Another merger is set to occur in the royalty space, with Elemental Royalty (TSX: ELE) agreeing to acquire Vizsla Royalties (TSXV: VROY). The deal, valued at approximately C$327 million, marks the largest single asset transaction in Elemental’s history and its first major move since merging with EMX Royalty.
The price tag represents a 31% premium to Vizsla Royalties’ unaffected closing price on May 12 and a 22% premium to its 20-day volume-weighted average.
The arrangement will see Vizsla Royalties shareholders elect to receive 0.15 Elemental shares, C$4.13 in cash, or some combination of both for each share held, subject to proration. Total cash consideration is capped at roughly C$82 million.
For Elemental, the prize is a 2.0%-3.5% net smelter return royalty on the Panuco silver-gold project in Mexico, operated by Vizsla Silver Corp. (TSX: VZLA). The royalty is uncapped, with no buy back or step down provisions, and covers the bulk of a 9,800-hectare land package that includes the Copala and Napoleon deposits. Vizsla Silver’s 2025 feasibility study pegs annual output at 17.4 million silver equivalent ounces over an initial 9.4 year mine life, with first production targeted for the second half of 2027.
The transaction also lands against a difficult backdrop. In late January, Vizsla Silver confirmed a security incident at the Panuco project area in which ten individuals were kidnapped, nine of whom subsequently passed away while the final individual remains missing. The episode briefly raised questions about operating risk in the district, though Vizsla Silver has continued to advance permitting, award EPCM contracts, and stockpile high-grade ore from its test mine since.
Elemental says it completed extensive due diligence covering technical data alongside project security, community relations, and ESG considerations. Chief executive David M. Cole framed Panuco as a future cornerstone asset and said the company expects the royalty to add roughly 7,500 gold equivalent ounces annually to it’s production mix once the project is in production. Vizsla Royalties chair Michael Konnert called the deal the “natural culmination” of the spinout’s mandate to unlock royalty value at Panuco.
The board of Vizsla Royalties has unanimously recommended shareholders vote in favour, and holders of roughly 23% of outstanding shares, including Vizsla Silver itself, have signed voting support agreements. Closing is targeted for the third quarter of 2026, subject to court, regulatory, and shareholder approvals.
The deal arrives a day after Elemental posted record quarterly numbers. First quarter revenue came in at US$24.3 million, up 83% year over year, while adjusted EBITDA reached US$17.7 million, a 55% increase. Operating cash flow climbed to US$14.5 million, and the company finished the quarter with US$69.1 million in cash and US$92.5 million in working capital.
Elemental Royalty last traded at $26.57 on the TSX.
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