Deterra Royalties Ltd.

Deterra Royalties Ltd. is a mid-tier gold and iron royalty and streaming company headquartered in Perth, Australia, operating primarily in Australia. Key assets include Mining Area C (Part Of Waio) and Thacker Pass. Portfolio composition includes 4 cash-flowing royalties and 2 exploration royalties. The organization's business model offers a lower-risk, higher-margin exposure to the resources sector by providing a financial interest in mining activity with limited exposure to operating margins or capital costs. This structure is designed to generate strong cash flows from revenue-based royalties. The company's cornerstone asset provides exposure to a large-scale, long-life operation managed by a leading global miner. Growth is pursued through the acquisition of existing royalties and the creation of new instruments by financing resource companies. The investment strategy focuses on bulk, base, and battery metals. A recent acquisition offer, if completed, will add a diversified portfolio of 21 royalty and royalty-like assets, providing immediate cash flow and multiple sources of near- and medium-term growth. The enterprise operates with a lean business model and a scalable operating cost structure, which supports its growth ambitions while maintaining a focus on shareholder returns.

Strategic focus centers on diversifying the royalty portfolio through disciplined and value-accretive investments to provide additional sources of earnings and improve cash flow resilience. A key objective is to build a globally diversified portfolio, leveraging a scalable operating structure to reduce reliance on a single cornerstone asset. A pivotal step in this strategy was the 2024 offer to acquire a diversified mining royalty company, which aligns with targeted investment parameters and disciplined value expectations. The capital management framework was updated to support this growth strategy, targeting a dividend payout of a minimum of 50% of net profit after tax from fiscal year 2025, a shift from the previous policy of distributing 100% of income. This change is intended to balance shareholder returns with the capital requirements for attractive investment opportunities. The investment review process involves a risk and value-based assessment approach, with the organization actively evaluating a significant number of opportunities. The remuneration structure is also being refined to introduce a long-term incentive metric based on shareholder returns relative to peer royalty companies, reflecting the evolving business focus.

Executive leadership is headed by Managing Director and Chief Executive Officer Julian Andrews, who has over 25 years of experience in project finance, capital raising, and mergers and acquisitions across the mining, energy, and chemicals sectors. The Board of Directors is composed of 5 members, including an independent chair, with 40% female representation. Board oversight is structured through 4 standing committees: Audit and Risk, Nomination and Governance, People and Performance, and Sustainability. The People and Performance Committee met 4 times during fiscal year 2024. The governance framework is supported by a Code of Conduct, a Whistleblower Policy, and an Anti-Bribery and Corruption Policy. A minimum shareholding policy is in place for directors and executive key management personnel to align their interests with shareholders, requiring the CEO to hold shares equivalent to 100% of total fixed remuneration within 5 years of appointment. The company has also implemented a share trading policy that prohibits hedging arrangements over unvested equity entitlements.

The organization maintained net-zero emissions for Scope 1 and 2 within its own operations in fiscal year 2024 by ensuring zero direct Scope 1 emissions and procuring renewable electricity to match its Scope 2 consumption. Travel-related Scope 3 operational emissions were measured and offset via the purchase of Gold Standard certified offsets. A materiality assessment was completed in line with Global Reporting Initiative Standards to identify and prioritize sustainability topics. The Human Rights Policy was updated to reflect a commitment to comply with the United Nations Universal Declaration of Human Rights and principles from the International Labour Organisation. The company conducts an ESG due diligence process for prospective investments, guided by its ESG Assessment Criteria and Risk Appetite Statement, which includes engaging third-party specialists. Social initiatives include a continued partnership with the Earbus Foundation of Western Australia, with a further $100,000 commitment in 2024 to support its mobile health clinics. Employees participated in community fundraising events, raising over $21,300 for the Perkins Walk for Women’s Cancer and over $16,800 for the MACA Cancer 200 Ride for Research.

In June 2024, the company announced an all-cash offer to acquire Trident Royalties Plc, a diversified mining royalty company. The transaction, which was approved by the target's shareholders in July 2024, remains subject to UK court approval and is expected to complete in the third quarter of calendar year 2024. The strategic rationale for the acquisition is to provide immediate commodity and geographical diversification, as well as multiple sources of earnings growth. Post-completion, management intends to assess how the acquired gold offtakes fit within the organization's longer-term strategy, which may result in a decision to retain or divest these assets. As of July 2024, substantial shareholders with holdings of 5% or more include Iluka Resources Limited with 19.99%, BlackRock Group with 6.08%, Schroder Investment Management Australia Limited with 6.00%, and Vanguard Group with 5.029%. The parent entity and its wholly-owned Australian controlled entities have entered into a deed of cross guarantee, forming a 'closed group' under which each entity guarantees the debts of the others.