Deterra Royalties Ltd Ordinary Shares DRR

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A$4.82 −0.05 (1.03%)

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As of Apr 19, 2024 6:10am Delayed Price Closed

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Company Report

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Opportunities in Mining Sector in Coal and Gold; Commodity Prices Generally Supportive

Jon Mills, Apr 16, 2024

Commodity prices diverged in the quarter. Despite solid China steel production, iron ore and metallurgical coal prices are down, while copper rose on supply issues and hopes of faster global growth. However, prices are elevated compared with history and cost-curve support.

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Price vs Fair Value

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DRR is trading within a range we consider fairly valued.

Price

A$4.82

Apr 19, 2024

Fair Value

A$1.10

Apr 4, 2024

Uncertainty

Medium

1-Star Price: A$3.47
5-Star Price: A$8.67
Economic Moat: Jvwcr
Capital Allocation: Xnwnpslq

Bulls Say, Bears Say

Bulls

Deterra has no exposure to operating or capital costs, which makes for a much lower-risk mining exposure.

Bears

Chinese demand for iron ore is likely to wane as declining returns from fixed-asset investment necessitate a structural shift.

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Trading Information

Previous Close Price: A$4.87
Day Range: A$4.80–4.85
52-Week Range: A$4.23–5.44
Bid/Ask: A$4.81 / A$4.85
Market Cap: A$2.55 Bil
Volume/Avg: 996,859 / 1.5 Mil

Key Statistics

Price/Earnings (Normalized): 16.63
Price/Sales: 10.13
Dividend Yield (Trailing): 6.59%
Dividend Yield (Forward): 6.18%
Total Yield: 6.59%

Company Profile

Deterra Royalties was spun out from Iluka Resources in October 2020 with Iluka retaining a 20% interest. Its only material income generating asset is a royalty covering iron ore produced by BHP from the Mining Area C royalty area, located in the Pilbara region of Western Australia. The royalty area includes the North Flank mine, producing around 60 million metric tons of iron ore a year, and the South Flank mine, expected to add a further 85 million metric tons a year by 2024 after producing first ore in 2021. The MAC royalty area also covers most of the Tandanya and Mudlark deposits, which BHP intends to develop in the longer term as part of its plan to operate the MAC production hub for at least 50 years. Deterra’s strategy is to grow into a diversified royalty company.

Sector: Basic Materials
Industry: Other Industrial Metals & Mining
Stock Style Box: Mid Growth
Total Number of Employees: —
Website: https://www.iluka.com

Competitors

Valuation

Metric	DRR	BHP	RIO
Price/Earnings (Normalized)	16.63	10.90	11.93
Price/Book Value	30.95	3.55	2.62
Price/Sales	10.13	2.66	2.60
Price/Cash Flow	16.28	6.89	8.48

Price/Earnings

DRR

BHP

RIO

Financial Strength

Metric	DRR	BHP	RIO
Quick Ratio	147.36	1.08	1.04
Current Ratio	153.21	1.57	1.69
Interest Coverage	82.84	7.59	8.04

Quick Ratio

DRR

BHP

RIO

Profitability

Metric	DRR	BHP	RIO
Return on Assets (Normalized)	171.42%	13.90%	11.84%
Return on Equity (Normalized)	209.45%	31.67%	22.48%
Return on Invested Capital (Normalized)	209.76%	21.70%	19.38%

Return on Assets

DRR

BHP

RIO

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