Summit Royalties to Combine with Star Royalties to Create a Scaled, High-Growth Royalty Platform

Executive Summary

• Summit Royalties has entered into a court‑approved Plan of Arrangement to acquire 100 % of Star Royalties, exchanging each Star share for 0.360 Summit shares (≈C$0.60 per Star share), representing a ~25 % spot premium and ~32 % VWAP premium.
• The transaction values the combined entity at an implied fully‑diluted in‑the‑money equity value of ≈C$51 million, with a pro‑forma market cap of ≈C$184 million and expected ownership split of 72 % Summit shareholders / 28 % Star shareholders.
• The combination creates a portfolio of ~50 royalties/streams across Canada, the U.S., and Australia, adds the Copperstone gold stream, and is projected to generate >US$15 M revenue in 2027 with $2 M annual cost synergies.

Key Details

• Consideration & Ownership – 0.360 Summit share per Star share; post‑transaction ownership ~72 % Summit shareholders, ~28 % Star shareholders (fully‑diluted).
• Valuation – Implied price of C$0.60 per Star share; premium ≈25 % to spot and ≈32 % to 20‑day VWAP; implied equity value ≈C$51 M; pro‑forma market cap ≈C$184 M.
• Scale & Asset Base – Combined entity will hold ~50 royalties/streams in Canada, USA, Australia; ~63 % of NAV from assets already producing or with committed production timelines; 4 assets currently producing, expected to rise to 6 by 2027.
• Growth Outlook – Projected GEOs CAGR ≈47 % over the next three years (highest among junior royalty/stream peers).
• Synergies & Cash Flow – Expected US$2 M annual cost synergies; Copperstone and Pitangui streams to be in production by 2027, boosting 2027 revenue to >US$15 M at consensus metal prices.
• Re‑Rating Potential – Pro‑forma fully‑diluted market cap ≈C$184 M; valuation discounts vs peers on Price/NAV and Price/2027E CFPS.

Transaction Mechanics

• Approval Requirements – ≥66⅔ % of Star shareholders (excluding interested parties) plus a simple majority after exclusions; special Star shareholder meeting anticipated Q2 2026.
• Support Agreements – Directors/officers of Star and large shareholders (~34 % of Star shares) have entered voting support agreements with Summit.
• Closing Conditions – Court approval, regulatory/exchange approvals, customary closing conditions; termination fee C$2.5 M payable to Summit if the deal is terminated under certain circumstances.
• Share‑Based Compensation Adjustments – All outstanding Star restricted share units and stock options will be adjusted per the exchange ratio.

Timeline

• Special Star shareholder meeting: expected Q2 2026.
• Transaction close (subject to approvals/conditions): expected Q2 2026.
• Post‑closing: Star shares to be delisted from TSXV and OTCQX; Star to cease reporting under Canadian securities laws.

Asset Highlights Added by the Deal

Advisors & Counsel

• Summit: Financial advisor – Canaccord Genuity Corp.; Legal counsel – Bennett Jones LLP.
• Star: Financial advisor – TD Securities Inc.; Legal counsel – Fasken Martineau DuMoulin LLP.

Notable Quotes

“We are very excited about the transformative combination of Summit and Star… The addition of the Copperstone gold stream … is expected to drive material cash flow growth in the coming years.” – Drew Clark, President, CEO & Director, Summit Royalties Ltd.

“We believe this merger will represent one of the most compelling investment opportunities available in the royalty sector… we look forward to our upcoming re‑rating potential.” – Alex Pernin, CEO & Director, Star Royalties Ltd.