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Deterra Royalties Ltd Ordinary Shares DRR

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Stock XASX Rating as of
A$4.14 −0.03 (0.72%)
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As of Delayed Price Closed
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Company Report

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Commodity Price Update Q3 2024: Value in Mineral Sands, Gold, and Thermal Coal

Jon Mills

Base metals prices surged earlier in the June quarter of 2024 before partially reversing due to concerns over China’s economy. Iron ore prices are broadly stable despite China's struggling property market and weak infrastructure spending, leading to questions over China's steel demand. After updating our commodity price assumptions, no-moat Iluka is the cheapest miner we cover, trading 31% below its unchanged fair value estimate of AUD 9.50.

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Price vs Fair Value

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DRR is trading at a 65% premium.
Price
A$4.14
Fair Value
A$8.20
Uncertainty
Medium
1-Star Price
A$7.86
5-Star Price
A$3.21
Economic Moat
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Capital Allocation
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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$4.17
Day Range
A$4.12–4.21
52-Week Range
A$3.90–5.44
Bid/Ask
A$4.13 / A$4.16
Market Cap
A$2.19 Bil
Volume/Avg
2.0 Mil / 1.7 Mil

Key Statistics

Price/Earnings (Normalized)
13.06
Price/Sales
8.70
Dividend Yield (Trailing)
7.67%
Dividend Yield (Forward)
7.19%
Total Yield
7.67%

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

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Metric
DRR
RIO
BHP
Price/Earnings (Normalized)
 13.0611.3211.19
Price/Book Value
 26.592.493.64
Price/Sales
 8.702.462.73
Price/Cash Flow
 13.988.047.08
Price/Earnings
No chart available

Financial Strength

Metric
DRR
RIO
BHP
Quick Ratio
 147.361.041.08
Current Ratio
 153.211.691.57
Interest Coverage
 82.848.047.59
Quick Ratio
No chart available

Profitability

Metric
DRR
RIO
BHP
Return on Assets (Normalized)
 171.42%11.84%13.90%
Return on Equity (Normalized)
 209.45%22.48%31.67%
Return on Invested Capital (Normalized)
 209.76%19.38%21.70%
Return on Assets
No chart available
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