Mr. Tim Gallagher reports

ROYALTIES INC. REPORTS Q3 RESULTS FOR SEPTEMBER 30, 2023

Royalties Inc. has released its results for the third quarter ended Sept. 30, 2023. Amounts are stated in U.S. dollars unless otherwise stated.

This news release should be read in conjunction with the company's interim financial statements and the associated management's discussion and analysis (MD&A) for the third quarter ended Sept. 30, 2023, which are available on the company's website or under the company's profile on SEDAR+.

Significant events in 2023

On April 12, 2023, the company completed both a name change and a change of business to a diversified royalties company in order to refocus its operations from mining exploration to a company focused on cash-flow-generating royalty opportunities. The company has acquired five cash-flowing music royalties over the last year, generating approximately $100,000 ($136,000 (Canadian)) per year. Royalties made a $721,400 ($1-million (Canadian)) investment in September, 2022, in Music Royalties Inc. (MRI), a private company that has acquired 27 catalogues and paid out over $7-million (Canadian) to its shareholders since 2019. MRI is currently paying a monthly dividend of $6,000 (Canadian) to Royalties, generating a 7.2-per-cent annual yield. Royalties has received $46,766 ($63,000 (Canadian)) in dividend income from MRI over the last 12 months and expects to receive $48,885 ($66,000 (Canadian)) for 2023.

In 2023, the company acquired four music royalties catalogues for $339,472, which are expected to generate $47,000 for a 14-per-cent yield as follows.

On Jan. 9, 2023, MRI advanced the company cash to purchase $137,900 of royalty assets comprising new message alert tones, which generated $21,323 for a 15-per-cent yield in 2022, paid monthly. The acquisition included 415 tracks, for a term of author life of rights plus 70 years. Alert tone royalties are short-message-based ring tones that are generated from consumer downloads on the Apple iTunes ring tone store on iPhones.

On May 11, 2023, the company invested $18,532 ($25,000 (Canadian)) through the issuance of 500,000 shares at five Canadian cents per share in order to participate in a 300-song catalogue generating a 9-per-cent yield, paid by royalty distributors SOCAN (the Society of Composers, Authors and Music Publishers of Canada) and Universal Music Publishing Group (UMPG).

On May 17, 2023, the company completed an acquisition for $53,000, generating a 9-per-cent yield of an American songwriter's public performance royalties, consisting of 103 tracks performed by artists including Backstreet Boys, Marshmello and Anarbor, and including top songs Ritual, It's Christmas Time Again, White Flag and 18.

On June 13, 2023, the company acquired $130,000 of music royalty assets with an expected 15-per-cent yield for a term of 9.3 years for sound recordings of television cues from the five-season show The Carbonaro Effect on TruTV, paid by royalty distributor American Society of Composers, Authors and Publishers (ASCAP).

Royalties also owns two mining royalties with significant potential value. One on its Bilbao property tied to the eventual breakout of the silver price. The other is from the litigation against a subsidiary of Capstone Copper Corp. in Zacatecas, Mexico, to reinstate a 2-per-cent NSR (net smelter return) royalty on the Portree claims where key witnesses were deposed in September and October, followed by a court-ordered mine site inspection in November. The timing and the outcome of the lawsuit are uncertain.

Results of operations

The company recorded dividend income from MRI for the three and nine months ended Sept. 30, 2023, totalling $13,422 and $35,721, respectively ($18,000 (Canadian) and $48,000 (Canadian)) (Sept. 30, 2022 -- nil and nil). For the three and nine months ended Sept. 30, 2023, the company received royalty income from its music royalty assets held of $11,221 and $21,644, respectively (Sept. 30, 2022 -- nil and nil).

For the three and nine months ended Sept. 30, 2023, the company recorded a loss of $64,539 and $110,406 or nil and 0.1 cent per share, respectively, primarily due to audit fees, tax return filings and Mexico expenses of $35,540 and $77,090, respectively (Sept. 30, 2022 -- $27,504 and $44,872).

Assets and liquidity

The book value of total assets as at Sept. 30, 2023, was $1,318,382, compared with $949,103 as at Dec. 31, 2022. Since 2008, the company has invested $23,369,294 on its Bilbao mineral project, which, in accordance with the company's accounting policies, has been fully impaired, based on the 2014 PEA (preliminary economic assessment) assumption of a minimum price of $30 (U.S.) per ounce silver.

As at Sept. 30, 2023, the company had cash of $41,463 to settle current liabilities of $101,687, excluding the $2-million contingent liability of a subsidiary.

About Royalties Inc.

Royalties has a 2-per-cent stake in MRI, a Canadian-based private company that acquires passive music royalties from rights holders (including, but not limited to, artists, producers and songwriters) and currently holds a portfolio of approximately 27 cash-flowing music royalties.

Royalties owns a 100-per-cent interest, subject to a 1.5-per-cent net smelter return royalty repurchased in July, 2019, on the Bilbao silver-lead-zinc-copper project, located in the southeastern part of the state of Zacatecas, Mexico.

Royalties owns 88 per cent of the outstanding shares of Minera Portree de Zacatecas S.A. de C.V., which holds an asserted claim to a 2-per-cent net smelter return royalty on six mining concessions, which are part of the Cozamin mine, operated by Capstone Copper Corp., which claim is challenged by Capstone.

We seek Safe Harbor.