Why Investors Should Consider Mining Amidst Global Economic Shifts

Mining is often overlooked by investors, but its critical role in the global economy and energy transition makes it a crucial investment opportunity. Central bank buying, fears of a shift away from the US dollar, and rising demand for renewables have led to a significant rally in metals, with gold and silver up 25%, platinum up 49%, and copper up 12% year-to-date. Supply shortages could persist longer than in previous cycles, making it a promising time to invest in mining.

Royal Gold, Inc. (NASDAQ: RGLD) has announced significant acquisitions that will bolster its position as a leading North American precious metals streaming and royalty company. The company has entered into agreements to acquire Sandstorm Gold Ltd. (TSX: SSL; NYSE: SAND) and Horizon Copper Corp. (TSXV: HCU; OTCQB: HNCUF).

Sandstorm Gold Acquisition
Under the terms of the agreement, Royal Gold will acquire 100% of the issued share capital of Sandstorm in exchange for Royal Gold shares at an exchange ratio of 0.0625 common shares of Royal Gold for each common share of Sandstorm. This transaction is valued at approximately $3.5 billion, representing a 21% premium based on the 20-day volume-weighted average price (VWAP) and a 17% premium based on the closing price of Sandstorm shares on the New York Stock Exchange (NYSE) on July 3, 2025 [1].

Horizon Copper Acquisition
Royal Gold will also acquire 100% of the issued share capital of Horizon in exchange for cash at C$2.00 per share. This transaction, valued at approximately $196 million, reflects an 85% premium to the 20-day VWAP and a 72% premium to the closing price of Horizon shares on the TSX-V on July 4, 2025 [1].

Benefits of the Acquisitions
The acquisitions will provide Royal Gold with immediate and meaningful revenue growth, adding 40 producing assets to its portfolio. These assets are expected to account for between 65,000 and 80,000 gold equivalent ounces (GEOs) in 2025, which would increase 2025 GEO production by approximately 26% [1]. The pro forma company will have a gold-dominant revenue mix of approximately 87% from precious metals, with gold contributing approximately 75% of total revenue [1]. The acquisitions will also enhance Royal Gold's diversification, with 80 revenue-producing assets and no single asset expected to account for more than 13% of net asset value (NAV) [1].

Portfolio Diversification and Growth Potential
The pro forma portfolio will include 47 development assets and 266 assets in the evaluation and exploration stages, creating significant organic growth potential and optionality. Assets are located in stable and mining-friendly jurisdictions, with approximately 41% from Canada and the U.S. and the remainder from countries where mining is a well-established contributor to local economies [1].

Financial Strength and Attractiveness
Royal Gold expects to have a low outstanding debt balance and modest debt to EBITDA at closing, positioning it to grow and compete for the largest transactions in the sector. The strong balance sheet and robust cash flow will provide liquidity for reinvestment and competition in the sector [1]. Increased scale and liquidity are anticipated to enhance the attractiveness of Royal Gold to institutional investors.

Shareholder Benefits
Upon completion of the transactions, Royal Gold shareholders will own approximately 77% and Sandstorm shareholders will own approximately 23% of the combined company. The transactions provide immediate NAV per share accretion to Royal Gold shareholders, a material premium, near-term cash flow per share accretion, and ownership in a larger and more liquid company to Sandstorm shareholders, and a material cash premium and liquidity for Horizon shareholders [1].

Value Creation
The combination of Sandstorm and Horizon will convert a greater proportion of stream and royalty earnings into equity free cash flow, simplifying the inter-company structure and particularly for the Hod Maden and Antamina interests [1].

Conclusion
These acquisitions align with Royal Gold's strategic goal of acquiring high-quality and long-life precious metals assets in mining-friendly jurisdictions. The additions will create a global portfolio of precious metals interests that is unmatched in terms of asset diversification, development, and organic growth potential. This positions Royal Gold as the go-to vehicle for investors seeking precious metals exposure in the U.S. marketplace.

References:
[1] https://www.nasdaq.com/press-release/royal-gold-acquire-sandstorm-gold-and-horizon-copper-and-reinforce-its-position