I asked ChatGPT for an analysis of RHI, with consideration of many market aspects, fundamentals, and a bonus comparison against DRR. Also included are links for sources (sorry if the format is annoying, it's how it was presented).
I also note that it did not consider royalties over future gold projects etc, which in my mind certainly present potential value.

Looking forward to hearing anyone's thoughts.

Red Hill Minerals (RHI:ASX) – Business & Assets

Red Hill Minerals is a small WA resources company re‑focused as a royalty/holding play. Its main asset is a 0.75% FOB royalty on the Onslow Iron Project (OIP) in the West Pilbara, owned by Mineral Resources (MinRes). RHI sold its 40% interest in the Red Hill Iron Ore JV to MinRes in 2021/22 for two A$200 m paymentsredhillminerals.com.auredhillminerals.com.au. First ore from OIP shipped May 2024, triggering the final A$200 m and RHI’s royalty streamredhillminerals.com.auredhillminerals.com.au. In FY25 Red Hill has received ~$4.1 m in royalties to dateredhillminerals.com.au (just the ramp‐up phase).

Aside from the iron-ore JV, RHI holds 100% of the small Pannawonica Iron Project (2 CIDs with 4.7 Mt reserves) and exploration ground for gold/base metals in WA and NSWredhillminerals.com.auredhillminerals.com.au. A royalty over the Sandstone gold project was added in Apr 2025 (recent ASX announcement). However, the OIP royalty dominates value: MinRes plans to ramp OIP to 35 Mtpa by mid-2025mineralresources.com.au, with one‐third of ore off‑taked to Baowuredhillminerals.com.auredhillminerals.com.au. MinRes reports >10 Mt shipped in the first year and added tranship vessels to hit 35 Mtpa, despite some cyclone delaysmineralresources.com.aumineralresources.com.au.

Financials & Dividends

RHI’s recent earnings were dominated by the OIP asset sale. For FY24 it reported ~A$154 m profit (mostly the sale proceeds)tradingview.com; after that, half-year Dec 2024 net income was only A$3.64 mtradingview.com. MarketIndex shows RHI’s trailing EPS rose sharply in 2024 but will drop to low single‐digits in FY25 without further one‑offs (estimated P/E will normalize accordingly). At end-2023 RHI had net assets ~$40 m and ~$23 m cashredhillminerals.com.au (before receiving the final $200 m). After paying large dividends in 2024, RHI still retains substantial cash (and will get ongoing small royalty inflows).

RHI has rewarded shareholders with large special/interim dividends. In July 2024 it paid a fully‑franked $1.50 per share special dividend (financed by the $200m sale payment)redhillminerals.com.au. It then declared a $0.30 interim dividend in Nov 2024 and a $0.03 interim in Apr 2025marketindex.com.au. On Apr 22, 2025 RHI announced a dividend policy of paying ~50% of royalty cash as semi‑annual dividendsredhillminerals.com.au. Hence future distributions depend on OIP performance. At current ~$3.05/share, RHI’s yield is very low (~1–2%) because dividends are still small, but this should rise if shipments ramp and iron ore prices remain firm.

Market Factors

Iron ore price: RHI’s royalty is in A$, but is derived from iron ore sold on world markets (62% Fe CFR China). Prices peaked in mid-2021 (~US$220/t) but have since fallen. As of June 2025, 62% Fe ore is about US$95–105/tmarkets.ft.com. At USD/AUD ~1.53–1.54exchange-rates.org, this is roughly A$145–160/t. Thus each shipped tonne yields RHI ≈0.75%×A$150 ≈A$1.13 (about 1 USD) in royalty. If OIP reaches 35 Mtpa, royalties could be on the order of ~A$26–30 million per year (gross), implying ~A$13–15m could be paid to shareholders at 50% payout. Conversely, if iron ore prices weaken (or A$ strengthens), royalty revenues would fall proportionally.

USD/AUD: In mid-2025, 1 USD ≈1.53–1.54 AUDexchange-rates.org, similar to long-term average. A weaker AUD (i.e. stronger USD) benefits Australian exporters. RHI’s royalty is paid by MinRes in A$, but it tracks an iron ore price set in USD, so a higher USD/AUD would increase RHI’s AUD receipts per tonne. Conversely, a strong AUD would dampen revenue.

Volumes and Timing: MinRes has shipped ~10 Mt in 12 monthsmineralresources.com.au, aiming for 35 Mtpa by mid-2025mineralresources.com.au. Any delay or underperformance (e.g. cyclones in early 2025) can postpone dividend growth. Conversely, upside comes if MinRes exceeds targets or expands the mine (OIP’s resource + adjacent deposits total ~1.1 Btredhillminerals.com.au).

Comparison – Deterra Royalties: Deterra (ASXRR) is a well-known iron-ore royalty trust (Roy Hill and BHP joint-ventures). It is larger (~A$2 b market cap vs ~A$200 m for RHI) and pays higher yield (~7% annual yieldtipranks.com). Deterra’s recent full-year DPS was A$0.233 (paid Feb 2025)tipranks.com, versus RHI’s ~A$0.06 (annualized). Deterra covers ~2.6% of Pilbara output (Roy Hill, etc.), so its cash flows are much larger and diversified. However, Deterra’s profits and dividends have fallen with iron ore weakness, showing the same cyclic risk. In contrast, RHI’s small size means higher execution risk (one asset, low liquidity) but also higher optionality (if OIP ramp‐up accelerates, RHI returns could jump).

Technical Analysis (Chart Signals)

RHI’s share price spiked on the July 2024 dividend news (to ~$7.95) then slid to ~$3.0 by mid-2025 (about –58%). Trading indicators are mixed-to-bearish at current levels: most moving averages (5,20,50,100,200D) sit above the current price and suggest “Sell” signalstipranks.comtipranks.com. For example, TipRanks shows RHI’s 20‑day EMA $3.28 vs price ~$3.03, a sell signaltipranks.com. The RSI is 32 (near neutral-to-oversold)tipranks.comtipranks.com, and MACD is slightly negative (–0.05)tipranks.com. In summary, momentum indicators do not currently signal a strong uptrend. Indeed, one technical summary rates RHI as a “Sell” based on these metricstipranks.com. (However, such short-term signals may not capture the multi-year view of royalty cashflows.)

Valuation and Outlook

Valuation considerations: Without formal models, a rough “back-of-envelope” approach is instructive. If OIP hits 30–35 Mtpa at, say, A$140/t, annual royalties ≈A$27–35m. Even at 50% payout that’s A$13–18m to equity. On ~64 m shares, that’s ~$0.20–0.28 per share yield. At a conservative P/E of ~10–15 on underlying earnings, that would imply a fair price in the $2–4 range. (P/E is hard to define: RHI’s 2024 EPS jumped from sale-profit, and 2025 EPS will be tiny without sale. A normalized P/E on ongoing royalties might be 10–15x.) SimplyWallSt’s DCF & peer metrics (which included the sale) show RHI “overvalued” (it gave a low fair value, but that figure was based on abnormal earnings)**.st. By contrast, trading screens note RHI’s trailing P/E ~1.2 (using 2024 earnings)**.st, but this is misleading because the one-time gain dominates.

Risks: The stock depends heavily on iron ore markets and execution. China demand, global supply (e.g. Brazil/Simandou projects), or a resurgence of COVID could move prices. A stronger AUD would reduce RHI’s AUD royalties. Locally, any slowdown at Onslow (e.g. further cyclones) could delay cashflows. Conversely, the strong backing of MinRes and Baowu’s offtake deal reduce mine-development risk. Red Hill also has substantial cash, which should fund exploration (thus optional value) with less need for equity dilution.

Potential: At current ~$3.05, RHI trades at roughly its mid-2024 post-dividend level. If OIP achieves full capacity and iron ore recovers (or stays steady) medium‑term, the market might re-rate RHI closer to its intrinsic royalty stream. For example, if RHI consistently paid >$0.15–0.20 per share annually, a ~$3 price would represent a 5–7% yield – not unreasonable for a stable royalty. However, if commodity headwinds persist, RHI could languish or fall.

Conclusion – Current “Fair Price” and Positioning

In summary, Red Hill is now primarily a leveraged play on Onslow iron ore. Its shares spiked on the asset sale and dividend but have since pulled back sharply. A medium/long‑term investor should weigh: (a) the big upside if Onslow delivers strong royalties (35 Mtpa at good prices gives very large cashflows vs today’s market cap of ~$0.2 bn) against (b) commodity and execution risk. Technically, the stock is in a downtrend (short-term signals are “sell”), so some analysts or scanners might label it a Selltipranks.com. However, from a fundamental standpoint it could be undervalued if one believes the ramp-up story.

Recommendation stance (analysis only): Red Hill is not richly priced here relative to its potential. If iron ore markets stabilize/improve and Ramp‑up continues, RHI’s intrinsic value (and dividend) should rise. Thus some analysts would see it as a “watch/buy on weakness” candidate – essentially a Hold-to-buy for long-term payoff. Against that, if you are cautious on iron ore, the low yield and technicals might make it a Hold (or even a Sell) for now, awaiting clearer evidence of sustained royalty earnings.

In contrast, Deterra (DRR) is a safer, larger royalty vehicle but with less upside – its current yield (~7%) is already baked in by high iron ore prices, and its recent drop (to ~$3.60) reflects the same commodity pullback. Red Hill’s smaller scale means more volatility but also more leverage to upside.

Bottom line: RHI’s “fair price” depends on iron ore forecasts. At ~$3.0, one might argue it is cheap given long-term royalties, but this is balanced by near-term uncertainties. It likely belongs on a watchlist: if ramp-up and prices hold, the stock could double; if not, it could drift lower. No clear short-term buy/sell signal dominates – the decision hinges on commodity outlook and personal risk tolerance.

Sources: Red Hill ASX releases and reportsredhillminerals.com.auredhillminerals.com.auredhillminerals.com.auredhillminerals.com.au; Market data and dividend historymarketindex.com.autipranks.com; MinRes/OIP updatesmineralresources.com.aumineralresources.com.au; commodity and currency datamarkets.ft.comexchange-rates.org; technical screenstipranks.comtipranks.com.