Royal Gold is pursuing its largest acquisition to date, sparking a market rally that has propelled its shares to unprecedented levels. The planned merger with Sandstorm Gold would establish the company as the dominant force in the mining royalty sector, a move that has now received crucial endorsements from independent advisory firms. The central question for investors is whether this upward trajectory can be sustained.
Strong Fundamentals Underpin Rally
The recent share price surge is supported by robust financial performance. For the second quarter, Royal Gold reported record revenue of $209.6 million, alongside an all-time high in operating cash flow of $152.8 million. The company has simultaneously strengthened its portfolio through strategic acquisitions in Zambia, Ecuador, and British Columbia.
Although some production declines occurred at certain assets, a feasibility study released on September 11 indicated significant extensions to mine lifespans, signaling long-term operational strength. These fundamental improvements provide substantial backing for the current market valuation.
Should investors sell immediately? Or is it worth buying Royal Gold?
Billion-Dollar Merger Receives Key Backing
Market optimism primarily stems from growing confidence in the proposed Sandstorm Gold acquisition. Two separate independent proxy advisory firms have recommended that Sandstorm shareholders approve the multi-billion dollar combination. The decisive vote is scheduled for October 9 in Vancouver, with potential to fundamentally reshape both companies.
Announced in July, this transformative deal would effectively double Royal Gold’s portfolio and significantly enhance its diversification across gold, silver, and copper. The combined entity would control nearly 400 assets, with gold projected to constitute approximately 75 percent of total revenue. Regulatory approvals have already been secured from Canadian and South African authorities.
Market Position Following Record High
Having reached new 52-week highs, Royal Gold demonstrates strong market confidence in its strategic transformation. Financial analysts maintain an average price target of $198.63, suggesting additional potential upside. The October 9 shareholder vote represents the critical juncture that will determine whether the Sandstorm acquisition delivers its anticipated transformative impact or leaves the company’s growth ambitions partially fulfilled.
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