Royalties Inc. Reports Q2 Results For June 30, 2025 and Update on Capstone Lawsuit
Royalties Inc. Reports Q2 Results For June 30,
2025 and Update on Capstone Lawsuit
Toronto, Ontario--(Newsfile Corp. - August 28, 2025) -
Royalties Inc. (CSE: RI)
(OTCID: ROYIF)
(or
"the
Company
") reports its results for the second quarter ended June 30, 2025.
This news release should be read in conjunction with the Company's unaudited financial statements
and the associated management's discussion and analysis (MD&A) for the year ended June 30, 2025
which are available on the Company's website at
www.royaltiesinc.com
or under the Company's profile
on SEDAR+ at
www.SEDARplus.ca
.
In the second quarter of 2025, the Company generated revenue of $24,042, consisting of $18,000 in
dividend income from its investment in Music Royalties Inc. ("MRI") and $6,042 in music royalty income.
Operating expenses totaled $68,625, leading to an operating loss of $44,583 versus $39,027 in the
prior year.
A non-cash foreign exchange gain of $156,357 on a US$2 million denominated contingent
liability (of a Mexico subsidiary to a defunct company, which the Company is working on to legally
cancel) resulted in a net income of $111,774 for the quarter, compared with a net loss of $46,642 in Q2
2024. For the six-month period, the Company generated net income of $78,176 versus a loss of
$87,308 in the prior year.
As at June 30, 2025, total assets increased to $1.8 million (December 31, 2024 - $1.25 million),
reflecting the Company's increased investment in MRI of $500,000, which now totals 3,000,000 shares
valued at $1.5 million. After quarter end, Royalties Inc. completed an additional equity swap, increasing
its holdings in MRI to 4,000,000 shares valued at $2 million, generating $144,000 in dividends per year.
Capstone Lawsuit Update
Royalties Inc. achieved a major milestone on June 16, 2025 with a significant legal victory in Mexico,
where its subsidiary Minera Portree de Zacatecas ("MPZ") obtained a favourable court judgment
confirming its entitlement to a 2% net smelter royalty on concessions at Capstone Copper's Cozamin
Mine, although Capstone appealed to the Supreme Court of Zacatecas, thereby delaying the resolution
for several months.
Capstone initially reported that mining started within the Portree claim in the fourth quarter of 2019. In
anticipation of the successful resolution of the dispute, MPZ's assertion is that Capstone owes it a 2%
NSR on the ore mined from the Portree portion over the last 6 years, which it estimates as 30% of the
Mala Noche Footwall Zone ("MNFZ") based on the assumption of the proportion of the surface linear
strike of 1.5 km of the MNFZ, the area which represents almost all of the production at the Cozamin Mine
since 2017, according to Capstone.
In 2024, Capstone paid US$4.4 million in royalties on US$234 million of net revenues for an average
1.9% NSR paid to two royalty holders. Royalties of US$1.2 million were paid to Gold Royalty
Corporation ("GROY") in respect of a 1% NSR on 2 claims only 300 meters and down strike from the
Portree block on the MNFZ. Royalties of US$3.2 million were paid to Grupo Minera Bacis S.A. de C.V.
("Bacis"), the former owner of the Cozamin Mine, under the terms of a December 2003 agreement
where a 3% NSR is paid on production from the property covered by the agreement. However, based on
Capstone's 43-101 and numerous public documents, MPZ estimates that the Bacis area has long since
been substantially mined out and therefore Capstone has incorrectly paid Bacis, royalties due to MPZ.
MPZ estimates that the Portree portion of the MNFZ represents about 30% of the 1.5 km strike being
mined, therefore estimates the 2% NSR on the Portree claim in dispute represents approximately
US$1.5 million per year on the production since 2019, based on Capstone's Audited Financial
Statements. This figure excludes the long term potential of the 2% NSR on both the depth potential and
any resource mined on the entire area covered by the five Portree claims which include the historical
high grade Parroquia copper mine in the southwest area of the Cozamin Mine land holdings. The
precise figures will only be determined with the actual co-operation of Capstone, which has not been
forthcoming. MPZ hired a local geological expert who reviewed Capstone's public 2019-2020 drill
results on the Portree claim and estimated the value of the 2% NSR at US$25 million.
The Company continues to maintain its 100% interest in the Bilbao silver-zinc-lead project in Zacatecas,
while exploring strategic opportunities to monetize the project in order to acquire cash-flowing royalties.
"This was a milestone quarter for Royalties Inc. with the legal victory against Capstone in Mexico and the
increase in our balance sheet through a strategic investment, which will lead the Company to profitability.
We remain focused on unlocking value for shareholders by growing our royalty portfolio and monetizing
key mining assets," commented Tim Gallagher, Chairman and CEO.
About Royalties Inc.
Royalties Inc. owns a 100% interest, subject to a 1.5% NSR owned as a separate asset, on the
Bilbao silver-zinc-lead project located in the State of Zacatecas, Mexico.
Royalties Inc. owns 88% of the outstanding shares of Minera Portree de Zacatecas, S.A. de C.V
("MPZ") which holds an asserted claim (backed by a court approved lien) to a 2% net smelter
royalty established in 2002 on five mining concessions called the 'Portree claims', a portion of
which is on the Mala Noche Footwall Zone, the main source of production at the Cozamin mine
where Capstone Copper Corp. ("Capstone") has been mining since 2010. Capstone assigned
this royalty to themselves without the knowledge of or proper payment to MPZ, the longstanding
and rightful owner, in 2017 and 2019. MPZ filed civil and criminal lawsuits in Zacatecas in 2021 to
invalidate the contract to transfer ownership which has now been officially supported by the court.
Despite MPZ's legal victory, Capstone appealed the decision to the Supreme Court of the State of
Zacatecas.
Royalties Inc. has a 3% stake in
Music Royalties Inc
. ("MRI"), which has acquired 30 cash-flowing
catalogs and paid out over $12 million in dividends since 2019 from 31 cash-flowing catalogs
generating a 7.2% annual yield.
For further information contact Royalties Inc. at
www.royaltiesinc.com
.
Tim Gallagher
CEO & Director
(416) 925-0090
Connor Gallagher
Investor Relations
(647) 921-2206
Andrew Robertson
Director
(416) 317-0137
Neither the CSE, nor its Regulation Services Provider accepts responsibility for the adequacy or
accuracy of this press release.
Forward-Looking Statements
This news release contains "forward-looking information" within the meaning of applicable securities
laws. All statements contained herein that are not clearly historical in nature may constitute forward-
looking information. In some cases, forward-looking information can be identified by words or phrases
such as "may", "will", "expect", "likely", "should", "would", "plan", "anticipate", "intend", "potential",
"proposed", "estimate", "believe" or the negative of those terms, or other similar words, expressions,
and grammatical variations thereof, or statements that certain events or conditions "may" or "will"
happen, or by discussions of strategy. Where the Company expresses or implies an expectation or
belief as to future events or results, such expectation or belief is based on assumptions made in good
faith and believed to have a reasonable basis. However, forward-looking statements are subject to
risks, uncertainties, and other factors, which could cause actual results to differ materially from future
results expressed, projected or implied by such forward-looking statements. Such risks include, but
are not limited to: sufficient capital and financing required in order to fulfill the Company's business
plans and strategy may not be obtained as expected; that the Company will not be able to pay future
dividends; and other risks related to the Company as disclosed in the documents filed on the
Company's profile at SEDAR+ at
www.SEDARplus.ca
. Accordingly, readers are cautioned not to place
undue reliance on forward-looking statements contained in this press release and they are expressly
qualified in their entirety by this cautionary statement. The forward-looking statements herein are
made as at the date hereof and are based on the beliefs, estimates, expectations, and opinions of
management on such date.
The Company does not undertake any obligation to update publicly or
revise any such forward-looking statements whether as a result of new information, future events or to
explain any material difference between subsequent actual events and such forward-looking
information, except as required under applicable securities law.
To view the source version of this press release, please visit
https://www.newsfilecorp.com/release/264275