EMX and Elemental Altus Combine Forces with Tether's Strategic Investment

• EMX Royalty Corporation and Elemental Altus Royalty Corporation announced a merger creating a mid-tier royalty company with 16 producing assets and over 180 additional royalty exposures across diversified jurisdictions
• Tether will become a 33% shareholder and invest $100 million at closing, providing strong financial backing and reducing cost of capital while maintaining management autonomy
• Combined portfolios showing significant discovery success including major finds at Timok (Serbia), Diablillos, and Caserones (Chile), with approximately $100 million in annual drilling expenditures across properties (paid by operators and not the merged royalty entity)
• Transaction expected to close mid-November with US listing planned, targeting institutional investors who previously considered the companies too small or illiquid
• Management maintains focus on technical analysis and risk-adjusted returns across the full spectrum from early-stage royalty generation to large corporate transactions, with no change to investment philosophy

The merger between EMX Royalty Corporation and Elemental Altus Royalty Corporation represents a significant consolidation in the junior royalty sector, creating what management describes as a "mid-tier royalty company with a substantial asset base." The transaction brings together two companies with complementary portfolios and shared operational philosophies rooted in prospect generation and technical expertise.

EMX CEO Dave Cole and Elemental Altus CEO Fred Bell emphasised their companies' historical relationship, noting they have "shared a director in the past" and "syndicated royalty purchases" together. This existing collaboration provided a foundation for the merger discussions, with both management teams developing mutual respect and understanding of operational synergies.

The catalyst for the transaction was Tether's investment in Elemental Altus, providing what Bell described as "a really cornerstone supportive shareholder going forwards." Tether's entry created the financial stability and strategic backing necessary to pursue a transformational combination. The merger structure will see Tether become approximately a 33% shareholder in the combined entity while investing an additional $100 million at closing.

Portfolio Performance Drives Asset Quality

Both companies have experienced strong portfolio performance in 2025, driven by discovery success across multiple properties. Cole highlighted the embedded optionality within royalty portfolios, noting "really strong discovery being made across the portfolio which is why you own royalties." Key performers include the Diablillos property where operators "just keep finding more silver and gold" and the Timok license in Serbia, described as their "flagship asset" with "huge discoveries plural happening."

The combined portfolio will feature 16 producing assets, providing more diversification than most individual mining companies. Revenue composition stands at 67% gold & silver (but heavily skewed gold) and 33% base metals on a revenue basis, with copper assets weighted more heavily on a net asset value basis due to their long-lived nature.

Bell noted that Elemental Altus achieved "record geos, (gold equivalent ounces)" at the beginning of 2025, with the Allied Gold royalty contributing to performance. The company also completed its largest single acquisition to date with the Laverton royalty purchase, adding to their existing position just days before announcing the EMX merger.

Financial Structure Creates Strong Capital Position

The merger will create a financially robust entity with strong liquidity and no debt. Cole explained that 

“[Tether's $100 million investment will help] pay for these good acquisitions that Fred has just made and pay off our $25 million debt to Franco Nevada, [leaving the combined company with] "$50 million in the bank and no debt on a proforma basis."

The enhanced financial position addresses a critical challenge both companies faced as independent entities. Cole noted that scale decreases cost of capital and increases availability of capital, while the portfolio effect provides exposure to more discovery opportunities. Bell emphasised that they expect to generate "70 to 80 million revenue on an annualised basis go forward" with an undrawn credit facility that could potentially reach $200 million based on revenue multiples.

Management Structure Maintains Operational Excellence

The combined company will maintain both management teams with clearly defined roles. Cole will serve as CEO, with Bell as President and Chief Operating Officer, and David Baker continuing as Chief Investment Officer. Significantly, the team recruited Stefan Wenger as CFO, leveraging his experience at Royal Gold where he helped grow the company "from a couple hundred million to a few billion."

The board structure reflects the transaction dynamics, with three directors from Elemental Altus and two from EMX, including Cole. Tether's Juan Sartori will serve as Executive Chairman and direct representative. Bell noted they "significantly downsized our board" from what had become an unwieldy structure of "nine board members and 12 people on the management team."

Interview with Dave Cole, CEO of EMX Royalty & Fred Bell, CEO of Elemental Altus Royalty

Tether's Strategic Investment Thesis

Tether's involvement extends beyond traditional private equity investment, reflecting their broader commodity allocation strategy. Bell explained that Tether has "acquired about $10 billion of physical gold" and continues purchasing gold regularly as part of their treasury management. Their investment in royalties represents what Bell described as "the second safest way to get exposure to gold" after physical ownership.

The investment thesis centers on valuation arbitrage opportunities. Bell illustrated this with current gold trading at approximately $3,600 while long-term consensus gold prices used in mining valuations remain around $2,500. This creates attractive opportunities for royalty investments that benefit from current metal prices while being valued on historical assumptions.

Cole opined that Tether's participation doesn't change their investment discipline. The partnership provides "bigger arrows in the quiver" for larger opportunities while maintaining their comprehensive approach to deal evaluation.

Market Positioning Against Competitive Landscape

The merger positions the combined entity to compete more effectively with established players like Wheaton Precious Metals and Franco-Nevada. However, management don't view this as a fundamental shift in strategy. Cole noted Franco "still buys very early stage royalties, so we've been competing with them on those" and expressed confidence in their ability to compete: 

"I don't mind competition. It's up to us to utilise the assets that we have to do the best we can."

The enhanced scale provides access to larger transactions while maintaining their grassroots approach. Cole described their methodology of starting with technical analysis, building comprehensive databases including geology, exploration results, permitting status, and social/environmental risks. This technical foundation enables them to "think about it opportunistically" and "extract the most value out of this region that we've studied."

Bell noted the importance of maintaining their generation capabilities, particularly in current market conditions where "companies can raise more money if it encourages exploration." This creates opportunities as projects advance and new discoveries emerge from previously overlooked properties.

Growth Strategy Guides Capital Allocation

Management outlined a disciplined approach to growth that leverages their combined capabilities across the full spectrum of royalty opportunities. Cole explained they 

“We will cast a broad net and we will look at everything from early stage royalty generation, up through royalty financings, purchase of existing royalties, portfolio purchases, all the way up to corporate transactions."

The companies maintain strong track records in corporate development, with EMX completing only three corporate transactions in 23 years and Elemental Altus completing two in eight years. This selective approach reflects their preference for asset acquisitions over corporate combinations, though they remain open to compelling opportunities.

Market Conditions and Timing

The merger occurs during a period of elevated gold prices, creating both opportunities and challenges. Cole acknowledged the benefits of current conditions while noting they "understand the cycles moving up. So that puts us in a different set of challenges." The companies maintain their countercyclical approach, seeking to "use the cycles to your advantage rather than be used by the cycles."

Higher gold prices have created more cash flow for producers, potentially reducing demand for royalty financing. However, Bell noted this also encourages more exploration spending, benefiting their existing portfolio. The gold price strength also facilitates corporate transactions, as evidenced by their recent Laverton acquisition where "the combination of the mine next door restarting and the gold price is probably what helped unlock that opportunity."

Future Outlook Shapes Strategic Initiatives

Near-term priorities include completing the merger by mid-November and achieving a US listing to access institutional investors. Bell noted they've already received interest from "investors, funds, institutions who previously [considered us] too small or too illiquid" since announcing the transaction.

The management team indicated they will address dividend policy within the next quarter or two, with Bell noting they're "absolutely combined in a position we can do that" without inhibiting growth. The enhanced scale and cash flow provide flexibility to maintain growth investments while returning capital to shareholders.

Long-term strategic positioning focuses on building upon their technical expertise and deal sourcing capabilities. Bell highlighted the value of "the best technical team in the junior royalty space" coming into the combined entity, emphasising how this expertise becomes more valuable as deal sizes increase and require greater confidence in evaluation.

Key Takeaways

The EMX-Elemental Altus merger represents a transformational consolidation in the junior royalty sector, creating a mid-tier company with enhanced scale, financial flexibility, and institutional backing through Tether's strategic investment. The transaction leverages complementary portfolios showing strong discovery momentum while maintaining the technical expertise and disciplined approach that drove both companies' historical success. With 16 producing assets, strong cash flow generation, and access to significant capital for growth opportunities, the combined entity is well-positioned to compete for larger transactions while maintaining their grassroots sourcing capabilities across the full spectrum of royalty opportunities.

TL;DR

EMX and Elemental Altus are merging to create a mid-tier royalty company backed by Tether's $100M investment and 33% stake. The combined entity will have 16 producing assets, $70-80M annual revenue, and strong discovery momentum across key properties including Timok and Caserones. Enhanced scale and US listing will provide access to institutional investors and larger acquisition opportunities while maintaining disciplined, technically-driven investment approach.

FAQ's (AI Generated)

Q: Why did Tether invest in this royalty merger rather than buying physical gold directly? 

Tether sees royalties as the "second safest way to get exposure to gold" after physical ownership, with current gold at $3,600 versus $2,500 long-term consensus pricing used in mining valuations, creating attractive arbitrage opportunities.

Q: When will the merger close and what are the immediate next steps? 

Transaction expected to close mid-November 2025, with US listing planned shortly after. Combined company will have $50M cash, no debt, and access to expanded credit facilities for growth opportunities.

Q: How will the companies maintain their deal sourcing competitive advantage post-merger? 

Management emphasise their technical expertise and grassroots approach, starting with comprehensive geological analysis and building relationships across regions to identify opportunities before they reach formal processes.

Q: What's the revenue composition and how many producing assets will the combined entity have? 

16 producing assets generating $70-80M annual revenue, with 67% from gold/silver and 33% base metals on revenue basis. Copper weighted higher on NAV basis due to long-lived assets.

Q: Will the enhanced scale change their investment philosophy or risk appetite? 

No fundamental change to disciplined, risk-adjusted approach. Enhanced capital provides "bigger arrows in the quiver" for larger opportunities while maintaining focus on technical analysis and value investing principles.

Q: How does management view dividend policy with Tether as a major shareholder?

Management will communicate dividend policy within next 1-2 quarters. Combined scale provides flexibility to pay dividends while maintaining growth investments, with Tether supportive of long-term value creation approach.