Deterra Royalties Ltd (ASX: DRR) shares are tumbling on Thursday.
In afternoon trade, the ASX 200 mining stock is down over 6% to $3.92.
This means the mining royalties company's shares have given back yesterday's gains and more.
Is this a buying opportunity for investors? Let's see what analysts at Macquarie Group Ltd (ASX: MQG) are saying about the company.
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What is the broker saying about this ASX 200 mining stock?
Macquarie notes that Deterra Royalties has agreed to sell the gold offtakes acquired via the Trident deal for US$56 million. This complements its earlier sale of La Preciosa for US$22 million.
The broker points out that this is the final part of a portfolio revamp. It said:
DRR's sale of its non-core gold offtakes for US $56m marks the final stage of a portfolio cleanse following the Trident acquisition. Recently, it sold the La Preciosa royalty package for US $22m, yielding US$78m, or slightly over A$100m. DRR assesses the offtake transaction to have generated a 25% pre-tax IRR since acquisition, based on its fair carrying value assessment at the time of the Trident acquisition.
Overall, Macquarie appears supportive of the transaction and highlights that it means the ASX 200 mining stock is now back to being an industrial metals-focused royalty vehicle. It adds:
Clean-up complete, back to base: The gold off-take foray was a function of acquiring Trident for Thacker Pass and the basket of preproduction royalties. With the portfolio now streamlined, DRR's original proposition of an industrial metals-focussed royalty vehicle can be resumed, which we assume will focus on base metal royalties and counter-cyclical investments.
Should you invest?
Macquarie is sitting on the fence with this one.
According to the note, the broker has retained its neutral rating on the ASX 200 mining stock with a steady price target of $4.20.
Based on its current share price of $3.92, this implies potential upside of 7.1% over the next 12 months.
In addition, the broker is forecasting a 5.2% dividend yield in FY 2026. This brings the total potential return 12-month to approximately 12%.
Commenting on its neutral rating, the broker said:
Neutral: The transaction simplifies and differentiates DRR as an industrial metals royalty company without precious exposure. Those looking to have exposure to the industrial metals complex for lower beta may find DRR an attractive alternative to higher operationally leveraged exposures.
Catalyst: Progress updates on Thacker Pass phase 1 construction and first production.
