The Strategic Merger of Elemental Altus and EMX: A High-Conviction Entry Point into the Gold-Focused Royalty Sector

The recent merger between Elemental Altus and EMX to form Elemental Royalty Corp (ELE) marks a pivotal moment in the gold royalty sector. This strategic consolidation, backed by a $100 million investment from Tether Investments, has created a mid-tier entity poised to capitalize on record gold prices and a structural shift in institutional demand for physical gold [1]. For investors, the transaction represents a compelling entry point into a sector experiencing robust growth, driven by macroeconomic tailwinds and operational scale.

Strategic Rationale: Tether’s Gold Play and Sector Synergies

The merger’s strategic rationale is twofold. First, it embeds Tether—a digital asset giant—into the physical gold trade, aligning its digital holdings with tangible assets. Tether’s CEO, Paolo Ardoino, has emphasized that gold and Bitcoin can coexist as foundational assets, with the former serving as a hedge against inflation and the latter as a store of value in the digital realm [2]. This dual-asset strategy positions ELE to benefit from both the crypto and traditional finance ecosystems.

Second, the merger consolidates a diversified portfolio of 16 producing royalties, with 67% exposure to precious metals, primarily gold. By combining Elemental Altus’s operational expertise with EMX’s royalty assets, the new entity gains access to a globally diversified revenue stream. Analysts note that the 51%-49% ownership split between Elemental Altus and EMX shareholders ensures aligned incentives for long-term value creation [1].

Financial Terms and Revenue Projections: A Foundation for Growth

ELE’s financial structure is underpinned by a $100 million investment from Tether, which purchased shares at C$1.84 apiece, signaling institutional confidence in its growth trajectory [1]. The merged company is projected to generate $70 million in adjusted revenue in 2025 and $80 million in 2026, with a market capitalization of approximately $933 million [3]. This valuation reflects the sector’s premium for companies with scalable, low-risk revenue models.

The transaction also includes a share consolidation for Elemental Altus at a 10-to-1 ratio, enhancing liquidity and reducing share overhang. Analysts estimate this could unlock a 30.71% upside for EMX shareholders [4]. Crucially, the merger’s structure avoids dilution while providing ELE with the capital to pursue further acquisitions or royalty generation.

Sector Positioning: Gold Royalties as a High-Conviction Play

The gold royalty sector is experiencing a renaissance in 2025, driven by record gold prices and a surge in demand for safe-haven assets. Gold Royalty Corp (GROY), a peer of ELE, reported a 100% year-over-year revenue increase in Q2 2025, with $4.4 million in total revenue and $3.8 million in direct royalty revenue [5]. This performance underscores the sector’s resilience and scalability, as companies like ELE benefit from rising gold prices without bearing the operational risks of mining.

ELE’s strategic positioning is further strengthened by its focus on gold—a commodity projected to grow by 8% in 2025 [6]. With a revenue split of 67% in precious metals and a pipeline of projects like Côté and Borborema, the company is well-positioned to outperform as gold prices consolidate in the mid-$3,300 range [3].

Risks and Skepticism: Navigating the Challenges

Critics argue that Tether’s lack of mining sector experience could pose risks, particularly in managing complex royalty agreements or navigating geopolitical challenges in gold-producing regions. However, ELE’s management team, composed of seasoned professionals from both Elemental Altus and EMX, mitigates this concern. Additionally, the company’s debt-free status and focus on organic growth provide a buffer against volatility [6].

Conclusion: A High-Conviction Investment Thesis

The Elemental Altus-EMX merger exemplifies the power of strategic consolidation in the gold royalty sector. By leveraging Tether’s capital, a diversified royalty portfolio, and a favorable macroeconomic environment, ELE is positioned to deliver outsized returns. For investors seeking exposure to a sector with strong tailwinds—rising gold prices, institutional-grade liquidity, and a low-risk revenue model—this merger represents a high-conviction entry point.

As the gold royalty sector continues to consolidate, ELE’s ability to scale efficiently and capitalize on Tether’s digital ecosystem could redefine the industry’s landscape. With a clear path to $80 million in adjusted revenue by 2026 and a market cap that reflects its strategic potential, the company is a standout in a sector poised for sustained growth.

Source:
[1] Elemental Altus and EMX to Merge to Create New Mid-Tier Gold-Focused Royalty Company, Elemental Royalty Corp [https://emxroyalty.com/news/2025/elemental-altus-and-emx-to-merge-to-create-new-mid-tier-gold-focused-royalty-company-elemental-royalty-corp/]
[2] Why Tether Is Suddenly Pouring Millions Into the Gold Industry [https://coindoo.com/why-tether-is-suddenly-pouring-millions-into-the-gold-industry/]
[3] Gold Royalty Firms Merge To Create A $933 Million Powerhouse [https://finimize.com/content/gold-royalty-firms-merge-to-create-a-933-million-powerhouse]
[4] EMX Royalty (EMX) Set for Acquisition by Elemental Altus [https://www.gurufocus.com/news/3096228/emx-royalty-emx-set-for-acquisition-by-elemental-altus]
[5] Gold Royalty (GROY) Reports Record Q2 Revenue Up 100 [https://finance.yahoo.com/news/gold-royalty-groy-reports-record-035251096.html]
[6] Investment Opportunities In Gold Mining In 2025 Trends [https://farmonaut.com/mining/investment-opportunities-in-gold-mining-in-2025-trends]