DEFM14A: Royal Gold to Acquire Sandstorm & Horizon Copper

Royal Gold, Inc. announces a strategic business combination to acquire Sandstorm Gold Ltd. and Horizon Copper Corp., aiming for increased diversification and long-term value.

Summary

• Royal Gold, through its subsidiary International Royalty Corporation (IRC), will acquire all issued and outstanding Sandstorm common shares and Horizon common shares.
• Sandstorm shareholders will receive 0.0625 of a share of Royal Gold common stock for each Sandstorm common share.
• Horizon shareholders will receive C$2.00 in cash for each Horizon common share.
• Upon completion of the Sandstorm Arrangement, Royal Gold stockholders are expected to own approximately 77% and Sandstorm shareholders approximately 23% of the combined company on a fully diluted basis.
• The transactions are expected to be immediately accretive to Royal Gold's net asset value and accretive to production and cash flow over the midto long-term.
• Royal Gold recently acquired a gold stream on the Kansanshi copper-gold mine for an advance payment of $1.0 billion, funded by available cash and an $825 million draw on its revolving credit facility.
• The revolving credit facility was expanded by $400 million to $1.4 billion, with $575 million remaining available after the Kansanshi funding.
• The acquisitions are structured as plans of arrangement under British Columbia's Business Corporations Act and require shareholder and court approvals.
• The Royal Gold Board of Directors unanimously recommends voting FOR the Stock Issuance Proposal and the Adjournment Proposal at the Special Meeting on October 9, 2025.

Sentiment

Score: 8

Explanation: The filing outlines a significant strategic acquisition expected to be accretive to NAV, production, and cash flow, with strong board support and clear financial rationale. While risks are disclosed, the overall tone and projected benefits indicate a positive outlook for Royal Gold's growth and market position.

Positives

• The arrangements are expected to generate long-term value and be immediately accretive to Royal Gold's net asset value upon closing.
• Expected to be accretive to production and cash flow over the midto long-term.
• Increased diversification of the combined company's portfolio, reducing exposure to individual project risks.
• Simplification of commercial arrangements between Sandstorm and Horizon.
• Increased market capitalization is expected to provide greater trading liquidity and appeal to more investors.
• The jurisdictional mix of assets will include approximately 41% of Net Asset Value (NAV) in Canada and the United States (38% after Kansanshi transaction).
• Issuance of Royal Gold common stock for Sandstorm preserves cash and credit facility capacity for other transactions, such as the Kansanshi acquisition.
• Expected synergies from the arrangements, including a substantial reduction in general and administrative expenses at Sandstorm and Horizon.
• Ability to continue paying increasing dividends consistent with past practice.
• Unanimous recommendation from the Royal Gold Board of Directors and management support for the combined company's continued leadership.

Negatives

• Current Royal Gold stockholders will experience reduced ownership in the combined company (approximately 77% post-Sandstorm acquisition).
• The exchange ratio for Sandstorm shares is fixed and will not adjust for changes in market price of either Royal Gold or Sandstorm shares.
• The issuance of a significant number of Royal Gold common shares could lead to market overhang and adversely affect the stock price.
• Significant transaction costs are expected, which may exceed anticipations and will be borne by Royal Gold even if arrangements are not completed.
• Potential for litigation related to the arrangements, incurring substantial costs and diverting management time.
• Risk that Sandstorm and Horizon may have unknown liabilities not discovered during due diligence.
• Potential for substantial payments to Sandstorm and Horizon shareholders who exercise dissent rights, which could adversely affect the combined company's financial condition.
• Integration of the acquired businesses is complex, costly, and time-consuming, potentially diverting management attention and resources.
• The unaudited pro forma financial statements are based on preliminary estimates and assumptions, and actual results may differ materially.

Risks

• The Exchange Ratio will not be adjusted in the event of any change in either Royal Gold's or Sandstorm's share price.
• The issuance of a significant number of Royal Gold common stock and a resulting market overhang could adversely affect the market price of Royal Gold common stock after completion of the Sandstorm Arrangement.
• The market price of Royal Gold common stock may decline if large amounts of Royal Gold common stock are sold following the completion of the Sandstorm Arrangement and may be affected by factors different from those that historically have affected or that are currently affecting the market price of Royal Gold common stock.
• Royal Gold stockholders will have reduced ownership in the Combined Company.
• The Sandstorm Arrangement Agreement subjects Royal Gold to restrictions on its ability to pursue alternatives to the Sandstorm Arrangement and may discourage other companies from making a favorable alternative transaction proposal.
• The Arrangements are subject to a number of conditions which may not be satisfied or waived, may delay the completion of the Arrangements and could result in additional expenditures of money and resources.
• Termination of the Arrangement Agreements could negatively impact Royal Gold, potentially requiring termination fee payments ($200 million to Sandstorm, $15 million to Horizon).
• If a governmental authority asserts objections to the Arrangements, Royal Gold may be unable to complete the Arrangements, or in order to do so, Royal Gold, Sandstorm and/or Horizon may be required to comply with material restrictions or satisfy material conditions.
• The Arrangements may be completed even though material adverse changes may result from the announcement of the Arrangements, industry-wide changes or other causes.
• Royal Gold, Sandstorm or Horizon may waive one or more of the closing conditions without re-soliciting approval by Royal Gold stockholders.
• Royal Gold does not currently control Sandstorm and its subsidiaries or Horizon and its subsidiaries, and their performance may be adversely affected by external factors during the interim period.
• The market price of Royal Gold's common stock declined following announcement of the Arrangements, and significant delays or termination could further adversely affect the price.
• Royal Gold, Sandstorm and Horizon are expected to incur significant transaction costs, which may be in excess of those anticipated.
• Royal Gold, Sandstorm and Horizon may be the targets of legal claims, securities class actions, derivative lawsuits and other claims related to the Arrangements.
• Sandstorm and Horizon may have liabilities that are not known to Royal Gold.
• Potential payments to Sandstorm and Horizon shareholders who exercise dissent rights could have an adverse effect on the Combined Company's financial condition or result in the Arrangements not being completed (if exceeding 5% for Sandstorm or 10% for Horizon).
• The financial forecasts are based on various assumptions that may not be realized, leading to actual results differing materially.
• The Combined Company may be unable to integrate the businesses of Royal Gold, Sandstorm and Horizon successfully or realize the anticipated benefits of the Arrangements.
• Significant demands will be placed on the Combined Company's managerial, operational, and financial personnel and systems as a result of the Arrangements.
• The trading price and volume of Royal Gold's common stock may be volatile following the Arrangements.
• The unaudited pro forma condensed combined financial statements and prospective financial information are based on preliminary estimates and assumptions, and actual results may differ materially.
• The benefits and synergies realized from the Arrangements may vary from expectations, including development assets like Platreef, MARA, and Hod Maden Project not meeting timelines or production targets.
• Increased indebtedness or difficulties in accessing the commercial debt market could adversely affect the Combined Company's financial condition and impair its ability to operate.
• The Combined Company's interest in the Hod Maden Project following the Horizon Closing will subject it to risks associated with joint ventures and joint operations, including capital requirements, operator performance, permitting, and potential disagreements.

Future Outlook

The arrangements are expected to close in the fourth quarter of 2025, subject to various approvals. Royal Gold anticipates the transactions will be immediately accretive to its net asset value and accretive to production and cash flow over the midto long-term. The combined company aims to leverage increased cash flows to pursue further growth opportunities and maintain increasing dividends.

Management Comments

• William H. Heissenbuttel, President and Chief Executive Officer of Royal Gold, stated strong support for the proposed Sandstorm Arrangement and joined the Board of Directors in unanimously recommending a vote FOR each of the proposals.

Industry Context

This announcement signifies a strategic consolidation within the precious metals streaming and royalty sector. Royal Gold, already a major player, is acquiring two other companies to enhance its portfolio diversification, increase its market capitalization, and strengthen its competitive position against larger peers like Wheaton Precious Metals Corp. and Franco-Nevada Corporation. The move reflects a trend towards larger, more diversified entities in the industry to mitigate project-specific risks and capture broader market opportunities.

Comparison to Industry Standards

• Scotia Capital's selected companies analysis for Royal Gold used a P/NAV range of 1.60x to 2.10x (compared to an implied NAV per share of $100.10) and a 2026 estimated P/CF range of 17.0x to 21.0x (compared to a modeled 2026 estimated cash flow per share of $9.81).
• Scotia Capital's selected companies analysis for Sandstorm and Horizon combined used a P/NAV range of 1.30x to 1.60x (compared to an implied NAV per Sandstorm common share of $7.16).
• Raymond James' selected public company analysis for Royal Gold used a P/NAV range of 1.70x to 2.00x (modeled NAV per share of $100.69) and a 2026 estimated P/CF range of 17.0x to 21.0x (modeled 2026 estimated cash flow per share of $9.81).
• Raymond James' selected public company analysis for Sandstorm used a P/NAV range of 1.25x to 1.60x (modeled NAV per share of $7.45) and a 2026 estimated P/CF range of 19.0x to 26.0x (modeled 2026 estimated cash flow per share of $0.46).
• The implied exchange ratio reference range from Scotia Capital's selected companies analysis was 0.0420x to 0.0685x, compared to the proposed 0.0625x.
• The implied exchange ratio reference range from Scotia Capital's discounted cash flow analysis was 0.0525x to 0.0691x (Spot Pricing) and 0.0513x to 0.0673x (Management Pricing), compared to the proposed 0.0625x.
• Raymond James' assessment of the exchange ratio based on selected public companies (NAVPS) resulted in an implied exchange ratio range of 0.0462x 0.0696x.
• Raymond James' assessment of the exchange ratio based on selected public companies (2026E P/CF) resulted in an implied exchange ratio range of 0.0424x 0.0716x.
• Selected precedent transactions for Sandstorm (since Jan 1, 2021, >$50M) showed a P/NAV range of 0.5x to 1.8x (median 1.0x) and a premium to 20-day VWAP of 5% to 87% (median 33%).

Corporate Governance

Legal Proceedings

• Potential litigation related to the arrangements, including securities class actions and derivative lawsuits, could result in substantial costs and divert management time.
• An injunction prohibiting completion of an arrangement could delay or prevent it, adversely affecting business.
• Horizon's equity interest in Entre is subject to a Mongolian regulatory acceptance process for an updated feasibility study and a pause in underground development work due to pending transfer of mining licenses, which is subject to an arbitration tribunal and Mongolian tax authority assessment.

Related Party Transactions

• Sandstorm is a related party of Horizon due to its 34% equity interest and significant influence.
• Horizon entered into the Antamina Silver Stream and Hod Maden Gold Stream agreements with Sandstorm as part of the consideration for acquiring the Antamina NPI and Hod Maden Project interest.
• Horizon has promissory notes in favor of Sandstorm (Antamina Promissory Note of $145.1 million outstanding, Hod Maden Promissory Note of $95 million principal amount).
• Horizon has a revolving credit facility with Sandstorm, with $8 million drawn subsequent to June 30, 2025.
• Horizon entered into a services agreement with Sandstorm for general administrative services (CAD6,500-CAD6,900 per month).
• Horizon received $0.2 million from Sandstorm to reimburse costs for corporate reorganizations.

Stakeholder Impact

• Shareholders of Royal Gold will have reduced ownership in the combined company (approximately 77% post-Sandstorm acquisition).
• Sandstorm shareholders will become Royal Gold stockholders, receiving 0.0625 Royal Gold shares per Sandstorm share.
• Horizon shareholders will receive C$2.00 cash per Horizon share.
• Employees of Sandstorm and Horizon may face integration challenges and potential changes in employment terms, though Royal Gold has agreed to honor existing severance and change of control agreements.
• Directors and officers of Sandstorm and Horizon will receive mutual releases and indemnification rights will be maintained for six years post-acquisition.
• Customers and suppliers of Sandstorm and Horizon may experience changes in relationships due to the integration into Royal Gold's operations.
• Creditors of Sandstorm and Horizon will see their existing credit facilities repaid or terminated upon closing, with Royal Gold assuming responsibility for financing.

Next Steps

• Royal Gold stockholders to vote on the Stock Issuance Proposal and the Adjournment Proposal at the Special Meeting on October 9, 2025.
• Sandstorm shareholders to vote on the Sandstorm Arrangement Resolution at the Sandstorm Meeting on October 9, 2025.
• Horizon securityholders to vote on the Horizon Arrangement Resolution at the Horizon Meeting on October 9, 2025.
• Obtain final court approvals (Interim Order and Final Order) from the Supreme Court of British Columbia for both arrangements.
• Obtain remaining regulatory approvals, including Investment Canada Act approval for Sandstorm and TSXV conditional acceptance for Horizon.
• Complete the closings of the Sandstorm and Horizon Arrangements, currently expected in the fourth quarter of 2025.
• Delist Sandstorm common shares from the TSX and NYSE post-completion.
• Delist Horizon common shares from the TSXV and remove from OTCQB post-completion.
• Royal Gold to file a registration statement on Form S-8 with the U.S. SEC for shares issuable upon exercise of assumed Sandstorm stock options.

Key Dates

Keywords

Royal Gold, Sandstorm Gold, Horizon Copper, Acquisition, Merger, Streaming, Royalty, Precious Metals, Copper, Gold, Mining, SEC Filing, Corporate Governance, Net Asset Value, Diversification, Kansanshi, Hod Maden, Oyu Tolgoi, Canada, South Africa, Zambia, Turkey, Mongolia, SEC, Nasdaq, NYSE, TSX, TSXV