Star swaps Elk royalty for 5% Gold Mountain equity

Executive Summary

• Star Royalties Ltd. has entered into a binding agreement to convert its 2% Net Smelter Return (NSR) royalty on the Elk Gold mine into a 5% equity stake in Gold Mountain Mining Corp.
• The transaction involves the extinguishment of the royalty in exchange for an option to acquire the equity stake, contingent upon the resolution of Gold Mountain's court-appointed receivership process.
• The deal includes a $500,000 cash payment to Gold Mountain, payable in two tranches in early 2026, and grants Star Royalties anti-dilution and tag-along rights.

Key Details

• Transaction Structure: Star Royalties is exchanging its 2% NSR royalty on the Elk Gold mine for an option to acquire 5% of the total issued and outstanding shares of Gold Mountain Mining Corp. (or any successor company arising from the receivership).
• Cash Consideration: The option includes a $500,000 payment to Gold Mountain, structured as two equal tranches of $250,000, payable on January 15, 2026, and March 30, 2026.
• Counterparties: The agreement is with Nhwelmen Construction LP (NCLP), which owns the Nlaka'pamux Nation Tribal Council (NNTC). Gold Mountain Mining Corp. is a subsidiary of NCLP.
• Rights Retained: Star Royalties retains customary anti-dilution and tag-along rights following the resolution of Gold Mountain's receivership.
• Land Package Expansion: The equity position provides exposure to an expanded land package of 21,187 hectares, significantly larger than the area covered by the original royalty.
• Strategic Rationale: Star Royalties views the equity stake as having the potential to surpass the value of the 2% NSR royalty, citing near-term catalysts including a revised resource statement, updated mine plan, exploration programs, and the announcement of a development partner.
• Operational Context: Elk Gold is expected to be developed by a soon-to-be-disclosed operator with a focus on safety and environmental stewardship, supported by permitting from NCLP and potential synergies with regional mining assets.

Notable Quotes

• Kevin MacLean, Chief Investment Officer, Star Royalties: "Pursuing this restructuring allows the company to capitalize on the reorganization of Elk Gold and to maintain optionality in the potential of the underlying resources. The equity position in Gold Mountain will give the company exposure to an expanded area of 21,187 hectares, representing a meaningful increase over the land package that was covered by the royalty."
• Lindsay Thompson, Chief Strategy Officer, NNTC: "Our primary objective during the receivership was structuring the new company to aggressively pursue the full value proposition of the Elk Gold resource. The support and resources provided by Star Royalties were a key part not only for this acquisition but also for accelerating our broader mining expansion strategy in British Columbia."