8-K: Royal Gold to Acquire Sandstorm Gold and Horizon Copper in Dual Arrangement Deals

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 royalty and streaming portfolio.

Summary

• Royal Gold, Inc. (RGLD) and its wholly-owned subsidiary International Royalty Corporation (IRC) have entered into two definitive arrangement agreements dated July 6, 2025.
• The first agreement is to acquire Sandstorm Gold Ltd. (Sandstorm) in an all-stock transaction, where Sandstorm shareholders will receive 0.0625 shares of Royal Gold Common Stock for each Sandstorm Common Share. Sandstorm's outstanding options, restricted share rights, and performance share rights will be converted into Royal Gold stock or cash based on the exchange ratio and fair market value.
• The second agreement is to acquire Horizon Copper Corp. (Horizon) in an all-cash transaction, with Horizon shareholders receiving C$2.00 in cash for each Horizon Common Share. Horizon's options, restricted share rights, and warrants will be cancelled in exchange for a cash payment if the consideration exceeds their exercise price.
• Both transactions are subject to various closing conditions, including shareholder approvals from Sandstorm, Royal Gold, and Horizon, as well as court and regulatory approvals.
• Key regulatory approvals required include Canadian Competition Act Approval, Investment Canada Act Approval, and South African Competition Act Approval for the Sandstorm deal, and Canadian Competition Act Approval and TSX Venture Exchange Conditional Acceptance for the Horizon deal.
• Support and voting agreements have been secured from key insiders: Sandstorm directors/senior officers (approximately 1% of Sandstorm shares), Horizon directors/senior officers and Sandstorm (collectively approximately 54% of Horizon shares), and Royal Gold directors/senior officers (less than 1% of Royal Gold shares). These agreements commit them to vote in favor of the respective arrangements and not to solicit or transfer their shares.
• Termination fees are stipulated: $130 million for Sandstorm and $10 million for Horizon if they terminate under certain conditions, and $200 million for Royal Gold (Sandstorm deal) and $15 million for Royal Gold (Horizon deal) under certain conditions.
• The transactions are expected to close by January 6, 2026, with a potential extension to April 6, 2026, for regulatory reasons.

Sentiment

Score: 8

Explanation: The document announces two definitive acquisition agreements, indicating significant strategic expansion for Royal Gold. The unanimous board approvals and strong insider support for both deals suggest a high probability of successful completion. While regulatory approvals and integration risks exist, the overall tone is positive regarding strategic growth and value creation.

Positives

• Royal Gold is expanding its royalty and streaming portfolio through two strategic acquisitions, enhancing its market position.
• The Sandstorm acquisition is an all-stock transaction, preserving Royal Gold's cash reserves for other strategic initiatives.
• The Horizon acquisition is an all-cash transaction, providing immediate liquidity and a definitive value to Horizon shareholders.
• Significant insider support for both transactions has been secured through voting agreements, covering approximately 1% of Sandstorm shares and 54% of Horizon shares, increasing the likelihood of shareholder approval.
• The transactions are structured as plans of arrangement, which can be a streamlined and efficient acquisition method under Canadian law.
• Royal Gold's board unanimously approved the Sandstorm acquisition, and Horizon's board unanimously approved its acquisition, indicating strong internal support and alignment.
• Fairness opinions were received by both Sandstorm's and Horizon's special committees and boards, supporting the financial terms of the deals from a financial point of view.

Negatives

• Both agreements include substantial termination fees, which could be a financial burden if the deals do not close under certain circumstances ($130 million for Sandstorm, $10 million for Horizon, $200 million for Royal Gold in Sandstorm deal, $15 million for Royal Gold in Horizon deal).
• The transactions are subject to multiple regulatory approvals in Canada and South Africa, which could introduce delays or require concessions that might impact the overall value or strategic benefits.
• The 'Outside Date' for completion is January 6, 2026, with potential extensions to April 6, 2026, indicating a relatively long closing period during which market conditions or operational factors could change.
• The forward-looking statements section highlights numerous risks, including potential failures to obtain shareholder or regulatory approvals, challenges in integrating operations, and exposure to market volatility.

Risks

• Shareholders of Royal Gold, Sandstorm, or Horizon may not approve the proposed transactions.
• Conditions to closing of the transactions may not be satisfied, or the closing might be delayed or not occur at all.
• Delays or adverse decisions regarding regulatory approval of the transactions could impede or prevent completion.
• Potential adverse reactions or changes to business or employee relationships of Royal Gold, Sandstorm, or Horizon may result from the announcement or completion of the transactions.
• Management time may be diverted to transaction-related issues, potentially impacting ongoing operations.
• Uncertainty exists regarding the ultimate timing, outcome, and results of integrating the operations of Royal Gold, Sandstorm, and Horizon.
• The combined company may be unable to realize anticipated synergies in the timeframe expected or at all.
• Changes in capital markets could affect the combined company's ability to finance operations as expected.
• Fluctuations in the price of gold, silver, copper, or other metals could materially impact financial performance.
• Operational activities or financial performance of properties on which Royal Gold, Sandstorm, or Horizon hold stream or royalty interests may vary from forecasts, or operators may change mine plans and mineral reserves/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 could occur.
• Changes of control of properties or operators could affect royalty/stream interests.
• Contractual issues involving stream or royalty agreements may arise.
• The timing of deliveries of metals from operators and subsequent sales of metal could be unpredictable.
• Risks are associated with doing business in foreign countries, including political and economic instability.
• Increased competition for stream and royalty interests could impact future growth opportunities.
• Environmental risks, including those caused by climate change, may affect operations.
• Potential cyber-attacks, including ransomware, pose a threat to data and operations.
• Adverse economic and market conditions could impact the company's financial health.
• Effects of health epidemics and pandemics could disrupt operations.
• Changes in laws or regulations governing Royal Gold, Sandstorm, Horizon, operators, or operating properties could have a negative impact.
• Changes in management and key employees could affect business continuity and performance.

Future Outlook

The transactions are expected to significantly expand Royal Gold's portfolio of royalty and streaming interests. The company anticipates completing the acquisitions by January 6, 2026, subject to obtaining all necessary shareholder, court, and regulatory approvals. Integration of the acquired operations is a key future step, with an expectation of realizing anticipated synergies.

Management Comments

• Royal Gold's Board unanimously determined that the Arrangement and entering into the agreement are in the best interests of Royal Gold and its stockholders.
• Sandstorm's Special Committee and Board unanimously determined that the Arrangement and entering into the agreement are in the best interests of Sandstorm and its shareholders.
• Horizon's Special Committee and Board unanimously determined that the Arrangement and entering into the agreement are in the best interests of Horizon and its securityholders.

Industry Context

These acquisitions reflect a trend of consolidation within the mining royalty and streaming sector, where larger, more diversified companies seek to expand their asset base and geographic reach. By acquiring Sandstorm, a significant player, and Horizon, which holds key interests like Antamina and Hod Maden, Royal Gold is strengthening its position as a leading precious metals royalty and streaming company. The dual acquisition strategy allows Royal Gold to integrate complementary assets and potentially achieve greater scale and operational efficiencies in a competitive market.

Comparison to Industry Standards

• The use of a plan of arrangement under the Business Corporations Act (British Columbia) is a standard and common method for corporate acquisitions in Canada, providing a court-supervised process for fairness and shareholder approval.
• The specified shareholder approval thresholds (e.g., 66 2/3% of votes cast, simple majority excluding certain persons for MI 61-101) are standard requirements for such arrangements under Canadian securities laws.
• The inclusion of 'no-shop' clauses with 'fiduciary out' provisions and matching rights (5-day matching period for Sandstorm, 3-day for Royal Gold) are customary in M&A agreements to allow boards to fulfill their fiduciary duties while providing the acquirer an opportunity to counter superior proposals.
• Termination fees ($130 million for Sandstorm, $10 million for Horizon, $200 million for Royal Gold in Sandstorm deal, $15 million for Royal Gold in Horizon deal) are common in M&A to compensate the non-breaching party for expenses and lost opportunity, and their magnitudes are generally within industry norms for deals of this scale.
• The reliance on Section 3(a)(10) of the U.S. Securities Act for the issuance of Royal Gold shares is a standard exemption used in Canadian plans of arrangement involving U.S. shareholders.
• The requirement for various regulatory approvals (Canadian Competition Act, Investment Canada Act, South African Competition Act, TSXV) is standard for cross-border and industry-specific transactions of this nature.
• The provisions for D&O indemnification and tail insurance for former directors and officers are standard practice to protect past management from liabilities arising from their tenure.

Management Changes

Corporate Governance

Legal Proceedings

• Each party will use commercially reasonable efforts to defend all lawsuits or other legal, regulatory, or other proceedings challenging or affecting the agreement or consummation of the transactions.
• There are no pending or threatened orders or proceedings by any Governmental Entity or other person that are reasonably likely to result in prohibition or restriction on the acquisition or completion of the Arrangement, or material damages, or limitations on ownership rights, for either the Company or the Purchaser, except as disclosed in their respective disclosure letters (which are not provided in this document).

Related Party Transactions

• Sandstorm Gold Ltd. is a significant securityholder of Horizon Copper Corp., holding 29,274,086 common shares, 734,375 warrants, and $240,059,623 convertible debentures, and has entered into a support and voting agreement to vote these securities in favor of the Horizon Arrangement.
• Directors and senior officers of Sandstorm Gold Ltd. have entered into support and voting agreements for their Sandstorm securities.
• Directors and senior officers of Horizon Copper Corp. have entered into support and voting agreements for their Horizon securities.
• Directors and senior officers of Royal Gold, Inc. have entered into support and voting agreements for their Royal Gold securities.

Stakeholder Impact

• Shareholders of Sandstorm Gold Ltd. will receive Royal Gold shares, becoming shareholders of a larger, more diversified royalty and streaming company, subject to Royal Gold's future performance.
• Shareholders of Horizon Copper Corp. will receive cash consideration (C$2.00 per share), providing immediate liquidity and a definitive value for their holdings.
• Shareholders of Royal Gold, Inc. will experience dilution from the issuance of new shares for the Sandstorm acquisition but are expected to benefit from an expanded and diversified asset base, potentially leading to long-term value creation.
• Employees of Sandstorm and Horizon will be impacted by the change in ownership; the document mentions provisions for honoring existing severance, change of control, and termination payment obligations, and that directors and officers not continuing employment will provide mutual releases.
• Existing credit facilities for both Sandstorm and Horizon are expected to be repaid or terminated, impacting their current creditors, while Royal Gold will ensure its own credit facility is not negatively impacted.

Next Steps

• Company (Sandstorm) to apply to the Court for an Interim Order to schedule the Company Meeting.
• Company (Horizon) to apply to the Court for an Interim Order to schedule the Company Meeting.
• Royal Gold to file proxy materials with the SEC for its special meeting of shareholders.
• Sandstorm to file a management information circular on SEDAR+ for its shareholder meeting.
• Horizon to file a management information circular on SEDAR+ for its securityholder meeting.
• Royal Gold and Sandstorm to coordinate and cooperate in preparing common disclosure for their respective circulars/proxy statements.
• Royal Gold and Sandstorm to make necessary filings under U.S. Securities Act and Exchange Act.
• Company (Sandstorm) to apply to the Court for a Final Order after obtaining Company Shareholder Approval and Purchaser Stockholder Approval.
• Company (Horizon) to apply to the Court for a Final Order after obtaining Company Securityholder Approval.
• Royal Gold and Sandstorm to file for Canadian Competition Act Approval, Investment Canada Act Approval, and SA Competition Act Approval.
• Royal Gold and Horizon to file for Canadian Competition Act Approval and TSXV Conditional Acceptance.
• Royal Gold to obtain Nasdaq listing approval for shares issued in the Sandstorm Arrangement.
• Royal Gold to file Form S-8 with the U.S. SEC to register shares from Sandstorm options.
• Royal Gold to make arrangements for repayment and termination of Horizon's credit facility.
• Royal Gold to obtain necessary waivers, consents, or amendments to its own credit facility.
• Company (Sandstorm) to purchase customary prepaid non-cancellable tail directors and officers liability insurance.
• Company (Horizon) to purchase customary prepaid non-cancellable tail directors and officers liability insurance.
• Company (Sandstorm) to take actions for delisting from TSX and NYSE as promptly as practicable after the Effective Time.
• Company (Horizon) to take actions for delisting from TSXV as promptly as practicable after the Effective Time.
• Company (Sandstorm) to procure resignations and mutual releases from directors and officers (other than those continuing employment/services).
• Company (Horizon) to procure resignations and mutual releases from directors and officers (other than those continuing employment/services).
• Royal Gold to honor severance, change of control, and termination obligations for Sandstorm and Horizon employees.
• Royal Gold and the acquired companies to cooperate on pre-acquisition reorganizations for tax efficiency.
• Parties to cooperate on tax reporting requirements.

Key Dates

Recommendation

Keywords

Royal Gold, Sandstorm Gold, Horizon Copper, Acquisition, Merger, Royalty, Streaming, Mining, Gold, Copper, Silver, SEC Filing, Arrangement Agreement, Stock Transaction, Cash Transaction, Corporate Governance, Shareholder Approval, Regulatory Approval, Canada, British Columbia, South Africa, Nasdaq, TSX, TSXV