BHP Group Ltd (ASX: BHP), a leading global resources company, recently faced a setback with its attempted takeover of UK-listed Anglo American (LSE: AAL). However, another ASX 200 mining stock has found more success in its UK acquisition endeavors. After the market closed on Thursday, this miner announced that its takeover offer had been accepted, making the deal appear highly likely.


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Which ASX 200 Mining Stock is Making an Acquisition?

The ASX mining stock in the spotlight is Deterra Royalties Ltd (ASX: DRR). Unlike traditional mining companies, Deterra Royalties generates revenue without direct mining operations. Instead, it earns money from royalties, allowing it to benefit from mining activities without the associated risks and costs. Currently, its most valuable asset is the royalty from BHP's Mining Area C operation.


Deterra Royalties is on the verge of expanding its portfolio significantly. The company has made a successful takeover bid for Trident Royalties (LSE: TRR), a diversified mining royalty company based in the UK. Trident's board has recommended Deterra’s 49 pence per share offer, valuing the deal at approximately £144 million (A$276 million). 

Trident Royalties’ Portfolio and Strategic Fit

Trident Royalties boasts a diverse portfolio, including 21 royalties and royalty-like offtake contracts. These assets provide exposure to a range of commodities such as lithium, gold, silver, copper, zinc, mineral sands, and iron ore. Trident's directors have unanimously supported the takeover offer, and key shareholders holding around 28.7% of Trident's shares have committed to voting in favor. 


The acquisition will be executed through a UK scheme of arrangement, contingent on approvals from Trident shareholders and the court, alongside other standard conditions. This strategic move aligns perfectly with Deterra’s growth strategy.

Strategic Commentary from Deterra’s Managing Director

Julian Andrews, Managing Director of Deterra Royalties, emphasized the strategic importance of this acquisition:


"This Transaction aligns with our growth strategy of building a diversified portfolio of royalties, leveraging our scalable operating cost structure. It provides an opportunity to accelerate the growth of our portfolio by adding a high-quality selection of 21 royalties and royalty-like instruments, primarily over North American domiciled assets, at an attractive time in the commodities cycle. This portfolio meets our investment criteria, offering exposure to bulk, base, and battery metals from operations in stable mining jurisdictions."

Dividend Policy Update

Alongside this promising acquisition news, Deterra Royalties announced a significant update to its dividend policy. Historically, the company has operated with a dividend payout ratio of 100% of net profit after tax, a strategy it will maintain for FY 2024. However, starting from the subsequent fiscal years, Deterra plans to adopt a minimum payout ratio of 50% of net profit after tax.


Julian Andrews provided insight into this strategic adjustment:


"We have a strong history of disciplined capital management, having delivered more than A$480 million of fully franked dividends to shareholders since our listing in late 2020. The adjustment to our dividend policy is designed to better align it with Deterra’s long-term strategy of balancing capital growth and income returns. Our commitment to returning capital when not required for investment or balance sheet management remains unchanged."

Implications of the Trident Royalties Acquisition

The acquisition of Trident Royalties is poised to have significant implications for Deterra Royalties. By integrating Trident's diverse portfolio, Deterra can enhance its revenue streams and mitigate risks associated with single-commodity dependency. The addition of royalties from various mining operations, particularly in North America, diversifies Deterra’s geographic exposure, thereby reducing geopolitical risks.

Leveraging Market Conditions

The timing of this acquisition is particularly strategic. The global commodities market is experiencing notable shifts, with increasing demand for metals essential for technology and infrastructure development. Deterra’s expansion into battery metals like lithium aligns with the rising global demand for electric vehicles and renewable energy technologies. This move positions Deterra to capitalize on favorable market conditions and emerging trends in the commodities sector.

Operational Synergies and Strategic Growth

Deterra’s scalable operating cost structure will likely benefit from the integration of Trident's assets. By spreading fixed costs over a larger asset base, the company can achieve greater operational efficiency and enhanced profitability. This acquisition is a testament to Deterra’s proactive approach to growth, focusing on high-quality assets that align with its strategic objectives.

Future Outlook and Investor Confidence

Investors can anticipate that the successful completion of this acquisition will bolster Deterra's financial performance and market position. The company's strategic focus on diversifying its portfolio and optimizing its dividend policy reflects a commitment to sustainable growth and shareholder value creation. 


With a robust portfolio and a prudent approach to capital management, Deterra Royalties is well-positioned to navigate the evolving commodities landscape and deliver consistent returns to its shareholders.


Deterra Royalties Ltd’s strategic acquisition of Trident Royalties signifies a pivotal step in its growth trajectory. By expanding its portfolio and adjusting its dividend policy, Deterra aims to achieve a balanced approach to growth and income returns. This move not only strengthens its market position but also enhances its ability to generate long-term value for shareholders.