What's Happening?
Deterra Royalties has sold its La Preciosa silver assets in Mexico to Avino Silver & Gold Mines for US$22 million. This transaction ends Deterra's royalty interests in the project and removes its obligation to a contingent milestone payment. The sale aligns with Deterra's strategic focus on base, bulk, and battery commodities, as precious metals are not central to its investment strategy. The company expects to realize a pre-tax profit of over US$6 million from this disposal, reflecting a 31% pre-tax internal rate of return.
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Why It's Important?
The divestment of La Preciosa allows Deterra to concentrate on its core strategic commodities, potentially enhancing its financial performance and aligning with its long-term business model. This move reflects a broader industry trend where companies are optimizing portfolios to focus on high-demand sectors like battery and electrification commodities. The transaction also highlights the strong silver price environment, which could benefit Avino Silver & Gold Mines as they develop the project further.
What's Next?
Deterra will likely continue reviewing its portfolio for opportunities to divest non-core assets and reinvest in strategic areas. The company may explore new acquisitions in the base and battery commodities sectors to strengthen its market position. Avino Silver & Gold Mines will focus on developing La Preciosa, leveraging the favorable silver market conditions to maximize returns.
