Mining Royalty Sector Review: M&A Activity and Market Divergence Define 2025

• Gold rose 74%, silver surged 160%, and lithium carbonate gained 80%, translating to significant share price appreciation for precious metal royalty companies, with major players like Wheaton Precious Metals up 102% and Royal Gold up 98%.
• Major M&A transactions in 2025 included Royal Gold's $3.5 billion acquisition of Sandstorm (the first major royalty company acquisition in years), Triple Flag's $420 million purchase of Orogen Royalties, and Altius Minerals' $520 million all-cash bid for Lithium Royalty Corp.
• Despite strong lithium price recovery, battery metal-focused royalty companies have not experienced the same valuation gains as precious metal peers, with Electric Royalties reporting 0% year-over-year share price appreciation compared to triple-digit gains for gold and silver focused companies.
• Several new royalty companies launched in late 2025, including Versamet Royalties, Summit Royalties, and Lunar Royalties, led by experienced teams with previous successful exits in the sector.
• Larger royalty companies with 200+ diversified assets trade at approximately 2.5x NAV, while smaller junior companies trade at 1x NAV, incentivising continued consolidation as companies seek to improve valuations through portfolio expansion.

The mining royalty sector experienced a transformative year in 2025, characterised by unprecedented M&A activity, surging metal prices, and a growing divergence between precious metal and battery metal valuations. In a recent industry discussion, Brendan Yurik, CEO of Electric Royalties provided a comprehensive overview of the sector's evolution, highlighting both opportunities and challenges for retail investors seeking exposure to this specialised segment of the mining industry. The conversation offers important insights into how royalty companies are positioning themselves amid structural changes in commodity markets and capital flows.

Metal Price Surge Drives Sector Performance

2025 proved to be an exceptional year for commodity prices across multiple categories. Gold prices increased between 74% and 80% depending on the measurement period, while silver demonstrated even more dramatic appreciation, surging 160% year-over-year. Copper, a critical industrial metal, rose 27.5%, and lithium carbonate staged a significant recovery with an 80% gain after experiencing substantial declines in previous periods.

These price movements translated directly into share price appreciation for precious metal-focused royalty companies. Wheaton Precious Metals, one of the sector's largest companies, gained 102% over the 12-month period. Royal Gold appreciated 98%, while Osisko Royalties matched the 100% threshold. Mid-tier companies experienced even stronger performance, with Element Royalties and Versamet Royalties both up 150%, Gold Royalty Corp gaining 215%, and Metalla Royalty advancing 127%.

However, this strong performance has been largely confined to precious metal-focused companies. Battery metal royalty companies, despite the significant recovery in lithium pricing, have not experienced comparable valuation gains. Electric Royalties, for instance, reported zero percent share price appreciation over the 12-month period, trading at essentially the same level as a year prior. This divergence suggests that market participants are not yet fully incorporating the battery metal price recovery into their valuation frameworks for royalty companies in that subsector.

Consolidation Wave Reshapes Sector Landscape

The royalty sector witnessed significant consolidation activity in 2025, marking a potential inflection point for the industry. The most notable transaction was Royal Gold's acquisition of Sandstorm for approximately $3.5 billion, representing the first acquisition of a major royalty company in many years. Royal Gold also acquired Horizon Copper, a Sandstorm royalty spinout, in a separate $200 million transaction.

Triple Flag completed its acquisition of Orogen Royalties for $420 million, a deal primarily centered around a single high-quality gold royalty in Orogen's portfolio. Most recently, Altius Minerals announced an all-cash bid of $520 million for Lithium Royalty Corp in December, a transaction with particular relevance to the battery metals segment.

According to Yurik, this M&A activity reflects fundamental economics of the royalty business model. When discussing the rationale for consolidation, he noted that acquiring portfolios offers significant efficiency: "It's much easier to acquire a bunch of royalties by acquiring one company than it is to go do 37 deals." This observation highlights a key driver of sector consolidation - the ability to rapidly scale portfolios while maintaining relatively fixed general and administrative expenses.

The consolidation trend appears likely to continue. Franco Nevada's willingness to deploy $1 billion for single high-quality royalties demonstrates the premium being placed on top-tier assets, while the acquisition of companies with diversified portfolios of 250+ royalties offers a more efficient path to diversification than pursuing individual transactions.

New Market Entrants Signal Sector Maturity

Despite the consolidation trend, 2025 also saw multiple new entrants launch royalty-focused investment vehicles. Versamet Royalties completed an initial public offering. Summit Royalties went public in November through a reverse takeover of Eagle Royalties, featuring an earlier-stage portfolio with some producing royalties. Lunar Royalties was established by Adam Lundin, spinning out royalties on copper projects.

These new entrants have achieved notable early success. Summit Royalties, despite being newly public, achieved a market valuation of three to four times that of Electric Royalties, demonstrating strong initial investor appetite for new royalty platforms led by experienced teams.

The proliferation of new entrants has not necessarily intensified competition for all deal types. Yurik emphasised that Electric Royalties faces limited competition in its target market of battery metals and smaller transactions. Private equity firms typically require minimum deal sizes of $20 million, creating a gap in the market for smaller financing opportunities. Additionally, Electric Royalties focuses on creating new royalties rather than acquiring existing agreements, further differentiating its approach from competitors who primarily acquire pre-existing royalty interests.

Interview with Brendan Yurik, CEO of Electric Royalties

Scale Drives Valuation Premiums

The royalty sector exhibits clear valuation stratification based on company size and portfolio diversification. Junior royalty companies typically trade at approximately 1x net asset value (NAV), while larger companies with extensive diversification command multiples of 2.5x NAV or higher. This valuation gap creates a powerful incentive for consolidation, as companies can theoretically enhance shareholder value through mergers that increase portfolio size and diversification.

The economic logic extends beyond simple multiple expansion. Larger portfolios spread across 10 or more cash-flowing assets reduce single-asset risk, a key concern for investors. General and administrative costs remain relatively stable as portfolios grow, improving operating leverage. The combination of multiple expansion and operating efficiency makes M&A an attractive growth strategy for management teams seeking to maximise shareholder value.

For companies unable to achieve scale through acquisition, organic growth through deal origination becomes critical. Yurik described Electric Royalties' approach to deal sourcing: 

"Most of the deals that we have are opportunities that we came up with." 

This proactive origination strategy allows smaller companies to avoid competitive bidding processes that can drive up prices and compress returns.

Capital Access Shapes Competitive Position

The discussion highlighted several factors retail investors should consider when evaluating royalty companies. Cost of capital emerged as a critical determinant of competitive positioning. Many established royalty companies have private equity partnerships providing access to capital for transactions, while smaller companies may rely on family funding or strategic partnerships. Electric Royalties, for example, has partnered with private equity groups like Sprott Streaming on transactions where it lacked sufficient internal capital.

The structural advantages of the royalty model provide defensive characteristics that may appeal to risk-averse investors. Royalty companies have no operating costs associated with mine development or operations, no holding costs for their royalty interests, and continue to receive payments even when underlying mines operate at a loss, as royalties are typically calculated on gross revenue rather than net profits. Diversification across 40 to 250 different interests further reduces single-asset risk.

For retail investors evaluating the sector, Yurik emphasised the complexity of individual mining investments: 

"Each individual mining project can be very risky. There's probably about 50 points along the development timeline. Any one of those goes the wrong way and you might not have a project anymore and that could take 10 years." 

This assessment underscores the value proposition of royalty companies in providing professionally managed, diversified exposure to the mining sector.

M&A Activity Expected to Accelerate

Looking ahead to 2026, industry participants expect M&A activity to accelerate beyond 2025 levels. The fragmented nature of the royalty sector, with numerous junior and mid-tier companies, provides ample consolidation targets. For larger royalty companies seeking growth, corporate acquisitions offer more efficient portfolio expansion than pursuing multiple individual royalty transactions.

The divergence between precious metal and battery metal valuations may present opportunities as lithium, copper, and other industrial metals continue their price recovery. Companies positioned in these segments but trading at significant discounts to precious metal peers could attract acquisition interest or experience valuation rerating as cash flows from battery metal royalties materialise.

Market participants generally expect the favorable metal price environment to persist, driven by structural supply-demand imbalances rather than temporary market conditions. This outlook supports the thesis that royalty companies can deliver sustained value creation through both organic cash flow growth and strategic M&A activity.

Key Takeaways

The mining royalty sector in 2025 demonstrated both the opportunities and challenges inherent in this specialised investment category. Strong metal prices drove exceptional returns for precious metal-focused companies, while battery metal royalties lagged despite comparable price appreciation in underlying commodities. Significant M&A activity marked a potential inflection point for sector consolidation, driven by valuation arbitrage opportunities and the efficiency of acquiring diversified portfolios through corporate transactions rather than individual deals.

New entrants successfully launched platforms despite the mature nature of the market, suggesting continued investor appetite for experienced management teams. For retail investors, royalty companies offer a professionally managed, diversified approach to mining sector exposure with structural advantages including no operating costs, gross revenue-based payments, and reduced single-asset risk compared to investing directly in mining companies. The outlook for 2026 suggests continued consolidation activity and potential valuation convergence between precious metal and battery metal subsectors as cash flows from industrial metal royalties become more evident.

TL;DR: Executive Summary

The mining royalty sector experienced transformative growth in 2025, with precious metal companies gaining 100%+ on surging gold and silver prices, while battery metal royalties lagged despite 80% lithium price recovery. Major consolidation included Royal Gold's $3.5B Sandstorm acquisition and Altius's $520M Lithium Royalty Corp bid, reflecting efficiency of acquiring diversified portfolios versus individual deals. Valuation multiples favor scale (2.5x NAV for large companies vs. 1x for juniors), driving continued M&A expected in 2026, with opportunities in undervalued battery metal exposure.

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