By Rhiannon Hoyle
The greatly increased credit limit of Deterra Royalties Ltd. forces the 16-month-old company to buy more royalties, though it’s in no rush to make new investments, its chief executive said.
The Australian-listed company, which derives the bulk of its revenue from royalties from the iron ore operations of BHP Group Ltd., said on Tuesday it had refinanced and extended its credit facility to A$350 million ($251.6 million). It previously had a line of credit of 40 million Australian dollars for its working capital.
“Does the announcement of the new line of credit mean that an asset acquisition is imminent? financial services firm Barrenjoey asked in a client note.
Chief executive Julian Andrews said Deterra had been focused on pursuing acquisitions, but felt no urgency to sign a deal.
“We’re actively looking for, but it’s a facility that we’re really putting in place to support that mid-term business development capability,” Andrews said in an interview with The Wall Street Journal on Tuesday. “We’re not going to chase assets. What’s important to us is making sure we’re able to act on these kinds of opportunities as they arise.”
He said Deterra wants to invest in base or battery metals or bulk products that are at or near production in developed mining regions. The company sees “a sweet spot” for acquisitions of around A$100-300 million, although it is not limited to that range, Mr Andrews said.
“We’re certainly not targeting a particular number of investments or even a particular amount,” he said.
However, he has signaled an interest in possibly purchasing mining royalty packages that may become available. Deterra currently holds six royalties.
“From time to time there are opportunities to acquire portfolios of assets and they can provide a number of different exposures at the same time,” Andrews said. “We certainly expect to see some of those over time.”
Write to Rhiannon Hoyle at [email protected]