The Merger of Elemental Altus and EMX: A Strategic Pathway to a Stronger Mid-Tier Gold-Focused Royalty Company

The gold royalty sector is undergoing a transformative phase, driven by robust gold prices, strategic consolidation, and the emergence of mid-tier players with scalable revenue models. At the forefront of this evolution is the merger between Elemental Altus and EMX, which has created Elemental Royalty Corp. (ELE), a mid-tier gold-focused royalty company poised to capitalize on the sector’s structural tailwinds. This analysis explores the valuation appeal and growth potential of the merged entity, contextualized within the broader dynamics of a consolidating royalty sector.

Strategic Synergies and Financial Strength

The merger combines Elemental Altus’s high-margin royalty portfolio with EMX’s exploration assets, creating a diversified entity with 67% exposure to precious metals and 33% to base metals [1]. According to a report by Newswire.ca, the merged company is projected to generate $70 million in revenue in 2025 and $80 million in 2026, supported by a gold-equivalent ounce (GEO) production range of 11,600–13,200 for 2025 [1]. This growth is underpinned by a $100 million investment from Tether, which provides critical liquidity for acquisitions and operational expansion [1].

Elemental Royalty’s financial performance further strengthens its valuation case. In Q1 2025, the company reported record adjusted revenue of $13.3 million, a 179% year-over-year increase, and adjusted EBITDA of $11.5 million, up 259% YoY [4]. Q2 2025 results reinforced this momentum, with adjusted revenue doubling to $10.5 million and operating cash flow surging to $14.4 million [1]. These metrics highlight the company’s ability to scale efficiently, even as gold prices remain elevated due to global inflationary pressures and central bank demand [5].

Sector Consolidation and Institutional Appeal

The gold royalty sector is witnessing a wave of consolidation, as smaller players seek to achieve scale to attract institutional investors. As noted in a US Funds analysis, companies like Franco-Nevada and Wheaton Precious Metals have reported record revenues and operating cash flows in Q2 2025, underscoring the sector’s resilience [2]. Gold Royalty Corp. (GROY), another consolidator, has also demonstrated strategic success despite a revenue miss, with a 50% increase in adjusted EBITDA and positive free cash flow [1].

Elemental Royalty’s merger aligns with this trend. By combining portfolios and leveraging Tether’s capital, the company is positioned to become a peer leader in revenue generation and discovery optionality [2]. The inclusion of EMX’s exploration assets adds a critical layer of upside, as successful discoveries could unlock new royalty streams. This dual focus on revenue growth and exploration differentiates Elemental from pure-play royalty companies and enhances its appeal to investors seeking both income and capital appreciation.

Valuation Metrics and Growth Catalysts

The merged entity’s valuation appears compelling when compared to sector peers. With $70 million in non-dilutive capital available for deployment—comprising cash and an undrawn credit facility—Elemental Royalty has the flexibility to pursue accretive acquisitions without overleveraging [4]. This liquidity, combined with a projected 2025 revenue of $70 million, suggests a low-cost path to scale. Analysts at SimplyWall St note that strong gold prices and ramp-up mines could drive further value creation, with Elemental’s gold-equivalent production expected to grow by 102% YoY in 2025 [4].

A key catalyst for long-term growth lies in the company’s pursuit of a U.S. listing. As highlighted in an Investing.com earnings call transcript, Elemental Altus is actively evaluating a U.S. listing to improve liquidity and attract a broader investor base [1]. This move could amplify the company’s market capitalization and provide access to capital markets critical for sustaining its acquisition-driven growth strategy.

Risks and Structural Tailwinds

While gold price volatility and operational delays at key assets pose risks, the sector’s structural drivers remain intact. Central bank gold purchases, U.S. fiscal pressures, and inflationary expectations continue to underpin gold’s role as a hedge against economic uncertainty [5]. Additionally, delayed Fed policy easing has accelerated consolidation, as smaller royalty companies seek partnerships to navigate rising acquisition costs [3]. Elemental Royalty’s strong liquidity position and diversified portfolio position it to weather these challenges while capitalizing on sector-wide opportunities.

Conclusion

The merger of Elemental Altus and EMX represents a strategic milestone in the gold royalty sector’s evolution. By combining operational strength, financial flexibility, and a gold-focused portfolio, Elemental Royalty is well-positioned to capitalize on consolidation trends and deliver sustained value to shareholders. As the sector continues to attract institutional capital, the company’s dual focus on revenue growth and exploration innovation makes it a compelling investment in a market where scale and diversification are paramount.

**Source:[1] Elemental Altus and EMX to Merge to Create New Mid-Tier Gold-Focused Royalty Company [https://www.newswire.ca/news-releases/elemental-altus-and-emx-to-merge-to-create-new-mid-tier-gold-focused-royalty-company-elemental-royalty-corp--800372774.html][2] Royalty and Streaming Companies Lead Gold Sector with Record Results [https://www.usfunds.com/resource/royalty-and-streaming-companies-lead-gold-sector-with-record-results/][3] Fed Policy Delays Drive Gold Consolidation as Structural Demand Drivers Remain Intact [https://www.cruxinvestor.com/posts/fed-policy-delays-drive-gold-consolidation-as-structural-demand-drivers-remain-intact][4] Earnings Call Transcript: Elemental Royalties Sees Record Q1 2025 Growth [https://www.investing.com/news/transcripts/earnings-call-transcript-elemental-royalties-sees-record-q1-2025-growth-93CH-4055340][5] Fed Policy Delays Drive Gold Consolidation as Structural Demand Drivers Remain Intact [https://www.cruxinvestor.com/posts/fed-policy-delays-drive-gold-consolidation-as-structural-demand-drivers-remain-intact]