Mr. Tim Gallagher reports

ROYALTIES INC. ESCALATES CRIMINAL INVESTIGATION BY FORMALLY DEMANDING PRODUCTION EVIDENCE AT THE COZAMIN MINE

Royalties Inc.'s 88-per-cent-owned subsidiary, Minera Portree de Zacatecas SA de CV (MPZ), filed a criminal lawsuit against Raul Gonzalez in 2022 for the possible criminal liability in the sale of property belonging to another (vente de cosa ajena) -- that is, attempting to transfer the ownership of a 2-per-cent royalty on the Portree claims to Capstone Copper Corp.'s Cozamin copper-silver mine. As previous requests and court-ordered site visits have been blocked by Capstone, MPZ's lawyers recently escalated this criminal lawsuit by filing a request for detailed evidence of historical production, including underground mine maps, 3-D block models, metallurgical balances, grades, concentrate weighing reports and payment data, and invoices on each of the five Portree claims at the Cozamin mine. The formal request was filed at the Public Prosecutor's Office of the State of Zacatecas in the Specialized Unit for the Investigation of the Crime of Fraud regarding case file CUI: 9367-UEI-FRAU-2022, against Raul Gonzalez Anaya for alleged fraudulent administration and specific fraud to the detriment of MPZ.

The submission demands that the Public Prosecutor compel Capstone Gold SA de CV (the Mexican operating subsidiary of Capstone Copper) to produce 14 categories of confidential underground mine documents and separately compel Metagri SA de CV (the Mexico City-based concentrate trading intermediary) to produce all payment records, pro forma settlements, bills of lading and wire transfer receipts for concentrate sold from the five Portree mining concessions.

What is being demanded -- the 14 document categories

The formally filed submission demands production of the following documents, under threat of financial penalties pursuant to Article 104(I) of the National Code of Criminal Procedure.

The Metagri demand -- tracing every dollar of concentrate sales

Separately, the submission demands that Metagri in Mexico City -- the concentrate trading intermediary identified as the entity that received and settled concentrate payments from Capstone Gold -- produce all pro forma payment statements, bills of lading, invoices and payment records for concentrate originating from the five Portree concessions. Metagri's records represent the complete financial chain from mine to smelter settlement -- precisely the documentation needed to calculate the NSR (net smelter return) royalty base on which Portree's 2-per-cent royalty accrues.

Cozamin mine sale process

Capstone Copper has retained Scotiabank Global Banking and Markets to conduct a sale process for the Cozamin mine, which has been publicly reported as valued at approximately $400-million (U.S.). Portree has formally notified Scotiabank GBM of its registered royalty obligation and the two court judgments. Portree notes that any purchaser of the Cozamin concessions will take them subject to Portree's 2-per-cent NSR royalty -- a real burden running with the land, registered at the RPM and confirmed by two courts -- together with all accumulated arrears and interest since 2019.

About Royalties Inc.

Royalties owns a 100-per-cent interest, subject to a 1.5-per-cent NSR owned as a separate asset, on the Bilbao silver-zinc-lead project located in the state of Zacatecas, Mexico.

Royalties owns 88 per cent of the outstanding shares of Minera Portree de Zacatecas (MPZ), which holds a court-confirmed claim (twice) to a 2-per-cent 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 has been mining since 2010. It attempted to assign this royalty to itself without the knowledge, consent or proper payment to MPZ, the rightful owner since 2002.

Royalties has a 5-per-cent stake in Music Royalties Inc. (MRI), which has paid out over $16-million in 79 monthly dividends since 2019 from 31 cash-flowing catalogues with 7,000 songs for a 7.2-per-cent annual after-tax yield.

We seek Safe Harbor.