Royalties loses $38,288 in 2025

Executive Summary

• Royalties Inc. reported its year-end financial results for 2025, highlighting a significant legal victory confirming its 2% Net Smelter Royalty (NSR) on Capstone Copper’s Cozamin mine in Mexico, with an estimated $10 million in past royalties owed and a future royalty value estimated at $25 million.
• The company reported record revenue of $143,881 (up 32%) driven by dividend income from its Music Royalties Inc. (MRI) investment, resulting in a net loss of $38,288, a significant improvement from the $392,292 net loss in 2024.
• Strategic updates include plans to expand the resource at the Bilbao silver-zinc-lead property via a new drill campaign and spin off the asset, alongside an increased ownership stake in MRI to $2,525,000.

Key Details

• Financial Results (Year Ended Dec. 31, 2025):
  • Revenue: $143,881 (up 32% YoY), comprising $117,600 in dividend income from MRI and $26,278 in other royalty income.
  • Operating Expenses: $316,945 (up 28% YoY), attributed to OTC U.S. listing costs, legal expenses, and increased marketing related to the Capstone lawsuit.
  • Operating Loss: $173,064 (vs. $139,130 in prior year).
  • Net Loss: $38,288 (vs. $392,292 in 2024), aided by a non-cash foreign exchange gain of $134,776 on a $2 million denominated contingent liability.
• Capstone Copper Legal Victory:
  • Judgment: On June 16, 2025, Minera Portree de Zacatecas SA de CV (MPZ, 88% owned by Royalties Inc.) obtained a favorable judgment confirming a 2% NSR on five concessions (Portree claims) at Capstone’s Cozamin mine.
  • Appeal Status: On Nov. 4, 2025, the Civil Chamber of the Superior Tribunal of Justice of Zacatecas upheld the entitlement and rejected Capstone’s appeal. The federal/final appeal is expected to be resolved in Royalties' favor in the coming months.
  • Estimated Owed Amount: Royalties estimates over $10 million (U.S.) in royalties on production since 2019 (before interest and damages).
  • Estimated Future Value: The value of the 2% NSR, including future production through 2030 and depth potential, is estimated at $25 million (U.S.).
  • Context: Capstone started mining within the Portree claims in Q4 2019. In 2025, Capstone paid $4.9 million (U.S.) in royalties to other holders; Royalties estimates its 2% share equates to ~$1.5 million (U.S.) per year, totaling ~$10 million for the period since 2019.
  • Resource Potential: The claims cover up to 30% of the Mala Noche footwall zone (MNFZ) and include the historical high-grade Parroquia copper mine with an estimated two-million-tonne historical resource.
• Strategic Investments & Assets:
  • Music Royalties Inc. (MRI): Royalties increased its ownership investment by $1,525,000 to a total of $2,525,000. This stake is expected to provide dividends of $181,800 in 2026. MRI has paid over $15 million in dividends since 2019.
  • Bilbao Property: An updated economic model by SLR Consulting indicates the breakout in silver prices has exponentially increased the potential value of the Bilbao silver-zinc-lead property. Royalties is planning a new drill campaign to expand the resource and intends to spin off the asset.

Notable Quotes

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