Deterra’s Strategic Exit from Precious Metals Raises Questions on Future Focus

Strategic Divestment of Non-Core Assets

Deterra Royalties Limited has announced the sale of its La Preciosa silver royalties and related milestone payment rights to Avino Silver & Gold Mines Ltd for a total consideration of US$22 million (approximately A$34 million). This move marks a clear step in Deterra’s ongoing strategy to streamline its portfolio by divesting precious metals assets that fall outside its core focus on base, bulk, battery, and electrification commodities.

The sale includes an upfront cash payment of US$13.25 million upon completion, with a further US$8.75 million payable within 12 months. This structure reflects a balanced approach to risk and reward, allowing Deterra to realise significant value while maintaining some exposure to the project’s future performance.

Financial Upside and Portfolio Impact

From a financial perspective, the transaction is expected to generate a pre-tax profit of US$6.2 million (around A$9.7 million), delivering a robust 31% pre-tax internal rate of return based on the original acquisition cost of US$14.8 million through the Trident Royalties portfolio less than a year ago. This profit underscores the value creation potential inherent in Deterra’s royalty acquisition strategy, particularly when paired with disciplined capital management.

Importantly, the proceeds from the sale will primarily be directed towards reducing Deterra’s net debt, strengthening the company’s balance sheet and enhancing financial flexibility. This prudent use of capital aligns with investor expectations for sustainable growth and risk mitigation.

Avino’s Position and Project Outlook

Avino Silver & Gold Mines enters this deal well-positioned, with approximately US$37 million in cash and no debt as of mid-2025, ensuring it is fully funded to complete the transaction and advance the La Preciosa project. The timing of the sale coincides with a strong silver price environment and Avino’s demonstrated progress in developing La Preciosa, making this a mutually beneficial agreement.

Deterra’s Managing Director Julian Andrews highlighted that the sale validates their business model of acquiring royalties over high-quality assets operated by established project operators. The divestment also reflects a disciplined focus on core commodities that are central to the evolving global economy, such as battery metals and electrification materials.

Looking Ahead

While the sale marks a significant milestone, questions remain about the timing and certainty of the deferred payment, which depends on Avino’s production milestones and payment election. Additionally, the tax implications of the transaction, though noted, have yet to be fully detailed. Investors will be watching closely to see how Deterra continues to optimize its portfolio and capital allocation in a dynamic market environment.