To advise that today's conference is being recorded. I would now like to turn the call over to the first speaker today, Mr. Jason Neal, Interim Chief Executive Officer. Thank you. Please go ahead.
Thank you. Good morning, and welcome to Deterra Royalties First Half 2026 Results Call. I'm Jason Neal, MD and CEO of Deterra, and I'm joined today by Jason Clifton, our Chief Financial Officer. As you're aware, I've been a long-standing non-executive director of Deterra and have stepped into the MD and CEO role only on an interim basis as a bridge to the next leader of our company, for which we have an active search process underway. In this transitionary period, it's been very much business as usual, and our team continues to advance various opportunities. It is a pleasure to report a strong half, and without further delay, I'm going to hand the call to Jason Clifton to take you through the highlights and some important details.
I will conclude the call before the Q&A session with some of my reflections on the half year and the strategic orientation of the company.
Thanks, Jason, and good morning, everyone. If you move to page three, you'll see we have delivered a record first half NPAT of AUD 87 million and a first-half dividend of AUD 0.124 per share, fully franked. This is a great result, which has been driven, firstly, by record sales volumes and strong pricing from Mining Area C, and secondly, by the profit delivered from the sale of non-core precious metals assets that were acquired as part of the Trident acquisition. We announced those sales in August and September last year and have used the AUD 108 million proceeds received to date to pay down debt. Thacker Pass continues to de-risk, construction is well underway, and Jason Neal will add more on Thacker later. We have a very strong balance sheet, with net debt at AUD 149 million.
We are well within all of our banking covenants and our target leverage ratio, and that positions us well to execute on investment opportunities as they arise over time. Moving to page four, you'll see revenue is up 12%, driven by the MAC royalty. The sales of our non-core assets delivered an accounting profit of AUD 8.4 million. A couple of comments on this. Firstly, you can see we have an effective tax rate of 24% for the half. That's because we had offshore tax losses that we were able to use to fully offset the tax that would have otherwise been payable on the profit on sale of those assets. Secondly, this amount has been included in our first half dividend to deliver AUD 0.124 per share, fully franked interim dividend.
That is consistent with our previously stated payout ratio target of 75%. Moving to page 5, you can see the MAC royalty revenue up 12%. Sales for the half are a record 68 million dry tons, with a realized price of AUD 139 per ton, which was up 5% on the first half, FY 2025. Moving to page 6. Our operating costs were AUD 8.1 million for the half. Within that number includes one-off costs of AUD 1 million associated with the CEO transition. Half of that relates to cash-based contractual entitlements, and half relates to the expensing of share-based payments that stay on foot for testing into the future in accordance with those share plan hurdles.
Offsetting that is, offsetting that one-off is a lower headcount across the company, and that reflects a restructuring of our teams in both the Perth and London offices in the first half of 2026. Finally, 1H 2026 saw a more normal level of external due diligence costs. 1H 2026 was AUD 0.9 million versus AUD 0.2 million in 1H 2025, and they support our business development activities. Those costs in 1H 2025 were very low, as we were focusing on integrating Trident at that time. On page 7, I provide an overview of the sales of non-core precious metals assets. These have generated AUD 108 million in cash proceeds in the half, which have been used to reduce net debt.
We have a further AUD 13 million cash payment receivable in August 2026, and that is the deferred receivable from the La Preciosa sale. Page 8 shows the strength of our balance sheet. Net debt is AUD 149 million at 31 December 2025. We are well within all of our covenants and have an average margin across our credit facilities of only 1.3%. We have three hundred and forty-four million undrawn capacity within our credit facilities. Finally, page 9 outlines our capital management framework. Starting at the left-hand side, one of Deterra's competitive advantages is the quality and consistency of our cash flows from MAC. As mentioned, our balance sheet is very strong, and that provides a range of options to finance any potential new investment.
75% payout ratio at the half is consistent with our FY 2025 dividends and continues to be the target going forward. That rate strikes the right balance between shareholder returns, balance sheet strength, and investment optionality. With that, I'll pass it back to Jason Neal.
Thank you. I'm going to take advantage of my only opportunity to address Deterra shareholders and prospective shareholders on a results call, as by the time we report full year results, I expect I will have—we will have appointed our next Managing Director and Chief Executive Officer. We've had a strong half year financially, based on another great period for the Mining Area C royalty. If you inventoried all of the royalty and streaming assets owned by all the listed companies in this business, that is our peer royalty and streaming companies, our royalty on MAC ranks third by research analysts' estimates of net asset value. It was an outstanding foundation for a new company. The MAC royalty supports our dividend to shareholders, which is fully franked and targeted to be 75% of net profit after tax.
We are a growth-oriented company, but how MAC supports that growth has not been by redeploying significant cash flows into new acquisitions. What MAC has provided is the ability to access bank debt capital at effectively investment-grade rates, which is a huge advantage for a small company. Our after-tax borrowing rate in the first half of 2026 was 3.6%. The first acquisition that Deterra made was Trident PLC in 2024 to target the Thacker Pass mining project in Nevada. We believed at the time that we were near trough prices for lithium and had confidence that there were value-enhancing milestones on the horizon. We also bought Trident PLC at an attractive multiple, in part because the shares were quite illiquid and trading on the UK market, where such a company lacks peers and can be somewhat orphaned by investors.
The construction phase is a good time to buy a royalty because the acquisition price is typically better pre-production, and the risks from that point to production are, for the most part, risks that impact the developer or operator. The royalty structure immunizes us directly from, for example, potential CapEx escalation and whether the OpEx matches the feasibility study. Our position, of course, is not riskless, but overall it is a great time to make a bet. Shortly after our acquisition, the Thacker Pass technical report was updated to show an 85-year mine life, an improvement from 40 years in the prior report, and outlined expansions for 160,000 tons of annual production, double what it had been in the prior report. But reflecting solely on the first half of 2026, we have seen significant de-risking of Thacker Pass.
This includes the important first draw on the $2.2 billion U.S. Department of Energy loan to support construction, which is a 23-year loan at U.S. T-bill rates without a spread. The U.S. government has been given the right to a 5% shareholding in Lithium Americas, which is the operator, and a 5% interest in the Lithium Americas General Motors joint venture that owns Thacker Pass. General Motors, of course, is not only a partner in the joint venture, having contributed $945 million, but also having offtake arrangements in place for lithium production. All of this is a very significant endorsement.
We have also seen the lithium carbonate price indices increase from about $11,000 per ton the day that we closed the Trident PLC acquisition, to approximately $17,500 a ton recently, much of that move in the half year. Altogether, a reflection of value appreciation of our royalty in Thacker Pass is that the share price of Lithium Americas has more than doubled from the day we closed the acquisition of Trident PLC through to today. So we're pretty happy with our acquisition and very much looking forward to first production, which Lithium Americas projects to be at the end of calendar 2027. When we bought Trident PLC, we got some other assets. One of those assets is a royalty on the PFS Stage Antler Copper Project in Arizona, USA.
It is a smaller royalty interest, but we view copper as an outstanding commodity to be exposed to, and Arizona is one of the best jurisdictions for copper mines. For Australian shareholders, it is fair to say that owning copper in Arizona is like owning iron ore in the Pilbara. In the first half of 2026, the owner of Antler, ASX-listed New World Resources, was acquired by Kinterra Capital. A project being acquired by a more capable and better-funded owner is one of the ways in which our underlying royalty assets can accrete in value. The final thought I want to offer to elaborate on the first half of 2026 is that we realized the sale on the non-core assets from the Trident PLC acquisition.
As fun and profitable as it is to own gold assets in recent years, we divested the gold offtake agreements that came with Trident Royalties. These aren't really royalties at all, but in a volatile market, they can pay similarly. They did not fit our portfolio and were always tagged for disposal, but we were happy to collect revenues until the disposal was sorted out. We sold those assets in the first half of 2026 to Vox Royalty at a price that we were happy with and which provided our shareholders with a 28% pre-tax return on those assets, factoring the value assigned in the Trident acquisition, the disposal price, and the revenue received in the interim. So we paid $188 million for the purchase of Trident Royalties.
With that, we drew our bank debt to AUD 314 million as of December 31, 2024. We divested non-core gold assets for $82 million, so a net acquisition of Thacker Pass, Antler, and a few other interesting assets was $106 million. The proceeds were largely applied to debt repayment. As of December 31, 2025, our drawn debt is now AUD 156 million. So today, we have AUD 344 million of undrawn debt and positioned to make further acquisitions opportunistically. This is a good point to reflect on our capital allocation, which can be summarized as continuing to pay a peer-leading dividend in the royalty and streaming sector and having completed a well-timed acquisition and subsequent asset rationalization to add new core assets, and now having available capital to deploy in future growth.
As I opened my remarks saying, this is the only results call that I will be leading. I joined this company as a non-executive director in 2022, attracted by the quality of our foundational asset and the opportunity to build significant shareholder value through growth. Thus far, we have delivered shareholders a very good return through dividends, but we have not provided a return through capital gains, as our share price is not that different than the 2020 IPO price. The royalty and streaming sector, which is dominated by North American companies, typically trades at a stronger value multiple than we have ourselves, and has provided an outstanding shareholder experience overall, generating returns significantly greater than underlying commodity prices. That is the potential and the objective of this company, and I look forward to returning to the non-executive role in a few months and supporting our next CEO.
Thank you. We will now begin the question and answer session. If you would like to ask question, please press star one and one on your telephone. One moment for the first question. Our first question comes from the line of Glyn Lawcock from Barrenjoey. Please go ahead.
Good morning, Jason. A couple of questions. Firstly, just on opportunities. I mean, obviously you've sold the asset in the last half, but we haven't seen much on the other side of the ledger. When we caught up six months ago, I think, you know, the message was, we prefer single asset acquisitions to corporate M&A or, you know, maybe buy an existing royalty versus creating one. How have things changed over the last six months? You know, at the board level, you know, is that still the sort of what you're trying to achieve? And, you know, has the opportunity set changed at all? Thanks.
Yeah. So I would say that, we have a number of irons in the fire. There's quite a few things that we're looking at. And honestly, there's a bit of a mix of everything. I wouldn't say we're spending very much time looking at corporate acquisitions at this time. I mean, never say never, but that's not the biggest focus. I would say mostly what we're looking at is where there's existing royalties that might come available, and there, we're trying to find a competitive advantage because most of these have a number of parties that are looking at them. But we're also looking at trying to establish new royalties.
I mean, the evolution of the royalty streaming space is that, we're becoming more and more part of the conventional project finance, ecosystem. And so we see a number of those opportunities, as well, so.
Okay. And so it really hasn't changed. I mean, it's, there's a mix of everything coming across the desk, and it's just about what, where you can add the value and not overpay versus a peer, I guess.
Yeah. The only thing I would say, though, is that the environment in aggregate is more active than it was, say, 12 months ago. There's a lot happening. We don't really compete with equity capital, but when equity capital is robustly available, I think as it is in a number of parts of the commodity space, that capital is typically alongside us. And so there's companies that feel like they can get their complete financing solution done in this environment, and so there's probably more opportunities for us to be a part of that. So same sort of mix, but a higher level of activity.
Okay. And then just my second question is, just thinking about, you know, cash returns, as you say, I mean, the capital return has been very minimal since, since it was listed, so it's all been about dividends. You know, if we don't find anything suitable, you know, like, what level does debt get to? I know your target gearing or leverage ratio is 0%-15%. You know, it's coming down. If you continue to pay only 75%, we're gonna continue to, to deleverage. In the absence of buying anything, when, at what level do you think we go back to almost paying out 100% of the MAC royalty to shareholders?
You know, I don't think that going back to 100% is on the horizon. I don't think anybody should expect that. The 25% that is retained is being used essentially to pay, as part of paying down the acquisition facility, and then we have at least AUD 300 million of dry powder right now. And if we really tested it, we could have more. I mean, that's the sort of capital that we think we need to have available to be invited to the processes or see the opportunities that we think are in the market. I mean, obviously, you might have seen the one that one of our peers announced recently.
We're not quite in the AUD 4 billion-dollar bracket, but there's quite a few things that are kind of more on the, you know, somewhere between 100 and 500, and we want to make sure we're sitting at the table for all of those.
Okay. But if we're sitting here in 12 months' time, and we haven't paid anything, we haven't bought anything, and you've used the 25%, so we end up in a leverage ratio closer to zero, do we then go back or do we build cash? I'm just trying to think about. I know you could buy something, and then this conversation's moot, but-
Yes. So I don't think we're going to get to the point where we're building cash. So yes, if we're unsuccessful in buying anything and the debt gets fully repaid, I don't think we'll continue to build a cash balance at that point. But I would say, I mean, I'd be really disappointed if we didn't have something done in the next 12-18 months, you know, of chasing opportunities.
Okay, that's great. Thanks very much.
Thank you for the questions. As a reminder, if you'd like to ask question, you can press star one and one and wait for your name to be announced. Our next question comes from Lachlan Shaw from UBS. Please go ahead.
Yeah. Good morning, team. Thanks for taking my question. Just wanted to, I suppose, have a couple of questions around the portfolio. So obviously, you've realized good value from the sell down of the precious metal stream that came with Trident. You know, on a go-forward basis, are you still open to portfolios that have, you know, I guess, a mix of, the streams that are core but also non-core, like, like, these sort of precious metal streams? And the second question, just around Lithium Americas, you know, I guess lots of good progress there in terms of funding and, and, and the construction is getting underway. How are you thinking about appetite to add, further lithium, specifically, into the portfolio? Thank you.
Sure. So on the second one, lithium is still an asset that we're looking at, and we see, and we see opportunities now, and then if we, if we had something that fit the portfolio well, we could very easily do another, another lithium acquisition. We do think that we got one of the very best lithium assets in the Thacker Pass. On gold, so, it's a, it's a bit semantical, but there is a structure. We didn't, we didn't either acquire a gold stream or sell a gold stream. It was, it was an offtake agreement. It's, it's not, it's not really a stream or royalty at all.
It's a gold offtake, and there's a pricing mechanism, and around the time of gold sale, and if gold is volatile, you end up getting a bit of a spread. It's not the sort of security that really fits well. It also causes a lot of accounting volatility for us, and so that was really the reason. It wasn't because we didn't like precious metals. If we got a precious metals royalty or stream as part of an acquisition, and it fit the portfolio in every other way, except it's odd that we have a precious metal, there's a reasonable chance we might just keep them as part of the portfolio. I think royalty streaming companies have typically been hoarders of assets.
The reason that we don't spend a lot of time looking at precious metals-heavy opportunities is simply because we have a competitive disadvantage there. The royalty streaming space really got started with silver and gold assets, and those companies have become very, very large companies with, you know, large cash balances, are trying to deploy better cost of capital than we may have. And I think if we participate in this process, we probably just lose them. So we're just putting our resources in other places. But there's nothing against gold and silver. Those have been great commodities. Investors have done really well with our peer companies exposed to them.
Thank you for the questions. Once again, if you'd like to ask question, please press star one and one and wait for your name to be announced. At this time, there are no further questions from the line. Allow me to hand the call back to management for closing.
Great. Well, thank you everyone for joining us today and for the questions. We're gonna get back to work here. So thanks very much, everyone. Take care.