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Mining industry

Royal Gold Agrees $3.7bn Acquisition Deals as Gold Prices Drive Consolidation

Strategic Insights

— 1 min read

High gold prices have fuelled a wave of consolidation in the mining sector, with record bullion prices driving streaming companies to expand through deals. Royal Gold, a mining royalty company, has agreed to purchase Sandstorm Gold and Horizon Copper, creating one of the world's top streaming companies. The deals, worth $3.7bn, reflect the intense competition for quality projects among streaming companies.

Key Takeaways:

  • Royal Gold is purchasing Sandstorm Gold in an all-share deal worth $3.5bn and Horizon Copper for $196mn in cash, creating one of the world's top streaming companies.
  • The deals reflect the intense competition for quality projects among streaming companies, with high commodity prices boosting profitability for gold miners and streaming companies.
  • The historic bullion rally has contributed to a fresh bout of dealmaking, with last year's gold deals accounting for 70% of dealmaking by value in the mining sector.
  • The largest gold mining deals last year included AngloGold Ashanti's $2.5bn takeover of Centamin, and Northern Star's $3.3bn purchase of De Grey.
  • The transactions will double Royal Gold's portfolio to 80 producing assets, with a further 266 mines at the exploration phase.
  • About three-quarters of the revenues of the expanded company will come from gold, with the rest from silver and copper.
  • Royal Gold's market capitalisation is expected to rise from $11.9bn to about $15.4bn after the transactions.

Statistics:

  • Gold deals accounted for 70% of dealmaking by value in the mining sector last year (S&P Global).
  • The largest gold mining deals last year included AngloGold Ashanti's $2.5bn takeover of Centamin, and Northern Star's $3.3bn purchase of De Grey.
  • Reuters reported that gold prices reached a record high in September 2020 and have remained high since.
  • Royal Gold's portfolio will double to 80 producing assets, with a further 266 mines at the exploration phase after the transactions.
  • The expanded company is expected to have three-quarters of its revenues come from gold, and the rest from silver and copper.

Sources:

  • "Royal Gold to buy Sandstorm Gold in $3.5bn deal" (peoplesdispatch.com, 2023)
  • S&P Global (2022)
  • Report by Peel Hunt (2023)
  • Reuters (2020)
  • Royal Gold (2023)

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