Deterra Royalties (ASX:DRR) reported a “strong half” in its first-half 2026 results call, highlighting record earnings, a fully franked interim dividend, and continued balance-sheet deleveraging following the sale of non-core assets. Interim Managing Director and CEO Jason Neal and CFO Jason Clifton also provided updates on the company’s growth strategy and the ongoing development of the Thacker Pass lithium project royalty acquired via the Trident transaction.
Record first-half profit and fully franked dividend
Clifton said the company delivered a record first-half net profit after tax (NPAT) of AUD 87 million and declared a first-half dividend of AUD 0.124 per share, fully franked. Management attributed the result to two primary drivers:
- Record sales volumes and strong pricing from the Mining Area C (MAC) royalty; and
- Profit from the sale of non-core precious metals assets that were acquired as part of the Trident acquisition.
MAC royalty volumes and pricing led revenue growth
Management said the MAC royalty continued to provide “quality and consistency” of cash flows. Clifton reported MAC royalty revenue was up 12%, with first-half sales at a record 68 million dry tons and a realized price of AUD 139 per ton, up 5% versus first-half FY2025.
Neal emphasized the importance of the MAC royalty to the company’s foundation and shareholder returns, saying it supports a fully franked dividend targeted at 75% of NPAT. He also said that, among listed royalty and streaming companies, Deterra’s MAC royalty ranks “third” by research analysts’ estimated net asset value, underscoring its scale within the sector.
Asset sales, costs, and debt reduction
Clifton said Deterra received AUD 108 million in cash proceeds to date from the sale of non-core precious metals assets and used the proceeds to reduce debt. He added the company expects a further AUD 13 million cash payment in August 2026, described as a deferred receivable from the La Preciosa sale.
Operating costs were AUD 8.1 million for the half, including AUD 1 million of one-off costs tied to the CEO transition. Clifton said roughly half of that amount was related to cash-based contractual entitlements, with the remainder reflecting expensed share-based payments that remain subject to future testing under share plan hurdles. These costs were partly offset by a lower headcount following restructuring in the Perth and London offices during the first half of 2026. Clifton also said external due diligence costs rose to AUD 0.9 million from AUD 0.2 million in the prior-year half, reflecting increased business development activity after the earlier Trident integration period.
On the balance sheet, Clifton reported net debt of AUD 149 million as of 31 December 2025, with an average margin across credit facilities of 1.3% and AUD 344 million of undrawn capacity. Neal separately referenced drawn debt of AUD 156 million at 31 December 2025 and said the company is positioned to make additional acquisitions opportunistically.
Thacker Pass de-risking and lithium outlook
Neal provided an update on Thacker Pass, the Nevada lithium project tied to Deterra’s Trident acquisition. He said construction is well underway and characterized the period as one of “significant de-risking,” including the first draw on a $2.2 billion U.S. Department of Energy loan supporting construction. Neal described the facility as a 23-year loan priced at U.S. T-bill rates without a spread.
Neal also pointed to the U.S. government’s rights to a 5% shareholding in Lithium Americas and a 5% interest in the Lithium Americas-General Motors joint venture that owns Thacker Pass, calling it a “very significant endorsement.” He noted General Motors contributed $945 million to the joint venture and has offtake arrangements in place. Neal said Lithium Americas is projecting first production at the end of calendar 2027.
Neal also cited market indicators he said reflected improving sentiment toward lithium, noting lithium carbonate price indices rose from about $11,000 per ton at the time Deterra closed the Trident acquisition to around $17,500 per ton recently. He added that Lithium Americas’ share price has more than doubled since the Trident deal closed.
Growth strategy: royalties, project finance, and acquisition discipline
During the Q&A, Neal said Deterra had “a number of irons in the fire” and was primarily focused on opportunities involving existing royalties that may come to market, as well as establishing new royalties. He said the royalty and streaming market is increasingly becoming part of the “conventional project finance ecosystem,” creating additional potential transactions. While he did not rule out corporate acquisitions, he said the company was not spending “very much time” on that avenue at present.
Neal said overall market activity is higher than it was 12 months ago, adding that more robust equity capital availability in parts of the commodity space can support broader financing solutions in which Deterra can participate.
Asked about capital returns and the possibility of increasing payout if acquisitions do not materialize, Neal said a return to a 100% payout is “not on the horizon,” emphasizing the retained 25% supports debt repayment and preserves “dry powder.” He said the company wants sufficient capacity—currently more than AUD 300 million—to be competitive for opportunities, which he described as often falling in a range “between 100 and 500.” He added that if debt were fully repaid and no transactions were completed, he did not expect Deterra would continue building a cash balance, but said he would be “really disappointed” if the company did not complete a deal within the next 12 to 18 months.
Neal also said Deterra remains open to lithium opportunities and would consider additional lithium acquisitions if they fit the portfolio, while reiterating that Thacker Pass is viewed as one of the “very best” lithium assets. On precious metals, he clarified that the divested assets were gold offtake agreements rather than traditional royalties or streams, and said they created accounting volatility and did not fit the portfolio. He added that the company is not opposed to precious metals exposure but sees a competitive disadvantage in precious-metals-heavy opportunities due to the scale and cost of capital advantages held by larger, established peers.
Neal concluded by noting that while dividends have provided shareholders a “very good return,” the share price has not materially exceeded the company’s 2020 IPO level. He said the royalty and streaming sector has historically delivered strong shareholder outcomes and suggested that remains the company’s objective as it continues its CEO search and pursues future growth.
About Deterra Royalties (ASX:DRR)
Deterra Royalties Limited operates as a royalty investment company in Australia. The company is also involved in the management and growth of a portfolio of royalty assets across bulk commodities, base, and battery metals. It holds interest in a portfolio of six royalties over the Mining Area C, Yoongarillup/Yalyalup, Wonnerup, Eneabba, and St Ives. The company was incorporated in 2020 and is based in Perth, Australia.
