Royalties Inc. Reports Federal Prosecutor Recommends Denying Capstone's Amparo

Core Viewpoint - Royalties Inc. is optimistic about the resolution of a legal dispute regarding royalty payments owed by Capstone Gold, which could lead to the collection of approximately US$10 million in royalties owed to Minera Portree de Zacatecas S.A. de C.V. (MPZ) for the years 2019-2026 [1][4]. Legal Proceedings - The Federal Prosecutor has formally opposed Capstone Gold's constitutional challenge (Amparo) against a ruling that upheld MPZ's royalty rights, indicating that the state court's decision is sound and should be confirmed [1][4]. - The dispute centers around a 2% royalty claim related to five mining concessions at the Cozamin mine, with the courts affirming MPZ's entitlement to royalties based on a 2002 agreement [2][3]. Financial Implications - The estimated value of the royalties owed to MPZ is around US$10 million, excluding interest and damages, with the potential for future revenues from the Cozamin mine reaching US$400 million, translating to US$8 million in annual royalty payments [4][5]. - If Capstone had been paying the royalties since 2019, MPZ's market cap could have been valued at US$100 million, reflecting the significant economic impact of the delayed payments [5]. Future Prospects - The copper price has more than doubled and the silver price has quadrupled since 2019, enhancing the future value of the royalties owed to MPZ [4]. - The Cozamin mine's future royalty obligations are expected to exceed the materiality threshold set by Capstone's auditors and attract investor interest, especially if mining operations continue to expand [4][5]. Company Background - Royalties Inc. holds an 88% stake in MPZ, which has a confirmed claim to a 2% net smelter return (NSR) established in 2002 on the Portree claims, a significant portion of which is located at the Cozamin mine [10].