Elemental Executes Option Agreement to Sell the Hachita Porphyry Copper-Gold Project

The most recent news release, dated 2025-12-04, announces that Elemental Royalty Corporation (now "Elemental Royalty") has executed an option agreement to sell its Hachita Porphyry Copper-Gold Project in New Mexico, U.S., to First Quantum Minerals Limited.

Under the terms of the agreement, First Quantum can earn a 100% interest in the Hachita project by: - Making an execution payment of US$50,000. - Providing option payments totaling US$750,000 over a five-year term. - Incurring cumulative exploration expenditures of US$6,000,000 over the same five-year term.

Upon the exercise of the option, Elemental Royalty will retain a 3% Net Smelter Return (NSR) royalty on the project. First Quantum will have the right to buy back 1% of this royalty for US$5,000,000 on or before the fifth anniversary of a published resource. Additionally, First Quantum will make Advanced Annual Royalty payments of US$100,000 upon each anniversary of the closing date until a Feasibility Study or Development Decision is completed. Elemental will also receive project milestone payments of US$500,000 upon completion of a Feasibility Study and US$2,500,000 upon a development decision.

The CEO, David M. Cole, highlighted this transaction as another example of Elemental's expertise in identifying prospective targets and attracting world-class exploration partners, reinforcing the company's project generation business model.

This news is a positive development for Elemental Royalty Corporation, but it is categorized as "Routine - Positive" rather than "Material." Here's why:

Context of Previous News: 1. Transformative Merger and Financing: The company recently completed a highly material merger with EMX Royalty Corporation (2025-11-13), forming a new mid-tier gold-focused royalty company with an implied market capitalization of US$933 million (as projected on 2025-09-04). This merger was supported by a US$100 million private placement from Tether Investments S.A. de C.V. (2025-11-13), a strategic investor whose initial stake was 33.7% with potential to increase to 47.7% (2025-06-12, 2025-09-04). These events significantly increased the company's scale, diversification, and financial strength. 2. Strategic Monetization of Exploration Assets: The Hachita agreement is a continuation of Elemental's proven royalty generation business model, where it identifies early-stage projects, advances them, and then options them to larger operators while retaining a royalty. This was explicitly stated as a core tenet of their business model by the CEO in the latest release and has been demonstrated previously. For example, on 2025-11-17, Elemental executed four similar option agreements to sell projects in Arizona to Ivanhoe Electric, involving comparable payment structures and retained royalties. 3. Financial Contribution vs. Company Scale: While the payments (US$50k execution, US$750k options, US$6M exploration, plus milestones and annual advanced royalties) are individually positive, they are relatively small when compared to the company's new, larger financial standing and projected 2025 adjusted revenue of US$42 million (2025-11-12) or the US$100 million Tether financing. The Hachita deal is for a single exploration-stage project, with significant payments spread over a five-year term. 4. World-Class Partner: The involvement of First Quantum Minerals Limited, a major global mining company, is a strong endorsement of the Hachita project's prospectivity and derisks future exploration, which is a positive aspect of this deal.

In conclusion, the Hachita option agreement is a well-executed step in Elemental's established strategy. It generates immediate cash flow, ensures future exploration and potential development of a non-core asset by a reputable third party, and retains significant long-term royalty upside. However, given the backdrop of the recent transformative merger, major financing, and other similar deals, this specific news, while positive, is a routine but successful execution of its business strategy rather than a material change to the company's overall trajectory.

Elemental Royalty Corporation is a Canada-based gold-focused royalty company primarily involved in the acquisition and generation of precious metal royalties. The company recently underwent a significant transformation through its merger with EMX Royalty Corporation, effective 2025-11-13, and changed its name from Elemental Altus Royalties Corp. to Elemental Royalty Corporation. This merger created a mid-tier royalty company with a globally diversified portfolio of over 200 royalties, including 16 producing royalties.

The company's business model revolves around identifying prospective targets, advancing them, and then optioning them to world-class exploration and mining partners while retaining a royalty interest. This strategy aims to provide exposure to commodity price upside and exploration-driven growth with reduced operational risk.

Key flagship or cornerstone royalty interests include: - Karlawinda Gold Project (Western Australia): An uncapped 2% Net Smelter Return (NSR) royalty. The project operator, Capricorn Metals Ltd., received regulatory approval for a 30% expansion, targeting approximately 150,000 ounces per annum of gold production, which is expected to increase Elemental's annual gold production from this royalty by approximately 25% at no cost. - Caserones Copper Mine (Chile): A 0.473% NSR royalty interest. - Korali-Sud Gold Project (Western Mali): A 3% NSR royalty on the first 226,000 ounces, then an uncapped 2% NSR, along with significant milestone payments. This project commenced full production in Q4 2024 and significantly contributed to Elemental's Q1 and Q2 2025 revenues. - Bonikro Gold Mine (Cote d'Ivoire): An increased 4.5% royalty interest, benefiting from mine sequencing into higher-grade zones. - Laverton Project (Western Australia): An uncapped 2-4% Gross Revenue Royalty (GRR) covering significant gold resources. This royalty, along with the Jasper Hills royalty, was acquired for AUD$80 million (2025-09-02) and its acquisition was completed on 2025-11-26. It is considered a cornerstone asset with near-term cash flow potential. - Dugbe Project (Liberia): A 2.0-2.5% uncapped NSR royalty. This feasibility-stage project was acquired for US$16.5 million (2025-09-02) and offers long-life, multi-million-ounce potential. - Hachita Porphyry Copper-Gold Project (New Mexico, U.S.): An exploration-stage project for which an option agreement was recently executed with First Quantum Minerals Limited, retaining a 3% NSR royalty. - Arizona Copper Projects (Arizona, U.S.): Four exploration-stage copper projects for which option agreements were executed with Ivanhoe Electric Inc., retaining a 2.5% NSR royalty on each.

The company aims for gold-focused diversification across its portfolio and continues to build a strong balance sheet for further accretive growth.