Deterra Royalties Ltd · ASX:DRR
Deterra Royalties — Investor Presentation (November 2020)
29 slides from Deterra Royalties's investor presentation, Nov 16, 2020
Slide 1: Australian Securities Exchange Notice
3 Australian Securities Exchange Notice 16 November 2020 ASX: DRR INVESTOR PRESENTATION Perth, 16 November 2020: Deterra Royalties Limited [ASX: DRR] (Deterra) is pleased to release an investor presentation being presented today by Deterra’s Managing Director at UBS Investment Bank’s Australasia Vir
Slide 2: Investor Presentation
Investor Presentation 16 November 2020 Julian Andrews Chief Executive Officer
Slide 3: Important notices and disclaimer
Important notices and disclaimer This presentation has been prepared by Deterra Royalties Limited (Deterra). By accessing this presentation you acknowledge that you have read and understood the following statement. This document provides an indicative outlook for the Deterra business and the 2021 fi
Slide 4: Introduction to Deterra Royalties
Subsection Introduction to Title Description Deterra Royalties 3.
Slide 5: Key drivers of success
Key drivers of success Deterra Royalties will focus on maximising earnings and dividends to shareholders from Mining Area C and will look to execute a disciplined growth strategy that builds a portfolio of royalties over time Maximise value from existing portfolio Execute disciplined growth strategy
Slide 6: Deterra Royalties
Deterra Royalties (ASX: DRR) A new resources-focused royalties business listed on the ASX - a unique proposition for Australian investors Capital Structure (as at 13 Nov 2020) Trading history Fully paid ordinary shares on issue 528,462,101 ($/share; shares traded) Daily volume (RHS) DRR Share Price
Slide 7: Experienced Board and Senior Management
Experienced Board and Senior Management Board and senior management reflects a diverse range of expertise across the global resources sector Board Member Biography Executive Member Biography Jenny Seabrook • Over 30 years experience across capital markets, mergers and Julian Andrews • Extensive expe
Slide 8: A structurally advantaged business model
A structurally advantaged business model Listed royalty companies provide investors with exposure to the value created through the discovery, extraction and sale of natural resources, typically without full exposure to some of the key operating risks of mining businesses The royalty business model R
Slide 9: A new investment vehicle in the Australian resources sector
A new investment vehicle in the Australian resources sector Deterra Royalties’ business model is simple and structurally advantaged relative to other forms of investment in resources • Business model is simple with initially one Deterra Business Model primary source of revenue Revenue royalties port
Slide 10: High margin business with strong earnings
High margin business with strong earnings Deterra Royalties is a high margin business with revenue driven by the MAC Royalty, which is linked to iron ore prices, sales volumes from the MAC Royalty Area and the AUD:USD exchange rate MAC Royalty revenue and pro-forma EBITDA margin Pro-forma income sta
Slide 11: Scalable corporate cost structure
Scalable corporate cost structure On-going corporate costs Pro Forma ongoing corporate costs guidance (A$ million) • Remuneration includes variable, non-cash component subject to performance thresholds Other • Corporate functions outsourced to maintain lean structure Outsourced functions and pursuit
Slide 12: MAC Royalty
Subsection MAC Royalty Title Description The cornerstone asset 11.
Slide 13: MAC – A world-class royalty asset
MAC – A world-class royalty asset Ownership of the Mining Area C Royalty gives Deterra Royalties exposure to one of the premier iron ore mines globally as measured by scale, cost position, credibility of the operator and remaining asset life • Operated by BHP, world’s largest mining company • A long
Slide 14: MAC Royalty Overview
MAC Royalty Overview MAC Royalty is Deterra’s cornerstone asset and consists of annual production-related Capacity Payments and ongoing quarterly Revenue Payments Illustrative MAC value chain and royalty payment mechanisms: Mine production Mine stockpiles Rail logistics Port stockpiles Ocean freight
Slide 15: Growth Opportunities: Organic
Subsection Growth Title Description Opportunities: Organic 14.
Slide 16: Near term organic growth driven by South Flank
Near term organic growth driven by South Flank MAC iron ore sales volumes are expected to more than double by 2023 due to BHP’s South Flank expansion, which is now over 84% complete Mining Area C production and sales volumes (Calendar years, Mt)1,2 • 145 million wmtpa (139 million dmtpa1) iron ore p
Slide 17: Multiple future growth options at Mining Area C
Multiple future growth options at Mining Area C Current MAC operations expected to continue until ~2050 with two potential mining areas identified by BHP in its long-term plan, Tandanya and Mudlark, likely to fall at least partially within the Royalty Area extending the potential royalty cash flows
Slide 18: Growth Opportunities: Investment
Subsection Growth Title Description Opportunities: Investment 17.
Slide 19: Growth strategy focused on value accretive investment
Growth strategy focused on value accretive investment Deterra Royalties will seek to build a portfolio of royalty interests focusing on earnings growth and diversification by making complementary and value accretive investments Key objectives of this strategy are to achieve: • Multiple sources of ea
Slide 20: Unique position as only listed Australian royalty investment company of scale
Unique position as only listed Australian royalty investment company of scale Deterra Royalties’ growth parameters Deterra Royalties’ competitive advantage In evaluating opportunities within these parameters, Deterra Royalties will focus Types of Focus on revenue or sales based royalties on opportun
Slide 21: Strong capacity to fund growth through the conservative use of debt and equity
Strong capacity to fund growth through the conservative use of debt and equity Deterra Royalties has been set up with low debt, providing it with significant debt funding capacity in order to pursue value accretive growth Low debt at inception provides Pro-forma net debt A$14.2 million significant d
Slide 22: Dividend Policy
Subsection Dividend Policy Title Description 21.
Slide 23: Attractive dividends expected to flow from ownership of long life MAC Royalty
Attractive dividends expected to flow from ownership of long life MAC Royalty Low debt and a scaleable corporate structure are designed to support the flow of dividends to shareholders • Dividend policy to pay out 100% of NPAT as dividends, fully franked to extent possible1 Mining Area C sales volum
Slide 24: Conclusion: Investment Highlights
Subsection Conclusion: Title Description Investment Highlights 23.
Slide 25: Key drivers of success
Key drivers of success Deterra Royalties will focus on maximising earnings and dividends to shareholders from Mining Area C and will look to execute a disciplined growth strategy that builds a portfolio of royalties over time Maximise value from existing portfolio Execute disciplined growth strategy
Slide 26: For More Information
FOR MORE INFORMATION Investors enquiries Media enquiries Brendan Ryan Cameron Morse Chief Financial Officer FTI Consulting Mobile: + 61 (0) 477 881 976 Phone: +61 (0) 8 9321 8533 Email: investor.relations@deterraroyalties.com Mobile: +61 (0) 433 886 871 Email: cameron.morse@fticonsulting.com Rob War
Slide 27: History of Mining Area C
History of Mining Area C Mining Area C has a long history dating back to when the Mount Goldsworth JV was created in 1962. South Flank expansion drives decision to review the Mining area C’s position within Iluka portfolio 1962 1994 2018 2019 Establishment of Mount Goldsworthy JV Creation of the MAC
Slide 28: Portfolio of royalties
Portfolio of royalties Deterra Royalties holds five other royalties (in addition to the MAC Royalty) as part of its existing portfolio Deterra Royalties Project1 Counterparty Location Commodity Status Royalty Key Terms Revenue (2019) Yoongarillup Mineral Sands Doral Mineral Sands 2% of revenue from
Slide 29: Deterra Royalties
( Deterra ROYALTIES
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