Royal Gold is buying Sandstorm Gold

Mining Stock Monkey VIP

Bulletin #77

July 8, 2025

Royal Gold is taking over Sandstorm Gold at a 17% premium to the previous day's closing price. Since Sandstorm is one of the companies in our portfolio, I'd like to share with you my thoughts on the transaction and my take on whether we should sell, hold, or buy more.

All figures are in US Dollars unless specified otherwise.

Sandstorm Gold / Royal Gold

On Monday, Sandstorm Gold announced a takeover bid by Royal Gold (RGLD) at a 17% premium to the previous day's closing price.

While a 17% premium isn't anything substantial, this comes after a huge run-up in Sandstorm's share price over the past few months. Therefore, this takeover is likely occurring at a huge premium relative to where Sandstorm's shares were trading when takeover talks started between the two companies.

At the same time as the Sandstorm transaction, Royal Gold is also buying Horizon Copper which was spun-out of Sandstorm a few years back.

If these transactions go through, Sandstorm shareholders will get Royal Gold shares and Horizon Copper shareholders will get cash. Both transactions are subject to shareholder approval.

My thoughts on the transaction

As a Sandstorm shareholder I am happy with this transaction because I think the combined company will do very well. Some of the reasons I like it:

• Accretive on per-share metrics. Royal Gold's share count will increase by about 30% post transaction but with the addition of Sandstorm's and Horizon's assets, their NAV will increase by about 44%. (Note: This stat makes the transaction look a little better than it actually is because RGLD will be taking on some debt and will also be using some cash to buy Horizon. Between the cash used and debt added, there's about a $500m impairment on RGLD's balance sheet. If we take $500m divided by the pre-announcement share price of $179.82, $500m is approximately equal to 2.78m Royal Gold shares. Adding 2.78m shares to RGLD's post-transaction share count, puts the effective share count increase at ~34% instead of ~30%.)

• Lower combined G&A. This transaction should lower the combined G&A of the three companies. This is essentially guaranteed to increase EBITDA by $15m+ every year at no risk to shareholders. A company like Royal Gold may trade at about 20X EBITDA, so a $15m annual savings could reasonably result in a $300m increase to Royal Gold's market cap.