South Flank and the expansion of lithium operations. The Thacker Pass project aims to increase production from 40ktpa lithium carbonate equivalent (LCE) in Phase 1 to 160ktpa across four phases. Additionally, projects like La Preciosa and Mimbula are set to enhance long-term scalability.

Trident Acquisition & Portfolio Expansion:
The acquisition of Trident strengthens DRR’s asset portfolio with high-quality lithium and gold projects. Thacker Pass holds the world’s largest measured lithium reserves, with production potential for 85 years, further diversifying revenue streams.

Share performance of DRR

DRR shares closed 2.43% lower at AUD 3.62 apiece on 2 April 2025. Over the past year, DRR’s share price has declined by nearly 27.16% and in the last three months, it has decreased by 2.69%.

52-week high of DRR is AUD 5.05, recorded on 10 May 2024 and 52-week low is AUD 3.32, recorded on 9 September 2024.

Support and Resistance Summary

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, and currency, is 02 April 2025. The reference data in this report has been partly sourced from EODHD/Others.

 

Technical Indicators Defined:

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.