Deterra Royalties (ASX: DRR) has acquired an existing third-party 1.75% net smelter return royalty covering a substantial portion of the Santa Cruz copper project in Arizona, USA, owned and operated by Ivanhoe Electric Inc. (NYSE:/TSX: IE), for US$74.15 million.
Concurrently, Deterra and Ivanhoe Electric have entered into a series of agreements to update and modernise the royalty, which also takes into account certain changes to the royalty agreed between Ivanhoe Electric and Deterra. In particular, the Royalty will now apply at a rate of 1.68% until the 6th anniversary following commercial production, reducing to 1.57% thereafter.
Santa Cruz has a short timeline to production and cash flow to the royalty. Project financing is underway, underpinned by recently announced results of an updated 2026 preliminary feasibility study.
Ivanhoe Electric announced the acquisition of a tunnel-boring machine (“TBM”) in the second quarter for use in mine development activities at Santa Cruz. The updated 2026 PFS incorporates the engineering details of the TBM and associated material handling system together with other engineering and development work and included modest increases in Reserves, first 15-year annual copper production and mine life as compared to the 2025 Preliminary Feasibility Study.
Initial development activities have commenced and Ivanhoe Electric is projecting first copper cathode production at Santa Cruz in 2029, subject to completion of project financing and permitting.
The sellers of the royalty comprise four private individuals, one corporation and two family trusts, based in the USA.
The acquisition of the Santa Cruz royalty aligns fully with Deterra’s strategy to grow our diversified portfolio of royalty assets to deliver long-term sustainable value for shareholders.
The Santa Cruz royalty becomes Deterra’s third core asset which, together with the Thacker Pass lithium royalty, provides meaningful revenue growth on top of our foundational Mining Area C iron ore royalty.
Deterra’s interim managing director and chief executive Jason Neal commented:
“The acquisition of the Santa Cruz Royalty represents a high-quality addition to Deterra’s portfolio, providing exposure to a large-scale, long-life asset in a premier mining jurisdiction.
“Alongside Deterra’s foundational Mining Area C iron ore royalty and our royalty over the world-class Thacker Pass lithium project, which is expected to achieve mechanical completion late next year and ramp-up to commercial production in 2028, this acquisition further strengthens the company’s portfolio and confirms our material near-term growth potential.
“Deterra established a competitive advantage in acquiring the royalty through our agreement with Ivanhoe Electric. This is a coveted copper royalty and we were the only interested company not bidding blind. We expect this acquisition to be accretive to earnings and cash flow once Santa Cruz has ramped up.”
