Sandstorm Gold Ltd.'s Exclusion from the S&P/TSX Global Mining Index: A Strategic Crossroads for Investors

The Exclusion Event and Market Context

Sandstorm Gold Ltd. (TSX:SSL) was excluded from the S&P/TSX Global Mining Index on October 20, 2025, according to an S&P Dow Jones announcement, following a structural transformation triggered by its acquisition by Royal Gold Inc. This decision coincided with the completion of a $3.5 billion merger that created a dominant player in the gold streaming and royalty sector, per the Royal Gold acquisition. While the exclusion was officially attributed to the company's reorganization, Sandstorm had previously faced a similar fate in June 2023 when it was removed from the NYSE Arca Gold Miners Index, despite meeting quantitative criteria like market capitalization and trading volume, as noted in the company's company response.

Share Price Performance: Navigating Dual Catalysts

Sandstorm's stock price trajectory reveals a complex interplay between index exclusions and corporate strategy. In June 2023, the stock closed at $9.39, according to SAND historical prices. By October 2025, however, the share price had surged to a 52-week high of $13.09, driven by the Royal Gold acquisition's 21% premium and strategic synergies following Royal Gold's shareholder approval. Despite the S&P/TSX exclusion in October 2025, the stock closed at $12.12 on October 17, 2025, per the SAND price history. Analysts note that index exclusions often trigger short-term liquidity shifts, but Sandstorm's fundamentals—such as its 49% gold revenue mix and record Q2 2025 revenue of $51.4 million—suggest intrinsic value remains intact, as shown in the company's 2023 annual results.

Market Perception and Institutional Investor Behavior

The exclusion from the S&P/TSX index initially raised questions about Sandstorm's market relevance. However, institutional investors, who hold 54.6% of outstanding shares, have maintained confidence, according to institutional ownership. Proxy advisory firms and analysts have endorsed the merger, emphasizing its alignment with long-term growth in gold prices and the streaming sector's defensive characteristics (per the Royal Gold acquisition announcement). While index exclusions typically lead to temporary price declines due to rebalancing by passive funds, Sandstorm's stock outperformed broader market trends post-exclusion, suggesting strong demand from active investors, as McKinsey analysis indicates.

Long-Term Investment Viability: A Merger-Driven Outlook

The acquisition by Royal Gold fundamentally alters Sandstorm's investment thesis. Post-merger, the combined entity is positioned to leverage Sandstorm's high-grade gold assets (e.g., MARA, Great Bear) and Royal Gold's operational expertise, creating a $1.6 billion market cap behemoth, per a stock overview. For investors, the exclusion from the S&P/TSX index is a minor setback compared to the strategic benefits of the merger, including reduced development risk and enhanced liquidity. Analysts project a 12-month price target of $11.79 for SAND, though this appears conservative given the stock's recent performance and the acquisition's premium, according to a MarketBeat target.

Is This a Buying Opportunity or a Red Flag?

While index exclusions can signal reduced visibility for passive investors, Sandstorm's case highlights the importance of separating noise from substance. The October 2025 exclusion coincided with a transformative acquisition that strengthens the company's long-term prospects. For active investors, the stock's post-exclusion stability and strong institutional backing present a compelling case for accumulation, particularly at current levels below its 52-week high. However, risks remain tied to gold price volatility and integration challenges in the merger.

Conclusion

Sandstorm Gold Ltd.'s exclusion from the S&P/TSX Global Mining Index is a temporary event overshadowed by its strategic merger with Royal Gold. The stock's performance post-exclusion underscores resilience and investor confidence in the combined entity's growth potential. For long-term investors, this represents a buying opportunity rather than a red flag, provided they align with the sector's macroeconomic tailwinds and the merger's execution risks.