Q & A Highlights

Q: If net debt continues to decline at its current rate, would Deterra consider returning to a 100% payout ratio once it reaches a net cash position? A: No. The company maintains a 75% payout ratio as it has a substantial pipeline of opportunities of various sizes it expects to deploy capital into. Even if net debt approached zero, the company would likely maintain the 75% payout ratio to preserve capital for acquisitions.

Q: How would you describe the deal-making environment over the last six months compared to the prior period, given market volatility from geopolitical conflicts? A: Volatility generally works against closing deals, and there has been significant volatility in both commodity and stock markets. However, the pipeline remains healthy with lots of active dialogues and several advanced opportunities. The company has a proactive hit list of targets, and while some interesting deals are taking longer than expected, the environment remains active.

Q: Is there a preference between operating assets versus development assets for future acquisitions? A: The company sees opportunities in both categories, but near-term development assets are a "sweet spot," particularly for single-asset companies. Deterra's capital is highly competitive against bank capital for early-stage construction assets because its structure can absorb ramp-up volatility that banks typically avoid. Operating royalties tend to come from liquidation processes or deleveraging, which are less frequent when commodity prices are strong.

Q: What is the status of the CEO search process? A: The search process is active with several live candidates being worked through. The extended timeline reflects the Board's dedication to finding the right leader. No specific timing has been promised for the appointment, and the company continues to operate as business as usual under interim leadership.

Q: What were the key drivers behind the strong full-year NPAT of $164 million? A: The strong result was driven primarily by record production and sales volumes from the MAC royalty, partially offset by softer AUD pricing, and the first-half profit from the sale of noncore precious metals assets acquired as part of the Trident acquisition. The AUD108 million in proceeds received to date were used to pay down debt.

Q: How is the Thacker Pass lithium project progressing, and what does this mean for Deterra? A: Thacker Pass continues to derisk significantly. Lithium Americas has drawn USD1.2 billion of the USD2.2 billion US Department of Energy loan, detailed engineering design has surpassed 95%, and over 70% of procurement is complete. The 2025 technical report updated the mine life to 85 years with expansion potential to 160,000 tons per annum, doubling original assumptions. First production is projected for the end of calendar 2026.

Q: What is the current balance sheet position and cost of debt? A: Net debt stands at $132 million as of June 30, 2026, with $357 million in undrawn capacity across facilities. The average margin is 1.3%, and the all-in post-tax cost of debt is 3.8%, which represents a distinct competitive advantage compared to the broader royalty industry.

Q: What was the effective cost of the Trident acquisition after asset disposals? A: The Trident acquisition delivered USD82 million from the sale of gold offtakes and other noncore assets, generating AUD8.4 million in profits. After factoring in these disposals, the effective cost of acquiring the Thacker Pass lithium royaltythe primary target of the Trident dealwas reduced to USD106 million, while retaining several important smaller development and exploration royalties.

Q: What is the rationale behind the amended dividend reinvestment plan (DRP) with a discount? A: The DRP discount, in line with other Australian companies, is designed to increase uptake and allow shareholders to efficiently subscribe for additional shares with their cash dividends. The capital raised through the DRP is initially used to pay down drawn debt facilities, increasing liquidity available for future acquisitions.

Q: How does the company view its share price performance relative to the broader royalty sector? A: While shareholders have received strong returns through fully franked dividends, the share price has not changed significantly since the 2020 IPO. The North American-dominated royalty sector typically trades at stronger multiples, which are earned through growing and diversifying portfolios. This represents the potential and objective for Deterra going forward.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .