Consolidated Financial Statements For the Years Ended
For the Years Ended December 31, 2024 and 2023
Principal and Registered Office
1015-789 West Pender Street Vancouver BC V6C 1H2
T: (604) 248-8648 T: (855) 240-3727 (toll free)
F: (604) 248-8663 E: [email protected]
Chief Executive Officer and Director
J. Patrick Nicol
Non-Executive Directors
Roland Butler Timothy M. Janke Justin Quigley Samantha Shorter
Transfer Agent
Computershare 3rd Floor 510 Burrard Street Vancouver BC V6C 3B9 (604) 661-9452
Legal Counsel
Osler, Hoskin & Harcourt LLP Suite 1700 Guinness Tower 1055 West Hastings Street Vancouver BC V6E 2E9 (604) 692-2760
Auditor
Smythe LLP 1700 – 475 Howe Street Vancouver BC V6C 2B3 (604) 687-1231
Listing
TSX Venture Exchange: OGN Shares Outstanding: 201,784,675
Table of Contents
1. NATURE OF OPERATIONS ............................................................................................ 12
2. STATEMENT OF COMPLIANCE ..................................................................................... 12
3. SUMMARY OF MATERIAL ACCOUNTING POLICIES .................................................... 13
4. CAPITAL MANAGEMENT ................................................................................................ 25
5. CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS ....................... 25
6. MARKETABLE SECURITIES ........................................................................................... 25
7. AMOUNTS RECEIVABLE ................................................................................................ 26
8. PROPERTY, PLANT AND EQUIPMENT .......................................................................... 27
9. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES ....................................................... 28
10. MINERAL PROPERTY INTERESTS .............................................................................. 28
11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES ................................................... 38
12. COMMITMENTS AND CONTINGENCIES ..................................................................... 38
13. SHARE CAPITAL ........................................................................................................... 39
14. NET INCOME PER SHARE ........................................................................................... 45
15. INCOME TAXES ............................................................................................................ 46
16. RELATED PARTY TRANSACTIONS ............................................................................. 47
17. SEGMENTED INFORMATION ....................................................................................... 48
18. FINANCIAL RISK MANAGEMENT ................................................................................. 49
19. SUBSEQUENT EVENTS ............................................................................................... 53
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF OROGEN ROYALTIES INC.
Opinion We have audited the consolidated financial statements of Orogen Royalties Inc. and its subsidiaries (the "Company"), which comprise:
♦ the consolidated statements of financial position as at December 31, 2024 and 2023;
♦ the consolidated statements of income and comprehensive income for the years then ended; ♦ the consolidated statements of cash flows for the years then ended;
♦ the consolidated statements of changes in shareholders' equity for the years then ended; and ♦ the notes to the consolidated financial statements, including material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2024 and 2023, and its consolidated financial performance and consolidated cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).
Basis for Opinion We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2024. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined that there are no key audit matters to communicate in our auditor’s report.
Other Information Management is responsible for the other information. The other information comprises Management’s Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated.
We obtained Management's Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
♦ Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
♦ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
♦ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
♦ Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
♦ Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
♦ Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Company as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Sukhjit Gill.
Chartered Professional Accountants
Vancouver, British Columbia
April 24, 2025
Consolidated Statements of Financial Position
Current Assets Note December 31, 2024 December 31, 2023 Cash and cash equivalents 5 $ 14,328,737 $ 6,383,521 Short term investments 7,885,212 5 8,555,787 Marketable securities 2,664,277 6 1,615,060 Amounts receivable 7 3,718,793 2,320,759 Prepaid expenses and deposits 81,387 148,783 28,299,764 19,402,552
Non-current Assets
| Royalty and mineral property interests | 10 | 41,077,392 | 41,627,691 |
| Property, plant and equipment, net | 8 | 265,436 | 220,798 |
| Reclamation bond | 10 | 115,834 | 115,834 |
| Deferred income tax asset | 15 | - | 1,227,191 |
41,458,662 43,191,514
Total Assets $ 69,758,426 $ 62,594,066
Liabilities and Shareholders’ Equity Liabilities
Accounts payable and accrued liabilities $ 681,542 11, 16 $ 669,705
| Short term lease liabilities | 9 | 64,112 | 57,895 |
| Joint venture partner deposits | 310,800 | 139,042 | |
| Income tax liability | 15 | 408,546 | - |
1,453,163 878,479
Non-current Liabilities
Long term lease liabilities 9 192,558 133,335 1,645,721 1,011,814
Shareholders’ Equity
| Share capital | 13 83,543,691 | 79,597,305 |
| Contributed surplus | 3,297,743 | 3,305,596 |
| Accumulated deficit | (18,728,729) | (21,320,649) |
68,112,705 61,582,252
Total Liabilities and Shareholders’ Equity $ 69,758,426 $ 62,594,066
Approved and authorized for issue by the Board on April 24, 2025.
Samantha Shorter Roland Butler
Director Director
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Income and Comprehensive Income
Years Ended December 2023
Note 2024
Royalties
Royalties revenue 10 $ 7,927,497 $ 5,949,248 Income from Royalties 7,927,497 5,949,248
Prospect Generation Revenue
Gain from prospect generation activities 10 $ 1,419,623 $ 1,847,278 Project management fees 10 - 32,086 1,419,623 1,879,364
Expenses
Impairment of mineral properties 10 -
138,599
Exploration expenditures 10 646,635 494,684 785,234 494,684 Income from Prospect Generation 634,389 1,384,680
Other Operations Revenue
Interest income 5 578,475 $ 256,557 578,475 256,557
Expenses
| Accounting and legal | 370,857 | 293,102 | |
| Depreciation | 8 | 80,924 | 90,833 |
| Foreign exchange loss (gain) | (632,896) | 236,981 | |
| General and administrative | 389,901 | 397,531 | |
| Investor services | 117,064 | 105,566 | |
| Management and professional fees | 16 | 338,417 | 346,259 |
| Marketing services | 106,466 | 127,074 | |
| Salaries and support services | 16 | 1,813,120 |
1,917,181
Share-based compensation 13,16 934,839 914,227 Travel 121,443 124,137 3,744,196 4,448,830 Loss from Other Operations (3,165,721) (4,192,273) 5,396,165 $ 3,141,655
Operating Income Before the Following $
Unrecoverable sales tax - (74,628) Other income (loss) 32,293
(85,790)
| Marketable securities fair value adjustment | 6 | (1,052,117) | (1,178,750) |
| Net Income Before Income Tax | 4,258,258 | 1,920,570 | |
| Income tax (expense) recovery | 15 | (1,666,338) | 1,123,819 |
2,591,920 $ 3,044,389
Net Income and Comprehensive Income $
Basic Income per Share 14 $ 0.01 $ 0.02 Diluted Income per Share 14 $
Weighted average shares outstanding- Basic 14 198,948,263 189,743,760 14 205,790,873
Weighted average shares outstanding- Diluted 209,012,763
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
Years Ended December 31, Note 2024 2023
Cash Flows Provided by Operating Activities
Net income $ 2,591,920 $ 3,044,389 Add (deduct) items not involving cash:
| Depreciation | 8 | 80,924 | 90,833 | |
| Marketable securities fair value adjustment | 6 | 1,052,117 | 1,178,750 | |
| Unrealized foreign exchange loss (gain) | (928,929) | 66,165 | ||
| Gain from JV activities | 10 | (1,419,623) | (1,847,278) | |
| Impairment of mineral properties | 138,599 | - | ||
| Other loss (income) | 85,790 | - | ||
| Deferred tax recovery | - | (1,227,191) | ||
| Income tax expense | 15 | 1,227,191 | - | |
| Interest expense on operating lease | 20,882 | 25,088 | ||
| Share-based compensation | 13 | 934,839 | 914,227 |
2,244,983
3,783,710
Net change in non-cash working capital balances related to operations:
| Amounts receivables | (1,398,034) | (1,032,104) |
| Prepaid expenses and deposits | 67,396 | (79,123) |
| Accounts payable and accrued liabilities | (11,837) | 255,430 |
| Income tax liability | 439,147 | - |
| Joint venture partner deposits | 171,758 | (33,029) |
Net Cash Flows Provided by Operating Activities 1,356,157
3,052,140
Cash Flows Provided (Used) by Investing Activities
Purchase of short term investments 5 (670,575) (2,191,454) Net sale in marketable securities 6 323,003 152,100 Reclamation bonds 90,738
-
| Mineral property and royalty interests, net of recoveries | 10 | 1,369,507 | (1,854,757) |
| Net purchase of property, plant and equipment | 8 | (624) | - |
| Net Cash Flows Provided (Used) by Investing Activities | 1,021,311 | (3,803,373) |
Cash Flows Provided (Used) By Financing Activities
Proceeds from exercise of warrants 13 2,858,314 5,271,484 Proceeds from exercise of stock options 13 145,380 76,344 Operating lease liabilities (59,230) 9 (80,065)
| Net Cash Flow Provided by Financing Activities | 2,923,629 | 5,288,598 |
| Effects of foreign currency translation on cash and cash equivalents | 948,136 | (114,456) |
| Increase in Cash and Cash Equivalents | 7,945,216 | 2,726,926 |
| Cash and Cash Equivalents, Beginning of the Year | 6,383,521 | 3,656,595 |
| Cash and Cash Equivalents, End of the Year | $14,328,737 | $ |
6,383,521
Cash and cash equivalents are comprised of:
Cash $ 13,989,771 $ 6,223,333 Cash restricted for exploration 270,800 99,042 Short-term money market instruments 68,166 61,146 $ 14,328,737 $ 6,383,521
Supplemental Cash Flow Information:
Commission fees paid on sale of short term investments $ 9,732 $ 4,500 Income taxes paid $
- $ 103,372
Interest received $ 578,475 $ 256,557 Net marketable securities received for property option payments $ 400,000 $ 1,977,000
OROGEN ROYALTIES INC.
Consolidated Statements of Changes in Shareholders' Equity
(Expressed in Canadian Dollars)
Share Capital
Obligation to Contributed Accumulated Shareholders' Note Shares Amount issue shares surplus deficit Equity Balance, December 31, 2022 179,200,795 $ 72,666,752 $ 57,840 $ 3,916,254 $ (24,365,038) $ 52,275,808
| Stock option exercise | 13 | 426,364 | 123,835 | - | (47,491) | - | 76,344 | |
| Warrant exercise | 13 | 13,820,853 | 6,806,718 | (57,840) | (1,477,394) | - | 5,271,484 | |
| Share-based compensation | 13 | - | - | - | 914,227 | - | 914,227 | |
| Net income and comprehensive income | - | - | - | - | 3,044,389 | 3,044,389 |
Balance, December 31, 2023 193,448,012 $ 79,597,305 $
- $ 3,305,596 $ (21,320,649) $ 61,582,252
| Stock option exercise | 13 | 1,083,203 | 327,448 | - | (182,068) | - | 145,380 | ||
| Warrant exercise | 7,115,545 | 3,618,938 | - | (760,624) | - | 2,858,314 | |||
| Share-based compensation | 13 | - | - | - | 934,839 | - | 934,839 | ||
| Net income and comprehensive income | - | - | - | - | 2,591,920 | 2,591,920 |
Balance, December 31, 2024 201,646,760 $ 83,543,691 $
- $ 3,297,743 $ (18,728,729) $ 68,112,705
The accompanying notes are an integral part of these consolidated financial statements.
OROGEN ROYALTIES INC.
Notes to the Consolidated Financial Statements Years Ended December 31, 2024 and 2023 (Expressed in Canadian Dollars)
1. NATURE OF OPERATIONS
Orogen Royalties Inc. (the “Company” or “Orogen”), is a royalty and mineral exploration company with a diverse portfolio of precious metal royalties and copper, gold and silver exploration projects in Canada, United States, Mexico, Argentina, Kenya and Colombia. The Company has two business segments – mineral royalties and mineral exploration project generation. The Company also owns a geological database covering parts of Mexico, central Asia, South Pacific, western Canada and western United States.
Orogen uses prospect generation to manage exploration and financial risks. Prospect generation allows Orogen to grow its existing royalties and securities assets in a disciplined and sustainable manner, while gaining exposure to exploration opportunities and discoveries. In addition, Orogen is positioned to operate counter-cyclical to the market by acquiring exploration targets when the projects are inexpensive and sell them into well capitalized markets when the project demand is strong. The foundation of the Company’s royalties has been built on prospect generation and has resulted in two discoveries including the Ermitaño project that is currently in production, operated by First Majestic Silver Corp., and the Expanded Silicon gold project, operated by AngloGold Ashanti NA, that is currently under exploration.
Orogen identifies, stakes, and acquires new projects and performs early-stage work to demonstrate their geologic potential. The Company then seeks partners who bring the capital and expertise to delineate a mineral deposit. Orogen retains exposure to the property through royalties, milestone payments, and equity consideration. Orogen also seeks to grow its royalties portfolio through the acquisition of new royalties.
The Company was incorporated on May 11, 2005, and is a reporting issuer in British Columbia, Alberta, Saskatchewan, and Ontario. The shares of the Company commenced trading on the TSX Venture Exchange (the “Exchange”) on January 25, 2011. On August 18, 2020, the Company acquired Renaissance Gold Inc. through a Plan of Arrangement under the Business Corporations Act (British Columbia) and was renamed Orogen Royalties Inc. The Company commenced trading on the Exchange under the symbol OGN on August 20, 2020. The head office, principal registered, and records office of the Company are located at 1015-789 West Pender Street, Vancouver, British Columbia, Canada, V6C 1H2.
2. STATEMENT OF COMPLIANCE
These consolidated financial statements have been prepared in accordance with IFRS Accountant Standards, as issued by the International Accounting Standards Board (“IFRS Accounting Standards”).
Except for cash flow information and financial instruments measured at fair value, these consolidated financial statements were prepared on a historical cost basis using the accrual basis of accounting.