Royalties Inc. Seizes Legal Triumph Over Capstone, Unlocks $25M+ Royalty Stream in Strategic Sector Expansion

In a landmark ruling that redefines the royalty sector's landscape, Royalties Inc. has secured a decisive legal victory over Capstone Copper Corp., unlocking a $25 million+ valuation potential for its 2% net smelter royalty (NSR) on the Cozamin Mine's Portree claims. The June 16, 2025, decision by Zacatecas' Third Commercial Court not only invalidated Capstone's unauthorized 2019 contract but also affirmed the company's ownership of a royalty stream tied to one of Mexico's most productive copper-silver deposits. This ruling, coupled with strategic portfolio diversification and rising commodity prices, positions Royalties Inc. as a compelling long-term investment in the high-margin royalty sector.

Legal Victory: A Foundation for Revenue Stability

The court's rejection of Capstone's 2019 contract—signed without Minera Portree's consent—restores Royalties Inc.'s entitlement to a 2% NSR on five mining concessions, including the Mala Noche Footwall Zone (MNFZ). This zone accounts for 30% of the 1.5 km strike length at the Cozamin Mine, which has been Capstone's primary production hub since 2017. By invalidating the 2019 assignment, the court reinforced the sanctity of the 2002 original contract, which explicitly prohibited transfers without MPZ's consent.

The ruling's financial implications are staggering. Royalties Inc. estimates the 2% NSR could generate $2.5 million in annual cash flow and $9 million in retroactive payments for production since 2019. While Capstone's appeal remains unresolved, the company's refusal to provide production data—a procedural delay the court has already acknowledged—only strengthens MPZ's position. The deferral of quantification to the execution phase aligns with Mexican legal precedent, ensuring Royalties Inc. retains leverage in determining final payouts.

Strategic Positioning: Diversification and Sector Synergy

Beyond the Capstone dispute, Royalties Inc. has leveraged its legal momentum to strengthen its asset portfolio. A recent equity swap with Music Royalties Inc. increased its stake to 4 million shares, generating $144,000 in annual dividends. This move diversifies revenue streams, reducing reliance on a single mining asset. Meanwhile, the company's focus on copper and silver—critical to AI and green energy infrastructure—aligns with a $1.2 trillion global market expected to grow at 7.5% CAGR through 2030.

The Cozamin Mine itself underscores this strategic foresight. With copper prices up 40% year-to-date and silver surging 35% due to EV battery demand, the 2% NSR's value has ballooned. Independent geological assessments suggest the NSR's total value could exceed $25 million, factoring in Capstone's 2024 royalty payments of $4.4 million to other holders. This positions Royalties Inc. to capitalize on a sector where royalty assets trade at 15–20x cash flow multiples, far outpacing traditional mining equities.

Future Growth: Legal Certainty and Market Dynamics

Capstone's appeal, while a near-term headwind, is unlikely to derail Royalties Inc.'s trajectory. The company's legal team has effectively countered Capstone's arguments, emphasizing the invalidity of the 2019 contract and the Commercial Code's deference to execution-phase quantification. With a final ruling expected by year-end, investors can anticipate a swift resolution.

Longer-term, the victory cements Royalties Inc.'s reputation as a sector innovator. The company's ability to enforce contractual rights in Mexico—a jurisdiction historically challenging for foreign investors—demonstrates operational rigor. This credibility could attract partnerships with junior miners seeking royalty financing, a $5 billion market segment expanding as exploration budgets rise.

Investment Thesis: High-Conviction Play in a High-Margin Sector

Royalties Inc. offers a rare combination of legal certainty, asset specificity, and sector tailwinds. At a current market cap of $120 million, the company trades at a discount to its intrinsic value, assuming the 2% NSR generates $2.5 million in annual cash flow (10x multiple = $25 million valuation). With Capstone's Cozamin Mine projected to produce 150,000 ounces of silver and 100 million pounds of copper annually, the NSR's upside is substantial.

For investors, the key risks include Capstone's appeal outcome and production data transparency. However, the company's proactive legal defense and Capstone's admission of mining activity since 2019 mitigate these concerns. A buy recommendation is warranted for those seeking exposure to a royalty play with clear catalysts and a defensible moat.

Conclusion: A Catalyst-Driven Opportunity

Royalties Inc.'s legal triumph over Capstone is more than a courtroom win—it's a strategic inflection point. By securing a high-margin royalty on a critical green energy asset and diversifying its portfolio, the company has positioned itself to outperform in a sector poised for explosive growth. As copper and silver prices climb and AI-driven demand accelerates, Royalties Inc. stands to deliver outsized returns for shareholders who recognize the value of legal clarity and operational discipline.

For investors with a 3–5 year horizon, this is a high-conviction opportunity to capitalize on the next phase of the royalty sector's evolution.