Mr. Brendan Yurik reports

ELECTRIC ROYALTIES CLOSES ACQUISITION OF LITHIUM ROYALTY AND OPTION PORTFOLIO IN ONTARIO, CANADA

Electric Royalties Ltd. has closed the previously announced transaction to acquire a portfolio of 18 royalty agreements and 32 lithium properties in Ontario, Canada (the Ontario lithium projects or the OLP). Pursuant to the asset purchase agreement between the company and 1544230 Ontario Inc., MK Exploration Services Inc. and Gravel Ridge Resources Ltd. (together, the vendors) dated April 8, 2024, the company has issued 2.25 million common shares of the company to the vendors and made a net cash payment of $1,689,000 (which reflects a total cash consideration of $1,875,000, less $75,000 down payment provided to the vendors in November, 2023, and $111,000 held in escrow representing cash payments and the value of shares received by the vendors after Jan. 1, 2024, pursuant to certain mineral property interests in the OLP).

Brendan Yurik, chief executive officer of Electric Royalties, commented: "Northwestern Ontario is known for its lithium potential; thus we are very pleased to complete the acquisition of these prospective lithium royalties and optioned properties in that region. We have strategically selected these royalties and projects from an initial 126 projects, based on our assessment of their prospective geology and greater proximity to prospects with reported lithium resources and exploration activity.

"Current lithium market conditions have allowed us to acquire this portfolio at a relatively low cost, while doubling the size of our overall royalty portfolio. The acquisition represents a significant opportunity for Electric Royalties to grow in an accretive manner, as forecasts suggest lithium prices will rebound in the longer term."

Overview of the Ontario lithium projects (OLP)

The OLP portfolio consists of 18 royalties and 32 lithium properties located in the province of Ontario, Canada. Thirty-one of the 32 properties are currently being explored by third parties pursuant to option agreements and, to the extent that the applicable option payments (yielding the company up to $2.2-million) are made over the next 2.5 years and the options are exercised, each of the properties would revert into royalty interests for Electric Royalties. Electric Royalties would retain its ownership interest in any properties that are not ultimately transferred to an optionee and would have the right to reoption, sell or relinquish such properties.

The properties cover prospective land on the same geological trends of, and surrounding, major lithium discoveries in Ontario. Six of 24 developed lithium prospects in Ontario with reported reserves or resources are located in the vicinity of these properties. Several of these properties are adjacent to Green Technology Metals' Seymour Lake lithium project (on which Electric Royalties holds a 1.5-per-cent net smelter royalty interest) that hosts the Aubry deposits. The Seymour Lake lithium project is road-accessible year-round and is envisioned as a central processing facility with the potential to add production from other deposits in the area. Green Technology Metals is currently pursuing a vertically integrated strategy with multiple mine and processing hubs supplying a central lithium conversion facility that would be built in Thunder Bay, Ont.

Currently, Canada hosts the sixth-highest lithium reserves of any country, yet 2022 production totalled an estimated 500 tonnes -- an amount dwarfed by global lithium powerhouses such as Chile and Australia. The hard-rock lithium deposits in Canada are hosted in pegmatites containing a lithium-bearing mineral known as spodumene. Lithium hosted in spodumene provides producers with greater flexibility as it can be processed into either lithium hydroxide (mainly used in high-density electric vehicle (EV) batteries) or lithium carbonate. It also offers faster processing times and is higher quality than lithium extracted from brine as spodumene typically contains higher lithium content. Spodumene-bearing pegmatites are often hosted in metavolcanic or metasedimentary rocks adjacent to granitic intrusions. Many of the world's largest hard-rock lithium occurrences are found in Archean or Paleoproterozoic orogens -- geological environments underlying approximately two-thirds of Ontario.

One of the most advanced and high-grade lithium projects in Ontario is Frontier Lithium's PAK and Spark deposits on which a positive prefeasibility study was recently announced. PAK contains one of North America's highest-grade lithium resources and is one of the largest known deposits of its subtype in North America. Further, Frontier has recently received a grant from the Ontario government to advance its understanding of the processing of lithium into battery metal products. Electric Royalties' OLP acquisition includes two large unexplored, optioned claim groupings located less than 10 kilometres from the Frontier projects and adjacent to terrane hosting geologically favourable two-mica granitic rocks.

One of the most exciting new lithium exploration stories in Ontario is the emerging Root Bay project being advanced by Green Technology Metals. Drilling programs completed in the last 1.5 years resulted in the announcement of a 9.4-million-tonne (Mt) indicated resource grading 1.3 per cent lithium oxide (Li2O) for Root Bay and a 4.5 Mt inferred resource grading 1.01 per cent Li2O for the associated McCombe deposit, at a 0.2-per-cent Li2O cut-off, reported under the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (or the JORC Code). The OLP includes numerous claims in this area, staked prior to the Root Bay discovery. Many of these claims are on or near to the subprovince terrane boundary, host numerous tourmaline occurrences, and are on or near the Root Bay pluton -- all of which are key exploration indicators of lithium-bearing pegmatites. One such claim in the OLP, the McCombe North property, was optioned to Bastion Minerals and is located less than two kilometres from the Root Bay deposit. Another claim group in the OLP, the Harrison Road property located a few kilometres to the south of Root Bay, was sampled by the Ontario Geological Survey (OGS), and returned anomalous lithium values in lake sediments; hence, it is considered to be prospective.

Rock Tech Lithium's Georgia Lake project is also one of the more advanced integrated lithium development projects in Ontario. Rock Tech Lithium is, reportedly, pursuing a vertically integrated strategy which not only includes development of the Georgia Lake deposit, but also the construction of a lithium processing plant. The plan is to build a facility that is capable of processing material from various sources and is adaptable to the region's growing lithium industry. There is tremendous exploration potential in the Georgia Lake area as it has been described as the largest concentration of rare-element mineralization in the Superior province of Ontario. Other companies have reported interesting results from work in the Georgia Lake district. Tearlach Resources recently announced the results of channel sampling which ranged from 1.56 per cent Li2O over three metres to 4.04 per cent Li2O over 0.7 metre in channel samples on its property.

The OLP includes the largest land position in the Georgia Lake lithium district. One of the properties, the Arrel lithium property, is 20 kilometres east of the Rock Tech pegmatites, and not only is underlain by a muscovite-bearing peraluminous granite but is also in contact with metasediments which make excellent hosts for pegmatites.

Lithium development in Ontario

Ontario is a province with a deep-rooted mining tradition, abundant clean hydroelectric and nuclear power, and a skilled mining work force. The permitting environment in Ontario is rigorous, fair and process-based, and both the federal and provincial governments are supportive of battery metal projects as shown in their recent investments and initiatives.

Access to sustainable power, abundant water and skilled personnel makes mine development and permitting easier, and it is one of the compelling reasons for Electric Royalties' interest in the OLP acquisition. The properties cover a collective area of over one million acres and are adjacent to some of the most prominent lithium exploration and development plays in North America.

Lithium outlook

The shift to clean energy systems is forecast to drive a significant increase in the demand for battery metals, and this is particularly true in the case of lithium. Lithium is a key component in current and anticipated battery chemistries. According to the International Energy Agency (IEA)'s Sustainable Development Scenario (SDS), clean energy technologies will ultimately account for 90 per cent of the demand for lithium, which could result in a 40-fold increase in demand by 2040.

New sources of lithium will need to be developed and, equally important, new processing facilities will need to be built to meet long-term demand. Finding new lithium deposits in proximity to where the metal is processed into products suitable for battery production is imperative to secure supply chains. Complex supply chains and foreign sources of supply increase the risk of exposure to physical disruption and trade restrictions, while increasing the carbon footprint of the process.

Completion of drawdown under convertible credit facility

Further to the company's news release on April 9, 2024, it has completed the $2.5-million drawdown under its $10-million amended and restated convertible credit facility with Gleason & Sons LLC (the lender) dated Feb. 16, 2024, for working capital and to finance the cash payment of the transaction and associated transaction costs.

Loans drawn under the credit facility bear interest at a floating rate (United States secured overnight financing rate as published by the New York Federal Reserve (SOFR) plus 7 per cent), with a maximum interest rate of 12.5 per cent, with interest payments capitalized into the principal amount and due at the maturity date of Jan. 12, 2028. Prior to the maturity date, on at least 10 days prior written notice to the company and subject to all required TSX Venture Exchange approvals having been obtained, the lender has the right to convert all or any portion of the outstanding principal amount of the credit facility and accrued and unpaid interest into the company's common shares. Any outstanding principal amount with respect to a drawdown under the credit facility will be converted at a conversion price equal to the greater of: (i) 50 cents; (ii) a 100-per-cent premium above the 30-day volume-weighted average trading price of the common shares of the company on the TSX Venture Exchange at the time of such drawdown; and (iii) the minimum price acceptable to the TSX Venture Exchange, per common share of the company, subject to adjustment as provided in the convertible note evidencing such drawdown. Any accrued and unpaid interest may be converted at conversion price equal to the market price (as defined under the TSX Venture Exchange's Policy 1.1) at the time of settlement.

The conversion price for the drawdown is 50 cents, and as a result a total five million common shares of the company are issuable on conversion thereof. The drawdown is subject to final TSX Venture Exchange approval.

The credit facility is a related party transaction within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions. The credit facility is exempt from the valuation requirement of MI 61-101 by virtue of the exemption contained in Section 5.5(b) as the company's common shares are not listed on a specified market. The company received disinterested shareholder approval of the credit facility at the company's special meeting of shareholders held on March 19, 2024, in accordance with MI 61-101.

David Gaunt, PGeo, a qualified person who is not independent of Electric Royalties, has reviewed and approved the technical information in this release.

About Electric Royalties Ltd.

Electric Royalties is a royalty company established to take advantage of the demand for a wide range of commodities (lithium, vanadium, manganese, tin, graphite, cobalt, nickel, zinc and copper) that will benefit from the drive toward electrification of a variety of consumer products: cars, rechargeable batteries, large-scale energy storage, renewable energy generation and other applications.

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