Deterra Royalties secures long-term upside as construction advances at Thacker Pass Lithium Project

Deterra Royalties Limited (ASX:DRR) has reaffirmed its strategic positioning in the global energy transition landscape with the latest progress update from Lithium Americas Corporation on the Thacker Pass Lithium Project in Nevada, USA. As construction activity accelerates on one of the world’s largest lithium deposits, Deterra’s gross revenue royalty stake is poised to deliver meaningful long-term cash flow benefits.

The Thacker Pass development, operated by Lithium Americas Corporation (LAC), represents one of the most advanced large-scale lithium mining projects in North America. In its latest announcement, LAC confirmed that permanent concrete placement at the processing plant area began earlier this month, with steel installation slated for commencement by September 2025. Earthworks have reached near-completion, marking a pivotal step in physical site development.

What Is Deterra Royalties’ Role in the Thacker Pass Lithium Project?

Deterra Royalties holds a 4.8% gross revenue royalty on the Thacker Pass Lithium Project, which is expected to reduce to 1.05% following the anticipated execution of a partial royalty buyback for a consideration of US$13.2 million. The company’s interest in the asset aligns with its strategy of acquiring revenue-based exposure to long-life, tier-one mining projects. This passive royalty structure allows Deterra to benefit from the project’s upside without incurring operational or capital expenditure risks.

According to Managing Director and Chief Executive Officer Julian Andrews, the Thacker Pass royalty acquisition has already delivered strategic value through multiple milestones. These include the successful final investment decision (FID), expanded production targets, and now the execution phase of project construction.

How Is Construction Progressing at Thacker Pass?

The construction timeline for Thacker Pass is progressing in line with earlier guidance. During the first quarter of 2025 alone, US$78.2 million in construction capital and associated costs were capitalized. LAC and its joint venture partner General Motors Holdings LLC collectively committed US$291.6 million in equity funding when the project’s FID was confirmed on April 1, 2025. The project’s financing will be further bolstered by a significant U.S. government-backed loan.

LAC expects to draw from a previously announced US$2.26 billion loan facility from the U.S. Department of Energy (DOE) in Q3 2025. The low-interest DOE funding underscores Washington’s strategic commitment to securing domestic battery supply chains and reducing dependency on Chinese lithium supply.

Why Is Thacker Pass Considered a Cornerstone Lithium Asset?

The Thacker Pass Lithium Project is considered globally significant due to its sheer resource size and planned production scale. Based on National Instrument 43-101 technical reports, the project boasts a Proven and Probable mineral reserve of 14.3 million tonnes of lithium carbonate equivalent (LCE), complemented by a Measured and Indicated resource of 44.5 million tonnes of LCE. These estimates are among the largest recorded for any lithium-bearing claystone deposit in the world.

Phase 1 of the project targets production of 40,000 tonnes per annum (tpa) of battery-grade lithium carbonate, eventually scaling up to a nameplate capacity of 160,000 tpa across five production phases. Notably, Thacker Pass is forecast to operate at a C1 cost of just US$6,238 per tonne of LCE during the first 25 years of its projected 85-year mine life—placing it among the lowest-cost lithium operations globally.

What Does This Mean for Deterra’s Royalty Portfolio?

From a financial perspective, Thacker Pass represents a future cornerstone for Deterra’s revenue streams. While the royalty rate may reduce from 4.8% to 1.05% following the buyback transaction, the size, life, and profitability of the underlying asset provide long-term visibility for stable royalty cash flows.

Deterra’s CEO underscored that the Thacker Pass royalty complements the company’s diversified exposure to quality mineral assets. The development also highlights Deterra’s differentiated model that focuses on scalable revenue streams tied to decarbonization-critical commodities, including lithium, which remains central to electric vehicle (EV) and energy storage markets.

How Are Investors Responding to Deterra’s Lithium Exposure?

Investor sentiment around Deterra’s lithium-linked royalty portfolio has turned increasingly constructive, particularly as global decarbonization policies drive structural demand for critical minerals. The strategic value of royalty exposure is gaining recognition in a capital-constrained environment, offering a high-margin, inflation-resilient earnings profile.

Market analysts tracking royalty and streaming companies suggest that Deterra’s Thacker Pass stake could evolve into a material cash generator from the early 2030s onwards, aligning with the completion of Phase 1 construction in late 2027 and commencement of commercial production thereafter. The company’s risk-adjusted profile and optionality in resource price upcycles continue to be seen as supportive of shareholder value creation.

What’s Next for Thacker Pass and Deterra?

With Thacker Pass construction now visibly underway, LAC and General Motors are expected to continue funding the capital program through 2026, paving the way for mechanical completion by late 2027. The next key project milestones include steel erection in Q3 2025, followed by installation of key process equipment and infrastructure.

For Deterra Royalties, further monetization of its royalty asset will depend on the successful operationalization of Phase 1 and continued adherence to the construction timeline. The forthcoming partial royalty buyback, expected to yield US$13.2 million in upfront proceeds, will also allow Deterra to reallocate capital across other high-yielding royalties and exploration-linked opportunities.

How Does Thacker Pass Fit into the Global Lithium Supply Chain?

Thacker Pass is strategically positioned to serve the burgeoning U.S. lithium battery supply chain, especially given the geopolitical push for critical mineral independence. With federal backing from the U.S. DOE and strategic equity support from General Motors, the project is emblematic of public-private partnerships targeting domestic energy resilience.

Lithium Americas Corporation has repeatedly emphasized that domestic processing and production of lithium carbonate will be essential to meet the rising EV manufacturing demands across North America. Deterra’s early involvement as a royalty holder provides indirect yet meaningful leverage to this trend.