Gold Royalty Corp. (NYSE American: GROY) is pleased to announce that it has entered into a binding purchase and sale agreement with OMF Fund III (Cr) Ltd., an entity managed by Orion Mine Finance Management LP to acquire a copper stream on the Vares Silver Project, operated by a subsidiary of Adriatic Metals plc located in Bosnia and Herzegovina.

Under the terms of the PSA, Gold Royalty will pay consideration to Orion of US$50 million to acquire the Stream at closing of the Transaction, consisting of US$45 million payable in cash and US$5 million to be satisfied by the issuance of 2,906,977 Gold Royalty shares.

Transaction Highlights:

• Materially accretive to Gold Royalty’s cash flow
  • The Vares Stream applies to 100% of copper production from the mining area over the Rupice deposit. The Stream has associated ongoing payments equal to 30% of the LME spot copper price, with the effective payable copper fixed at 24.5%.
  • First concentrate production at Vares occurred in February 2024 with commercial production expected in the fourth quarter of 2024.
  • Adriatic has provided production guidance of 240-300 kt of ore mined from Vares with copper grades of 0.5-0.6% in 2024. Adriatic forecasts 750-850 kt and 800-900 kt of ore mined in 2025 and 2026 respectively at grades of 0.5-0.7% Cu.
  • Gold Royalty expects to potentially further benefit from copper prices currently near all time highs.
• High-quality asset with exploration and expansion upside
  • Adriatic’s most recent guidance is targeting a mine life of 18 years with an attractive operating cost profile.
  • Mine plan is built upon the high-grade polymetallic Rupice deposit with copper expected to comprise only 2% of the life of mine revenue.
  • Studies are underway to increase annual production rates to 1 million tonnes of ore per year by 2026.
  • Adriatic has stated that the project remains open for further exploration within the existing Vares concessions.
• Aligning with a strong and proven operating team
  • Adriatic’s operating team is highly experienced.
  • Recent initiatives have improved productivity levels and advanced development supporting Adriatic’s disclosed guidance of commercial production in the fourth quarter of 2024.

David Garofalo, Chairman and CEO of Gold Royalty, commented: “With this acquisition we are adding another high-quality, long-life asset to our portfolio which we expect will meaningfully increase our revenue and cash flow on a per share basis. Vares not only provides significant near-term cash flow, but also provides potential upside through exploration and mine expansion. We welcome Orion as a strategic shareholder and look forward to further enhancing our relationship with a leading private equity firm with an exceptional track record in the global mining sector. Finally, while the Gold Royalty portfolio is still predominantly precious metals focussed, the Company expects to benefit from record copper prices through the additional copper exposure that comes with the Vares Stream.”

Overview of the Vares Silver Project

The Vares Silver Project consists of 41 km² of concession area, which is centered around the town of Vares. The town is located in the Vares municipality in Bosnia and Herzegovina and is a 50-minute drive from Sarajevo, the capital of Bosnia and Herzegovina. The Vares Operation is one of the largest investments in Bosnia and Herzegovina, bringing significant economic and social benefits to the country. The Stream applies to certain areas of Vares, including the Rupice area of the project. All mineral reserves and resources within the current Vares mine plan are from the Rupice deposit and are subject to the Stream (refer to Table 2 and Table 3).

Vares is a polymetallic project with the majority of expected production to be silver and zinc, in addition to smaller components of lead, gold, copper, and antimony. Current development and near-term production are expected from the Rupice underground mine.

The Vares Processing Plant has a nominal capacity of 800,000 tonnes per annum, and applies three-stage crushing, grinding, flotation and filtration to produce two saleable concentrates: silver-lead and zinc concentrates are expected to be transported via rail to the Port of Ploče for shipment to smelters. The silver-lead concentrate contains payable silver, lead, zinc, copper and gold. The zinc concentrate contains payable zinc, silver, and gold. Both the Rupice Mine and Vares Processing Plant have been designed and constructed using the latest technology from the leading manufacturers in the industry, whilst adhering to the highest levels of health and safety.

On January 24, 2024, Adriatic announced its maiden production guidance for 2024, 2025 and 2026 following an updated reserve announcement in December 2023. The guidance is based on successful extension and exploration drilling, mine optimization work and advancing higher grade development at Rupice and Rupice Northwest. Such guidance consisted of the 2024 ramp-up and future life of mine averages:

Table 1 – Adriatic Production Guidance for the Vares Silver Project

Table 2 – Rupice Deposit Mineral Reserves (as announced on December 20, 2023)

Mineral Reserves Notes:

• The Mineral Reserve has been prepared by Adriatic reported in accordance with the requirements of ASX Listing Rule 5.8 and the JORC Code and is not a current mineral resource estimate prepared under SK-1300.
• For the mineral reserves, metal prices of US$23.00/oz Ag, US$2,450/t Zn, US$2,280/t Pb, US$8,335/t Cu, US$1,912/oz Au and US$11,525/t Sb were used.
• A mining cost of US$35/t was used for the cost model, all other costs remained as per the previous definitive feasibility study disclosed by Adriatic;
• As there was no measured mineral resource, no proven ore reserves were estimated.
• During the stope optimization process, a maximum of 5% inferred material is allowed to be included in individual stope shapes;
• Overall, less than 1% of the Ore Reserve is in the inferred category;
• Any inferred material was given a zero grade;
• No stoping had taken place at the cut-off date of this report and while development stockpiling has commenced, volumes are not sufficient for any reasonable grade reconciliation to commence;
• The estimated reserves were reported on a 100% basis; and
• A cut-off is applied using a net smelter return of US$68/t ore.

Table 3 – Rupice Deposit Mineral Resource Estimate (as announced on July 27, 2023)

Mineral Resource Estimate Notes:

• The Mineral Resource Estimate has been prepared by Adriatic reported in accordance with the requirements of ASX Listing Rule 5.8 and the JORC Code and is not a current mineral resource estimate prepared under SK-1300.
• A cut-off grade of 50 g/t silver equivalent was applied.
• Silver equivalent (AgEq) –was calculated using conversion factors of 31.1 for Zn, 24.88 for Pb, 80.0 for Au, 1.87 for BaSO4, 80.87 for Cu, 80.87 for Sb, and recoveries of 90% for all elements. Metal prices used were US$2,500/t for Zn, US$2,000/t for Pb, US$150/t for BaSO4, US$2,000/oz for Au, US$25/oz for Ag, US$6,500/t for Sb and US$6,500 for Cu.
• The applied formula was: AgEq = Ag(g/t) x 90% + 31.1 x Zn(%) x 90% + 24.88 x Pb(%) * 90% + 1.87 x BaSO4% x 90% + 80 x Au(g/t) x 90% + 80.87 x Sb(%) x 90% + 80.87 x Cu(%) x 90%
• Adriatic disclosed that it was the opinion that all elements and products included in the metal equivalent formula have a reasonable potential to be recovered and sold.
• Metallurgical recoveries of 90% have been applied in the metal equivalent formula based on recent and ongoing test work results.
• A bulk density (BD) was calculated for each model cell based on its domain, using regression formulas. For the Main zone: BD = 2.66612 + BaSO4 x 0.01832 + Pb x 0.03655 – Zn x 0.02206 + Cu x 0.09279 for the barite high-grade domain, BD = 2.72748 + BaSO4 x 0.02116 + Pb * 0.04472 + Zn x 0.01643 – Cu x 0.08299 for the barite low-grade domain; and for the NW zone: BD = 2.92581 + BaSO4 x 0.01509 + Pb x 0.04377 – Zn x 0.02123 + Cu x 0.10089 for the barite high-grade domain, BD = 2.74383 + BaSO4 x 0.01731 + Pb x 0.04573 + Zn x 0.02023 – Cu x 0.06041 for the barite low-grade-domain (the barite domains were interpreted using 30% BaSO4 cut-off).
• Rows and columns may not add up due to rounding.

For further information regarding the Vares Project and the above estimates and guidance, please refer to Adriatic’s company announcements dated January 24, 2024, December 20, 2023, July 27, 2023, August 19, 2021, available under its profile at www.sedarplus.ca.

Transaction Funding

The Company expects to fund the acquisition by means of its announced equity offering and borrowings under its revolving credit facility. Gold Royalty has entered into an amendment to its credit agreement with the Bank of Montreal and the National Bank of Canada to expand its existing secured revolving credit facility by US$5 million in connection with the Transaction. As amended, the expanded credit facility will consist of a US$30 million secured revolving credit facility with an accordion feature providing for an additional US$5 million of availability subject to certain conditions. Such amendment is subject to, among other things, closing of the Transaction and the satisfaction of customary conditions.

About Gold Royalty Corp.

Gold Royalty Corp. is a gold-focused royalty company offering creative financing solutions to the metals and mining industry. Its mission is to invest in high-quality, sustainable, and responsible mining operations to build a diversified portfolio of precious metals royalty and streaming interests that generate superior long-term returns for our shareholders. Gold Royalty’s diversified portfolio currently consists primarily of net smelter return royalties on gold properties located in the Americas.

Qualified Person

Alastair Still, P.Geo., Director of Technical Services of the Company, is a “qualified person” as such term is defined under Canadian National Instrument 43-101 and has reviewed and approved the technical information disclosed in this news release.