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OPERATIONAL REVIEW
DIGGeRs & DeALeRs PReVIeW MACA.NET.AU

exchange for future streams or royalties.” He expects any new Deterra deals to be
Contrary to the traditional perception of similarly focused.
royalty holders as leeches, sucking vital Miners and developers have been well
revenue from miners, Andrews believes a served by equity and debt markets in recent
well-structured royalty or stream can serve years, but recent volatility could mean the
as the perfect partnership. huge pipeline of development projects soon
“There’s always that idea with historical encounters blockages, which could prove
royalties that previous owners are giving beneficial to Deterra.
away value, but it is a form of finance that “At the moment we are seeing strong
has proven a great alignment with compa- commodity prices across the board which
ny and capital, value is created in return,” makes finding value harder,” Andrews said.
he said. “We get paid off the performance “But on the flipside, stronger conditions
Julian Andrews
of the mine, it is not like a debt repayment mean a strong pipeline of projects. In many
where we expect to be paid regardless of ways we are looking at a good market but
ties but there may also be operating min- performance. It also means a company can not where it is so good people don’t need
ers who hold a royalty which is not their avoid diluting shareholders or issuing equity funding.
focus, so investors are not aware of the op- at a discount.” “We can be a bit more patient because
portunity which exists. We can help unlock Unlike its North American peers, Deterra we have strong cash flow, so we don’t need
that opportunity and give those royalties plans to steer away from the precious met- to act immediately. We are looking for com-
appropriate value.” als space. modities with strong fundamentals around
While the secondary market represents “More than 90% of streaming is in the supply/demand.
an obvious opportunity, it has been in the precious metals space and it is very well “We can offer $100-300 million finance
primary market that the North American served by the North Americans but other packages but that is only indicative and we
streamers have enjoyed the largest returns. than that we are pretty agnostic,” Andrews could look at larger deals. It comes down to
“We see ourselves acting as a potential said. “We will focus on bulks, base metals particular operation itself. I think we would
third source of finance for miners and de- and battery minerals.” also look at by-product streams and there
velopers – you have debt, equity, and us,” Andrews said around half of all royalty/ is good precedence on how they work and
he said. “We won’t ever see ourselves as streaming deals were focused on project can provide real benefits for operators as
the sole solution, but we can plug the gap development, with the remainder split be- well.”
which often opens between equity and tween funding M&A and balance sheet
debt. Dealing directly with the operator in repair. – Dominic Piper

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