DEFA14A: Royal Gold to Acquire Sandstorm Gold and Horizon Copper, Bolstering Precious Metals Portfolio

Royal Gold, Inc. announced definitive agreements to acquire Sandstorm Gold Ltd. in an all-stock transaction and Horizon Copper Corp. in an all-cash transaction, significantly expanding its precious metals streaming and royalty portfolio.

Summary

• Royal Gold will acquire Sandstorm Gold Ltd. in an all-stock transaction at an exchange ratio of 0.0625 Royal Gold common shares for each Sandstorm share, implying a 21% premium based on the 20-day volume-weighted average price (VWAP) and 17% based on the July 3, 2025 closing price, valuing Sandstorm at approximately $3.5 billion.
• Royal Gold will acquire Horizon Copper Corp. in an all-cash transaction for C$2.00 per share, implying an 85% premium to the 20-day VWAP and 72% to the July 4, 2025 closing price, valuing Horizon at approximately $196 million.
• The transactions are expected to add 40 producing assets, contributing an estimated 65,000 to 80,000 gold equivalent ounces (GEOs) in 2025, representing an approximate 26% increase in 2025 GEO production based on midpoints of full year guidance.
• The pro forma company will have 80 revenue-producing assets and 47 development assets, with a total portfolio of 393 streams and royalties.
• The pro forma revenue mix is expected to be approximately 87% from precious metals, with gold contributing about 75% of total revenue.
• No single asset is expected to account for more than 13% of net asset value (NAV) in the pro forma portfolio, indicating significant diversification.
• The pro forma portfolio NAV is weighted approximately 41% towards stable and mining-friendly jurisdictions like Canada and the U.S.
• The combination simplifies inter-company structures, particularly for Hod Maden and Antamina interests, converting a greater proportion of stream and royalty earnings into equity free cash flow.

Sentiment

Score: 9

Explanation: The document announces significant strategic acquisitions that are highly accretive, diversify the portfolio, and strengthen the company's financial position and growth outlook. The premiums offered to target shareholders are substantial, indicating strong perceived value. The overall tone is very positive, focusing on growth, synergies, and market leadership.

Positives

• Immediate and meaningful revenue growth with an expected 26% increase in 2025 gold equivalent ounce (GEO) production.
• Significant portfolio diversification with 80 revenue-producing assets and no single asset expected to account for more than 13% of net asset value (NAV).
• Strong gold-dominant revenue mix, with approximately 75% from gold and 87% from precious metals.
• Attractive long-term growth potential from 47 development assets and 266 evaluation/exploration assets, including high-quality near-term development assets such as Platreef, MARA, and Hod Maden.
• Portfolio weighted towards stable and mining-friendly jurisdictions, with approximately 41% from Canada and the U.S.
• Strong balance sheet and robust cash flow expected, positioning Royal Gold to continue to grow and compete for the largest transactions in the sector.
• Increased size and liquidity are anticipated to enhance the attractiveness of Royal Gold to institutional investors as a leading North American precious metals streaming and royalty company.
• Provides immediate NAV per share accretion to Royal Gold shareholders.
• Offers a material premium, near-term cash flow per share accretion, and ownership in a larger and more liquid company to Sandstorm shareholders.
• Provides a material cash premium and liquidity for Horizon shareholders.
• Value creation through simplification of inter-company structure, converting a greater proportion of stream and royalty earnings into equity free cash flow.

Risks

• Shareholders of Royal Gold may not approve the issuance of new shares of Royal Gold common stock in the Sandstorm transaction.
• Security holders of Sandstorm or Horizon may not approve the Transactions.
• A condition to closing of the Transactions may not be satisfied, or a party may terminate an arrangement agreement.
• The closing of the Transactions might be delayed or not occur at all.
• Delays or adverse decisions regarding regulatory approval of the Transactions.
• Potential adverse reactions or changes to business or employee relationships of Royal Gold, Sandstorm, or Horizon, including those resulting from the announcement or completion of the Transactions.
• Diversion of management time on Transaction-related issues.
• Uncertainty regarding the ultimate timing, outcome, and results of integrating the operations of Royal Gold, Sandstorm, and Horizon.
• The ability of the combined company to realize anticipated synergies in the timeframe expected or at all.
• Changes in capital markets and the ability of the combined company to finance operations in the manner expected.
• Changes in the price of gold, silver, copper, or other metals.
• Operating activities or financial performance of properties on which Royal Gold, Sandstorm, or Horizon hold stream or royalty interests, including variations between actual and forecasted performance.
• Operators' ability to complete projects on schedule and as planned, or changes to mine plans and mineral reserves and mineral resources.
• Liquidity needs, mining and environmental hazards, labor disputes, distribution and supply chain disruptions, permitting and licensing issues, other adverse government or court actions, or operational disruptions at operating properties.
• Changes of control of properties or operators.
• Contractual issues involving stream or royalty agreements.
• Timing of deliveries of metals from operators and subsequent sales of metal.
• Risks associated with doing business in foreign countries.
• Increased competition for stream and royalty interests.
• Environmental risks, including those caused by climate change.
• Potential cyber-attacks, including ransomware.
• Adverse economic and market conditions.
• Effects of health epidemics and pandemics.
• Changes in laws or regulations governing Royal Gold, Sandstorm, Horizon, operators, or operating properties.
• Changes in management and key employees.

Future Outlook

The combined company expects to maintain or exceed its precious metals revenue concentration long-term. Royal Gold anticipates a low outstanding debt balance and modest debt to EBITDA at closing, positioning it to grow and compete for large transactions. The combined portfolio is well-positioned for cash flow growth from its robust development pipeline. Operators expect various production levels and mine life extensions for key assets like Mount Milligan (through 2036), Pueblo Viejo (mid-2040s), Cortez (750,000-1.1 million ounces annually over the next five years), Khoemacau (20+ year mine life), Wassa (potential extension into 2040s), and Antamina (through 2036). Platreef Phase 1 is expected to commence production in late 2025.

Management Comments

• "I am pleased to announce these acquisitions, which fit our strategic goal of acquiring high-quality and long-life precious metals assets in mining-friendly jurisdictions." Bill Heissenbuttel, President and CEO of Royal Gold.
• "Upon completion of these transactions, Royal Gold will remain firmly positioned as a leading North American precious metal streaming and royalty company." Bill Heissenbuttel, President and CEO of Royal Gold.
• "The addition of the Sandstorm and Horizon assets will create a global portfolio of precious metals interests that is unmatched in terms of asset diversification, development and organic growth potential, and exploration optionality." Bill Heissenbuttel, President and CEO of Royal Gold.
• "These characteristics will position Royal Gold as the go-to vehicle for investors seeking precious metals exposure in the U.S. marketplace, and we welcome Sandstorm shareholders to participate in the formation of the premier growth company in our sector." Bill Heissenbuttel, President and CEO of Royal Gold.
• "Today is a significant milestone for Sandstorm and its shareholders, marking the beginning of an exciting new chapter." Nolan Watson, President & CEO of Sandstorm.
• "This transaction rewards Sandstorm shareholders in the near term while also offering a compelling opportunity to own a large-scale, world-class streaming and royalty company with continued upside potential." Nolan Watson, President & CEO of Sandstorm.
• "Joining forces with Royal Gold will amplify the strengths of Sandstorm’s portfolio and unlock new opportunities for our shareholders as we create a truly extraordinary royalty company." Nolan Watson, President & CEO of Sandstorm.
• "Since its creation in 2022, Horizon’s unique position as a junior company holding a world-class copper portfolio has offered shareholders a remarkable investment opportunity." Erfan Kazemi, President & CEO of Horizon.
• "The significant cash premium to Horizon’s valuation is indicative of the incredible value that underlies Horizon’s asset base." Erfan Kazemi, President & CEO of Horizon.

Industry Context

The acquisitions reinforce Royal Gold's position as a leading North American gold-focused streaming and royalty company. The increased scale and liquidity are expected to enhance its appeal to institutional investors in the competitive streaming and royalty sector. This strategic move reflects a broader industry trend towards consolidation and diversification within the precious metals streaming and royalty space, aiming to create larger, more robust entities with enhanced growth pipelines and reduced asset concentration risk.

Comparison to Industry Standards

• The pro forma company will have the most diversified portfolio of mining assets in the streaming and royalty sector, with 80 revenue-producing assets, surpassing many peers in asset breadth.
• Antamina, a key asset acquired, is considered the world's fourth-largest copper mine on a copper equivalent basis, indicating the addition of a top-tier producing asset.
• MARA, a development asset, is ranked as one of the lowest capital-intensive copper projects globally, leveraging existing infrastructure from the Alumbrera processing plant, which provides a significant competitive advantage compared to greenfield developments.
• Platreef, once all three phases are complete, is expected to be the world's largest platinum group metals mine, positioning Royal Gold with exposure to a globally significant PGM asset.

Corporate Governance

Related Party Transactions

• Sandstorm, as well as the senior officers and directors of Horizon and certain additional Horizon shareholders, which collectively control 54% of the total basic common shares of Horizon, have entered into voting support agreements pursuant to which they have agreed to vote their shares in favor of the Horizon Transaction, subject to certain conditions.

Stakeholder Impact

• Shareholders (Royal Gold): Expected to benefit from immediate NAV per share accretion, increased scale, enhanced diversification, and long-term growth potential.
• Shareholders (Sandstorm): Receive a material premium, near-term cash flow per share accretion, and ownership in a larger, more liquid combined company.
• Shareholders (Horizon): Receive a material cash premium and liquidity for their shares.
• Employees (Royal Gold, Sandstorm, Horizon): Potential for adverse reactions or changes to business or employee relationships due to the announcement or completion of the Transactions, and diversion of management time on Transaction-related issues.
• Investment Professionals: Increased scale and liquidity of Royal Gold are anticipated to enhance its attractiveness to institutional investors, potentially leading to broader analyst coverage and investment interest.

Next Steps

• Royal Gold to file proxy materials with the SEC in connection with the solicitation of proxies for Royal Gold's special meeting of shareholders (Royal Gold Special Meeting).
• Sandstorm to file a management information circular on SEDAR+ in connection with the solicitation of proxies to obtain Sandstorm shareholder approval of the Sandstorm transaction.
• Horizon to file a management information circular on SEDAR+ in connection with the solicitation of proxies to obtain Horizon shareholder approval of the Horizon transaction.
• Royal Gold shareholders to vote on the issuance of new shares for the Sandstorm transaction.
• Sandstorm shareholders to vote on the Sandstorm transaction, requiring approval of 66 2/3% of votes cast and a simple majority excluding votes cast by senior officers and directors.
• Horizon shareholders to vote on the Horizon transaction, requiring approval of 66 2/3% of votes cast and a simple majority excluding votes cast by Sandstorm, senior officers, and directors.
• Supreme Court of British Columbia approval required for both transactions.
• Listing of shares of Royal Gold's stock to be issued in the Sandstorm transaction on Nasdaq.
• Regulatory clearances or approvals for both transactions.
• Integration of the operations of Royal Gold, Sandstorm, and Horizon post-closing.
• Chifeng advancing work to upgrade inferred resources at Wassa for inclusion in a mine plan.
• MMG advancing a feasibility study for expansion of the Khoemacau mine.
• Pre-feasibility study underway at Mount Milligan to define the long-term outlook of the mine.
• SSR Mining working towards a formal investment decision for the Hod Maden project.

Key Dates

Recommendation

Keywords

Gold, Silver, Copper, Streaming, Royalty, Mining, Acquisitions, Mergers, Precious Metals, Diversification, Royal Gold, Sandstorm Gold, Horizon Copper, SEC Filing, Corporate Finance, Investment, Resources