{"url_path":"/sec/tmcr/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-04-27","source_url":"https://www.sec.gov/Archives/edgar/data/2087398/0001104659-26-049527-index.html","accession_number":"0001104659-26-049527","cik":"0002087398","ticker":"TMCR","issuer_name":"Metals Royalty Co Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/2087398/0001104659-26-049527-index.html","primary_entity_key":"0002087398","primary_entity_name":"Metals Royalty Co Inc."},"word_count":7007,"has_tables":true,"body_markdown":"**ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS**\n\n*You should read the following discussion and analysis of our financial condition and results of operations together with our audited financial statements prepared in accordance with IFRS. This discussion contains forward-looking statements that involve significant risks and uncertainties. Our actual results, performance and achievements could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below. All amounts are shown in U.S. dollars unless otherwise indicated*\n\n**Overview**\n\nThe Company is engaged in the acquisition and management of critical metal and mineral royalties, streams and other similar interests. The Company is focused on providing capital to support mineral security and independence in North America in support of accelerating domestic industry growth, including energy, defense and re-industrialization. The Company aims to focus on capital development opportunities encompassing all aspects of the critical metals and minerals value chain. The Company commenced operations in October 2022 as a British Columbia corporation named Low Carbon Royalties Inc. In September 2025, the Company changed its name to The Metals Royalty Company Inc.\n\n​\n\n49\n\n[Table of Contents](#TOC)\n\nOur royalty-based business model is designed to enable us to participate in the long-term potential cash flows and commodity upside of large-scale, strategically significant critical metals and mineral assets, with reduced exposure to operational, development, or environmental risks typically associated with resource production operations. The Company’s core and only asset is a 2.00% gross-overriding royalty (“GORR”) from The Metals Company Inc.’s (“TMC”) wholly owned subsidiary, Nauru Ocean Resources, Inc. (“NORI”). We believe we are well-positioned to benefit from growth in global demand for critical metals and minerals, and the needs of operators for alternative sources of financing to fund their mining and extraction operations.\n\nIn August 2025, we entered into the Contribution Agreement, as amended in December 2025, with a former subsidiary, 1554997 B.C. Ltd., to contribute our royalties in respect of NG Energy International Corp.’s operations (the “Oil and Gas Royalties”) to 1554997 B.C. Ltd. in anticipation of distributing the shares of 1554997 B.C. Ltd. to our existing shareholders as a return of capital (the “Spin-Out”). The Spin-Out was consummated on December 18, 2025, and we no longer have any interest in the Oil and Gas Royalties business.\n\nIn connection with the Spin-Out, we met the criteria for classifying the Oil and Gas Royalties business as a discontinued operation as of September 30, 2025. Accordingly, unless otherwise indicated, the results of operations have been adjusted for all periods presented to present the Oil and Gas Royalties business as discontinued operations.\n\nPrior to the Spin-Out, our portfolio consisted of metals and minerals and oil and gas royalty and streaming assets. Following the Spin-Out, our metals and minerals royalty and streaming assets consist of the NORI royalty.\n\nWe do not conduct exploration, development or mining operations on the properties in which we hold interests and we are not required to contribute additional capital costs, exploration costs, environmental costs or other operating costs on these properties.\n\nOn March 23, 2026, the Nasdaq granted conditional approval to list our common shares under the symbol TMCR.\n\n**Historical Royalty Portfolio**\n\nThe discussion below includes a description of our royalty interest portfolio prior to the Spin-Out.\n\n**TMC (Exploration — Critical Minerals — NORI (CZZ)) — 2.00% GORR**\n\nIn Q3 2024, TMC announced the successful commercial-scale processing of polymetallic nodules, producing calcine.\n\nIn April 2025, TMC submitted its application for Commercial Recovery of Deep-Sea Minerals in the High Seas under the US Seabed Mining Code.\n\nIn May 2025, TMC announced a $37 million equity investment from strategic investors.\n\nIn June 2025, TMC announced a $85.2 million strategic investment from Korea Zinc, a world-leader in non-ferrous metal refining and pCAM technology to advance development of deep-seabed critical minerals for the United States.\n\nIn August 2025, TMC announced receipt of notice of full compliance from the National Oceanic and Atmospheric Administration (“NOAA”) on its exploration application and reconfirmation that TMC USA has priority right over both exploration areas. In conjunction with this announcement, TMC announced the world’s first mining reserves for a seafloor polymetallic nodule project with 51 million tonnes (Mt) of probable mineral reserves and expected commercial production to commence in the fourth quarter of 2027.\n\nIn January 2026, TMC USA submitted a consolidated application for an exploration license and commercial recovery permit under NOAA’s updated regulatory framework.\n\n**Maria Conchita (Producing — Natural Gas — Colombia) — 3.125% GORR**\n\nOn March 25, 2024, NG Energy announced the closing of a debt financing for up to US$100.0 million and an initial advance of US$40.0 million from Macquarie Group to refinance existing debts outstanding and advance the development of its Maria Conchita Block and SN-9 Block.\n\n50\n\n[Table of Contents](#TOC)\n\nIn April 2024, NG Energy announced it entered into additional natural gas offtake agreements ranging from three to five years with creditworthy counterparties at undisclosed prices.\n\nIn August 2025, NG Energy announced it commenced drilling the Aruchara-4 well at its Maria Conchita Block.\n\n**Sinu-9 (Producing — Natural Gas — Colombia) — 1.44% GORR**\n\nIn August 2024, NG Energy announced the commissioning of the 28.3 kilometer pipeline at Sinu-9.\n\nIn September 2024, NG Energy announced the closing of a $30.0 million (CAD) private placement common share financing with a use of proceeds to advance the development of Sinu-9.\n\nIn November 2024, the first natural gas sales at Sinu-9 were reported by NG Energy.\n\nIn early 2025, NG Energy announced the sale of a 40% operating working interest of the Sinu-9 block to an affiliate of Maurel & Prom S.A. for cash consideration of US$150.0 million to help accelerate the development of the natural gas resources at Sinu-9.\n\nIn April 2025, NG Energy announced it achieved steady production volumes in excess of 10 MMcf/d from its Magico-1X and Brujo-1X wells at Sinu-9, and successful delivery of natural gas to the Promigas National Transportation System.\n\nIn July 2025, NG Energy, with Maurel & Prom S.A., announced the acquisition of the minority working interests (28%) at Sinu-9 with NG Energy purchasing 7% and Maurel & Prom S.A. purchasing 21%. The working interest acquisitions are expected to close simultaneously with the previously announced Maurel & Prom S.A. transaction announced in early 2025.\n\nIn August 2025, NG Energy announced gross production at Sinu-9 had reached 22 MMcf/d.\n\n**Results of Operations**\n\nComparison of the Years Ended December 31, 2025 and December 31, 2024\n\nThe following table summarizes our results of operations for the year ended December 31, 2025 and 2024. These results take into consideration the classification of the Oil and Gas Royalties business as a discontinued operation.\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**December 31,**\n\n**  ​ ​ ​**\n\n**December 31,**\n\n**  ​ ​ ​**\n\n​\n\n​\n\n**For the years ended,**\n\n​\n\n**2025**\n\n​\n\n**2024**\n\n​\n\n**Change**\n\n**Operating expenses**\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nGeneral and administrative expenses\n\n​\n\n$\n\n6,067,900\n\n​\n\n$\n\n870,750\n\n​\n\n$\n\n5,197,150\n\nShare-based compensation expenses\n\n​\n\n \n\n640,207\n\n​\n\n \n\n338,229\n\n​\n\n \n\n301,978\n\nTotal operating expenses\n\n​\n\n \n\n6,708,107\n\n​\n\n \n\n1,208,979\n\n​\n\n \n\n5,499,128\n\nOperating loss\n\n​\n\n \n\n(6,708,107)\n\n​\n\n \n\n(1,208,979)\n\n​\n\n \n\n(5,499,128)\n\nInterest income\n\n​\n\n \n\n244,467\n\n​\n\n \n\n57,906\n\n​\n\n \n\n186,561\n\nLoss from continuing operations before income taxes\n\n​\n\n \n\n(6,463,640)\n\n​\n\n \n\n(1,151,073)\n\n​\n\n \n\n(5,312,567)\n\nIncome tax (expense) / recovery from continuing operations\n\n​\n\n \n\n(380,170)\n\n​\n\n \n\n293,969\n\n​\n\n \n\n(674,139)\n\nNet loss from continuing operations\n\n​\n\n \n\n(6,843,810)\n\n​\n\n \n\n(857,104)\n\n​\n\n \n\n(5,986,706)\n\nNet income from discontinued operations\n\n​\n\n \n\n7,959,161\n\n​\n\n \n\n573,828\n\n​\n\n \n\n7,385,333\n\n**Net income / (loss) and comprehensive income / (loss)**\n\n​\n\n$\n\n1,115,351\n\n​\n\n$\n\n(283,276)\n\n​\n\n$\n\n1,398,627\n\n​\n\nOperating expenses\n\nOperating expenses consists of general and administrative expenses and share-based compensation expenses. General and administrative expenses increased by $5.2 million from $0.9 million for the year ended December 31, 2024 to $6.1 million for the year ended December 31, 2025. The increase was primarily due to the following factors:\n\n●One-time direct listing costs of approximately $1.6 million, which includes incremental legal fees associated with the preparation and review of our registration statement, third-party service providers for accounting support, as well as additional audit and consent letter fees incurred with the registration process;\n\n51\n\n[Table of Contents](#TOC)\n\n●Legal and accounting fees increased by $1.6 million, primarily reflecting fees paid to external accounting consultants engaged to assist with the preparation of financial statements for the years ended December 31, 2024 and 2023, and the nine month period ended September 30, 2025, in connection with our direct listing. In addition, the Company incurred audit fees performed by our independent registered public accounting firm;\n\n●Personnel costs increased by $1.4 million, primarily due to hiring personnel to support the Company’s growth strategy, our obligations as a public company, as well as incentive compensation accrued during the period; and\n\n●Office and administrative expenses increased by $0.5 million, largely due to higher travel and investor relations costs.\n\nShare-based compensation expenses increased by $0.3 million due to additional equity grants issued in the fourth quarter of 2025. There were no equity grants in 2024.\n\nRecovery of income taxes from continuing operations\n\nDuring the year ended December 31, 2025, we recognized a deferred tax expense of $0.4 million related to the temporary difference associated with the TMC royalty and streaming interest, partially offset by the temporary difference associated with non-capital losses. During the year ended December 31, 2024, we recognized a deferred tax recovery of $0.3 million related to continuing operations in equal amounts to the deferred tax expense related to discontinued operations.\n\nDiscontinued operations\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**December 31,**\n\n**  ​ ​ ​**\n\n**December 31,**\n\n**  ​ ​ ​**\n\n​\n\n​\n\n**For the years ended,**\n\n​\n\n**2025**\n\n​\n\n**2024**\n\n​\n\n**Change**\n\nRoyalty income\n\n​\n\n$\n\n1,118,283\n\n​\n\n$\n\n1,458,739\n\n​\n\n$\n\n(340,456)\n\nDepletion\n\n​\n\n \n\n(156,908)\n\n​\n\n \n\n(590,942)\n\n​\n\n \n\n434,034\n\nGain on spin-out of assets\n\n​\n\n \n\n6,617,616\n\n​\n\n \n\n—\n\n​\n\n \n\n6,617,616\n\nIncome from discontinued operations before income taxes\n\n​\n\n \n\n7,578,991\n\n​\n\n \n\n867,797\n\n​\n\n \n\n6,711,194\n\nRecovery / (Provision) of income taxes\n\n​\n\n \n\n380,170\n\n​\n\n \n\n(293,969)\n\n​\n\n \n\n674,139\n\nNet income from discontinued operations\n\n​\n\n$\n\n7,959,161\n\n​\n\n$\n\n573,828\n\n​\n\n$\n\n7,385,333\n\n​\n\nDiscontinued operations consists of royalties earned from the sale of commodities that underly royalty rights related to the Oil and Gas Royalties business, less depletion, plus the gain on the spin-out of assets, net of income taxes. Royalty income decreased by $0.3 million from $1.5 million for the year ended December 31, 2024 to $1.1 million for the year ended December 31, 2025 due to decreased production of natural gas and slightly offset by an increase in natural gas prices in Colombia. Depletion decreased by $0.4 million from $0.6 million for the year ended December 31, 2024 to $0.2 million for the year ended December 31, 2025 primarily due to the decreased production of natural gas, and the classification of the Oil and Gas Royalties assets as held for sale at September 30, 2025. Additionally, the Oil and Gas Royalties business recognized a deferred tax recovery of $0.4 million as a result of a decrease in the deferred tax liability for the Oil and Gas Royalties business.\n\n**Liquidity and Capital Resources**\n\nSince our inception, we have incurred operating losses. Our source of liquidity is cash generated from equity issuances. During the year ended December 31, 2025, the Company raised $22.8 million from the issuance of common shares.\n\nOur working capital and liquidity position as at December 31, 2025 consists of current assets of $18.9 million, including cash of $18.4 million, and $17.1 million of net working capital. This compares to current assets of $1.7 million, including cash of $1.4 million, and $1.6 million of net working capital, as of December 31, 2024.\n\nWe expect our expenses to increase in connection with our ongoing activities, as we plan to hire additional staff and incur substantial accounting and compliance costs associated with becoming a public company.\n\n​\n\n52\n\n[Table of Contents](#TOC)\n\nUntil such time that we can generate royalty revenue sufficient to achieve profitability, we expect to finance our cash needs through equity offerings or debt offerings. Even if we do achieve profitability, we may finance additional royalty or other interests through these means. To the extent that we raise additional capital through the sale of common shares, convertible securities or other equity securities, current ownership interests will be diluted. If we raise additional funds through debt financing, if available, this may result in fixed payment obligations and may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures, creating liens, redeeming shares or declaring dividends, that could adversely impact our ability to conduct our business. We may be required to raise additional funds when needed through the issuance of equity or debt and if we are unable to raise additional funds when needed, it will have an adverse impact on our business.\n\nBased on anticipated cash on hand, and the financing proceeds associated with converting the subscription receipts into common shares of the Company, the Company anticipates having sufficient cash to fund operations through the fourth quarter of 2027, when the first production from the NORI Area D is anticipated.\n\nIn July 2025, the Company entered into a subscription receipt agreement with Odyssey Trust Company (“Odyssey”), as amended on December 17, 2025, providing for the issuance of up to 4,000,000 subscription receipts at $5.00 per share for a total consideration of $20.0 million, which is held in escrow by Odyssey. Upon receipt of conditional approval for the public listing of the Company’s shares on a national stock exchange prior to March 31, 2026, the subscription receipts will automatically convert to common shares and the Company will be entitled to the cash proceeds. If the Company does not meet the escrow release requirements, namely written confirmation of conditional approval from a national stock exchange in connection with the public listing of the Company and delivery of a release notice to Odyssey by the Company certifying that the release conditions have been achieved prior to March 31, 2026, the cash proceeds held by Odyssey and any interest earned will be returned to the investors. During the year ended December 31, 2025, $15.7 million of gross proceeds was received by Odyssey related to 3,134,481 subscriptions receipts sold under this arrangement. The subscription receipt agreement operates as a forward contract for the issuance of shares. Upon receipt of conditional approval for the public listing of the Company’s shares prior to March 31, 2026, the Company is obligated to issue a fixed number of shares for a fixed amount of cash, therefore the instruments will be equity classified. All proceeds were paid directly to Odyssey and only upon the public listing of the Company’s shares and the release of the proceeds from escrow will the Company record the issuance of the common shares and receipt of the financing proceeds. The Company does not have significant decision making authority in directing the activities of the escrow agent and does not have significant risks and rewards associated with the cash proceeds. The Company only has the ability to obtain the economic benefits that flows from investing the cash if the Company meets the escrow release requirements. Accordingly, as of December 31, 2025, the proceeds from the subscription receipts are not reflected as an asset and corresponding liability in the Company’s financial statements. On March 23, 2026, the Nasdaq granted conditional approval to list our common shares. As a result, the escrow release requirements were met and 3,134,481 subscription receipts were automatically exchanged into common shares of the Company. Upon release of the proceeds from escrow by Odyssey, the Company received gross proceeds of $15.7 million and interest income of $0.2 million earned on the subscription receipts.\n\nIn July 2025, the Company entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, LTD. (“Yorkville”). Under the SEPA, upon the public listing of the Company’s shares and the close of the subsequent receipt financing, Yorkville is committed to buying up to $100.0 million of the Company’s common shares during the 36 months following the effective date of the SEPA. The Company, at its sole discretion, has the right, but not the obligation, to sell to Yorkville common shares at 96% – 97% of market price. The obligation to purchase shares is limited by i) Yorkville’s ownership limitation of 4.99% of the common shares ii) the number of registered common shares of the Company, and iii) the shares issued under the SEPA cannot exceed 19.99% of the issued and outstanding common shares of the Company. As of December 31, 2025, the Company does not have the ability to exercise its right to issues shares as the public listing of the Company’s common shares has not yet occurred. Upon the public listing of the Company’s shares, the Company will owe to Yorkville a $1.0 million commitment fee, payable in shares of common stock or cash, at the Company’s election.\n\nIn our opinion, our working capital is sufficient for our present requirements.\n\n53\n\n[Table of Contents](#TOC)\n\n**Summary of Cash Flows**\n\nThe following table provides information regarding our cash flows for the periods presented:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Year Ended** \n\n​\n\n​\n\n**December 31,**\n\n​\n\n  ​ ​ ​\n\n**2025**\n\n​\n\n**2024**\n\nNet cash provided by (used in):\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nOperating activities\n\n​\n\n$\n\n(3,233,596)\n\n​\n\n$\n\n537,784\n\nInvesting activities\n\n​\n\n \n\n(14,279)\n\n​\n\n \n\n—\n\nFinancing activities\n\n​\n\n \n\n20,219,245\n\n​\n\n \n\n—\n\nNet increase in cash\n\n​\n\n$\n\n16,971,370\n\n​\n\n$\n\n537,784\n\n​\n\nOperating Activities\n\nDuring the year ended December 31, 2025, operating activities used $3.2 million in cash, primarily due to a net loss from continuing operations of $6.8 million, offset by cash flows from discontinued operations of $1.5 million, working capital changes of $1.5 million, and non-cash charges of $0.6 million for share-based compensation.\n\nDuring the year ended December 31, 2024, operating activities provided $0.5 million in cash, primarily due to a net loss from continuing operations of $0.9 million and non-cash charges of $0.3 million of deferred tax assets, offset by non-cash charges of $0.3 million for share-based compensation and cash flows from discontinued operations of $1.4 million.\n\nInvesting Activities\n\nDuring the year ended December 31, 2025, investing activities of $14 thousand was related to the purchase of computer equipment.\n\nThere were no investing activities during the year ended December 31, 2024.\n\nFinancing Activities\n\nDuring the year ended December 31, 2025, net cash provided by financing activities of $22.8 million related to proceeds received from sales of common shares offset, partially offset by the Spin-Out of 1554997 BC Ltd. and a return of capital of $1.1 million.\n\nThere were no financing activities during the year ended December 31, 2024.\n\n**Contractual Obligations and Other Commitments**\n\nAs of December 31, 2025 and December 31, 2024, we did not have any payments due over the succeeding five-year period pursuant to any contractual obligations.\n\n**Off-Balance Sheet Arrangements**\n\nDuring the periods presented we did not have, nor do we currently have, any off-balance sheet arrangements as defined in the rules and regulations of the SEC.\n\n**Related Party Transactions**\n\nRelated party transactions include transactions with directors and executives who represent key management personnel. Refer to Note 10 “Related Party Disclosures” of our annual financial statements and the accompanying notes.\n\n54\n\n[Table of Contents](#TOC)\n\n**Critical Accounting Estimates**\n\nThe preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Therefore, actual results may differ from these estimates and assumptions.\n\n*Asset Acquisitions*\n\nAsset acquisitions are recorded at cost, which can include cash consideration and common share consideration. The cost basis of asset acquisitions are based on the estimated fair value of the consideration paid unless the estimated fair value of the acquired assets is considered more reliable. When asset acquisitions are included in the same arrangement as other assets or services, the estimated fair value of the acquired assets and services is used to allocate the consideration paid on a relative fair value basis if fair value can be reliably estimated for all of the assets and services. Otherwise, the estimated fair value for the more reliably estimated component is used, with the residual value allocated to the other component. For those asset acquisitions measured based on the estimated fair value of the consideration paid, changes in the assumptions of the fair value of common shares may materially affect the initial recognition amount for transactions that include common share consideration. For those asset acquisitions measured based on the estimated fair value of the acquired assets, changes in the assumptions of the fair value of those assets may materially affect the initial recognition amount.\n\n*Depletion*\n\nRoyalty and streaming interests comprise a large component of the Company’s assets and, as such, the reserves and resources of the properties to which the interests relate have a significant effect on the Company’s financial statements. These estimates are applied in determining the depletion of, and assessing the recoverability of, the carrying value of royalty and streaming interests. The public disclosures of reserves and resources that are released by the operators of the interests involve assessments of geological and geophysical studies and economic data and the reliance on a number of assumptions, including the estimated number of units of proved plus probable reserves. These assumptions are, by their very nature, subject to interpretation and uncertainty.\n\nThe estimates of reserves and resources may change based on additional knowledge gained subsequent to the initial assessment. Changes in the estimates of reserves and resources may materially affect the recorded amounts of depletion and the assessed recoverability of the carrying value of royalty and streaming interests.\n\n*Impairment and reversal of impairment of royalty and streaming interests*\n\nAssessment of impairment and reversal of impairment of royalty and streaming interests at the end of each reporting period requires the use of judgments, assumptions and estimates when assessing whether there are any indicators that give rise to the requirement to conduct an impairment or impairment reversal analysis on the Company’s royalty and streaming interests. Indicators which could trigger an impairment or impairment reversal analysis include, but are not limited to, a significant adverse or beneficial change in operator reserve and resource estimates, operating status, change in permitting and concession rights, industry or economic trends, current or forecasted commodity prices, and other relevant operator information. The assessment of fair values requires the use of estimates and assumptions for recoverable production, long-term commodity prices, discount rates, reserve conversion, future capital expansion plans and the associated attributable production implications. Changes in any of the assumptions and estimates used in determining the fair value of the royalty and streaming interests could impact the impairment or impairment reversal analysis.\n\n*Valuation of share-based compensation*\n\nManagement determines the costs for share-based compensation using market-based and non-market-based valuation techniques. The fair value of the stock option awards and restricted share units with service-based vesting conditions (“RSUs”) and restricted share units with service-based and performance-based vesting conditions (“PSUs”) is determined at the date of grant for employees and as service is provided for non-employees. Assumptions are made and judgment is used in applying the valuation techniques. These assumptions and judgments include estimating the fair value of the underlying common share, future volatility of the share price, expected dividend yield, future employee turnover rates, option exercise behaviors, the estimated vesting period for PSUs, and the probability of achieving non-market vesting conditions. Such judgments and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates of share-based compensation.\n\n55\n\n[Table of Contents](#TOC)\n\n*Income taxes*\n\nThe interpretation and application of new and existing tax laws or regulations in Canada, the United States of America or any of the countries in which the Company’s royalty interests are located requires the use of judgment. The likelihood that tax positions taken will be sustained upon examination by applicable tax authorities is assessed based on facts and circumstances of the relevant tax position considering all available evidence. Differing interpretation of these laws, regulations or rules could result in an increase in the Company’s taxes, or other governmental charges, duties or impositions. In assessing the probability of realizing deferred income tax assets, the Company makes estimates related to expectations of future taxable income and expected timing of reversals of existing temporary differences. Such estimates are based on forecasted cash flows from operations which require the use of estimates and assumptions such as long-term commodity prices, energy and mineral reserves. The Company reassesses its deferred income tax assets at the end of each reporting period.\n\n*Discontinued operations*\n\nThe assessment of whether the held for sale criteria are met requires the use of judgment by management. Under IFRS 5, the judgmental criteria include whether the asset (or disposal group) is available for immediate sale in its present condition, whether the likelihood of sale is highly probable, and the disposal must be expected to be completed within one year from the date of classification. Changes in any of the judgements used in determining if an asset (or disposal group) meets the held for sale criteria could impact the classification of the related assets and liabilities and presentation of income (loss) between continuing and discontinued operations.\n\n*Valuation of Spin-Out*\n\nThe valuation of the net assets distributed to the Company’s shareholders as part of the Spin-Out was recognized at fair value, based on the estimated fair value of the royalty interests transferred, and the accrued royalty collections from the Oil and Gas business since April 30, 2025 and cash and accounts receivable at April 30, 2025. Significant assumptions used in estimating the fair value of the royalty interests in the Maria Conchita Block and SN-9 Block included discount rates that reflect current market conditions and uncertainties, as well as estimated future cash flows attributable to the royalty interest derived from proved reserves estimates.\n\n**Financial Risk Management**\n\nThe Company’s financial instruments are comprised of financial assets and liabilities. The Company’s principal financial assets are cash, accounts receivable, and related party receivables. The Company’s principal financial liabilities comprise accounts payable and accrued liabilities. The main purpose of these financial instruments is to manage short-term cash flow and working capital requirements and fund future acquisitions.\n\nThe Company is engaged in the business of acquiring, managing and creating resource royalties and streams. Royalties and streams are interests that provide the right to revenue or production from the various properties, after deducting specified costs, if any. These activities expose the Company to a variety of financial risks, which include direct exposure to credit risk, liquidity risk, commodity price risk and capital risk management.\n\nManagement designs strategies for managing some of these risks, which are summarized below. The Company’s executive management oversees the management of financial risks and ensures that financial risk-taking activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk appetite.\n\nThe Company’s overall objective from a risk management perspective is to safeguard its assets and mitigate risk exposure by focusing on security rather than yield.\n\nCredit risk\n\nCredit risk is the risk that a third party might fail to fulfill its performance obligations under the terms of a financial instrument and the potential for loss due to the failure of a borrower to repay a loan. Credit risk arises predominantly with respect to our cash and receivables. As of December 31, 2025, our maximum credit risk exposure is represented by the respective carrying amounts of the financial assets in the statement of financial position. The Company maintains its cash in a high-quality financial institution and closely monitors its receivable balances.\n\n​\n\n56\n\n[Table of Contents](#TOC)\n\nLiquidity risk\n\nLiquidity risk is the risk of loss from not having access to sufficient funds to meet both expected and unexpected cash demands. The Company manages its exposure to liquidity risk through prudent management of its statement of financial position, including maintaining sufficient cash balances. The Company has in place a planning and budgeting process to help determine the funds required to support our normal operating requirements on an ongoing basis. Management continuously monitors and reviews both actual and forecasted cash flows, including acquisition activities.\n\nCommodity price risk\n\nCommodity price risk is the risk the Company will encounter fluctuations in its future royalty production revenue with changes in commodity prices. Commodity prices for petroleum, natural gas, metals and minerals are influenced by global and regional factors, including levels of supply and demand, weather, and geopolitical factors. The Company does not hedge its commodity price risk.\n\nForeign currency risk:\n\nAlthough the Company reports its financial results in United States dollars, certain expenses and potential future investments related to its royalty interests may be denominated in foreign currencies. As a result, the Company is subject to fluctuations in exchange rates, which could impact the value of our royalty revenues, operating costs, and investment returns. The Company does not currently engage in hedging activities or enter into derivative contracts to mitigate this exposure. Accordingly, adverse movements in foreign exchange rates could materially affect the Company’s financial condition and results of operations.\n\nCapital risk management\n\nThe Company’s primary objective when managing capital is to provide a sustainable return to shareholders through managing and growing the Company’s resource asset portfolio while ensuring capital protection. The Company defines capital as its cash, which is managed by the Company’s management team subject to approved policies and limits by the Board of Directors.\n\nThere were no changes in the Company’s approach to capital management during the year ended December 31, 2025 compared to the prior year. The Company is not subject to material externally imposed capital requirements or significant financial covenants. As of December 31, 2025, the Company has cash totaling $18.4 million.\n\nDependence on third-party operators\n\nWe are not and will not be directly involved in the exploration, development and production of minerals from, or the continued operation of, the mineral projects underlying the royalties or streams that are or may be held by us. The exploration, development and operation of such properties is determined and carried out by third-party owners and operators thereof and any revenue that may be derived from our asset portfolio will be based on production by such owners and operators. Third-party owners and operators will generally have the power to determine the manner in which the properties are exploited, including decisions regarding feasibility, exploration and development of such properties or decisions to commence, continue or reduce, or suspend or discontinue production from a property. The interests of third-party owners and operators may not always be aligned with our interests. As an example, it will usually be in our interest to advance development and production on properties as rapidly as possible, in order to maximize near-term cash flow, while third-party owners and operators may take a more cautious approach to development, as they are exposed to risk on the cost of exploration, development and operations. Likewise, it may be in the interest of owners and operators to invest in the development of, and emphasize production from, projects or areas of a project that are not subject to royalties, streams or similar interests that are or may be held by us. Our inability to control or influence the exploration, development or operations for the properties in which we hold or may hold royalties or streams may have a material adverse effect on our business, results of operations and financial condition. In addition, the owners or operators may take action contrary to our policies or objectives; be unable or unwilling to fulfill their obligations under their agreements with us; or experience financial, operational or other difficulties, including insolvency, which could limit the owner or operator’s ability to advance such properties or perform its obligations under arrangements with us.\n\nWe may not be entitled to any compensation if the properties in which we hold or may hold royalties or streams discontinue exploration, development or operations on a temporary or permanent basis.\n\n57\n\n[Table of Contents](#TOC)\n\nThe owners or operators of the projects in which we hold an interest may, from time to time, announce transactions, including the sale or transfer of the projects or of the operator itself, over which we have little or no control. If such transactions are completed, it may result in a new operator, which may or may not explore, develop or operate the project in a similar manner to the current operator, which may have a material adverse effect on our business, results of operations and financial condition. The effect of any such transaction on us may be difficult or impossible to predict.\n\nRoyalties, streams and similar interests may not be honored by operators of a project\n\nNon-performance by our counterparties may occur if such counterparties find themselves unable to honor their contractual commitments due to financial distress or other reasons. In such circumstances, we may not be able to secure similar agreements on as competitive terms or at all. No assurance can be given that our financial results will not be adversely affected by the failure of a counterparty or counterparties to fulfill their contractual obligations in the future. Such failure could have a material adverse effect on our business, results of operations and financial condition.\n\nTo the extent grantors of royalties or streams that are or may be held by us do not abide by their contractual obligations, we may be forced to take legal action to enforce our contractual rights. Such litigation may be time-consuming and costly and, as with all litigation, no guarantee of success can be made. Should any such decision be determined adverse to us, it may have a material adverse effect on our business, results of operations and financial condition.\n\n**Emerging Growth Company Status**\n\nWe qualify as an “emerging growth company,” as defined in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable to public companies. The provisions include:\n\n●we are only required to include two years of audited financial statements in this Report, in addition to any required interim financial statements, and are only required to provide reduced disclosure in “*Management’s Discussion and Analysis of Financial Condition and Results of Operations*”;\n\n●we are not required to engage an auditor to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;\n\n●we are not required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay”, “say-on-frequency” and “say-on-golden parachutes”; and\n\n●we are not required to disclose certain executive compensation related items such as the correlation between executive compensation and performance comparisons of the chief executive officer’s compensation to our median employee compensation.\n\nWe may take advantage of these provisions until the last day of the fiscal year following the fifth anniversary of the completion of this offering or such earlier time we no longer qualify as an emerging growth company. We would cease to qualify as an emerging growth company upon the earliest of (a) the last day of the first fiscal year in which our annual gross revenue is $1.235 billion or more, (b) the date on which we have, during the previous rolling three-year period, issued more than $1.0 billion in non-convertible debt securities and (c) the last day of the fiscal year in which the market value of our Common Shares held by non-affiliates exceeded $700.0 million as of July 31 of such fiscal year.\n\nUnder the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards would otherwise apply to private companies. Given that we currently report and expect to continue to report our financial results under IFRS as issued by the IASB, we will not be able to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required by the IASB.\n\n58\n\n[Table of Contents](#TOC)\n\n**Foreign Private Issuer Status**\n\nWe will report under the Exchange Act as a “foreign private issuer” under the U.S. securities laws. In our capacity as a foreign private issuer, we are exempt from certain laws and regulations of the SEC and certain regulations of Nasdaq. Consequently, we are not subject to all of the disclosure requirements applicable to U.S. domestic public companies. For example, we are exempt from certain rules under the Exchange Act, as amended, that impose certain disclosure obligations and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, our executive officers, the members of our board of directors and our principal shareholders are exempt from the “short-swing” profit recovery provisions of Section 16(b) of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of our securities. On and after March 18, 2026, our officers and directors, but not our principal shareholders, will be subject to the reporting requirements of Section 16(a) of the Exchange Act. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. In addition, we are not required to comply with Regulation FD, which restricts the selective disclosure of material information.\n\nWe may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We will remain a foreign private issuer until such time that 50% or more of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies: (i) the majority of the members of our board of directors or our global management team are U.S. citizens or residents; (ii) more than 50% of our assets are located in the United States; or (iii) our business is administered principally in the United States.\n\nWe have taken advantage of certain reduced reporting and other requirements in this Report. Accordingly, the information contained herein may be different from the information you receive from other public companies.\n\n**Recently Adopted Accounting Pronouncements**\n\nCertain new accounting standards and interpretations have been published that are not mandatory for the current period and have not been early adopted. The amendments have an effective date of later than December 31, 2025, with earlier application permitted.\n\n*IFRS 18 — Presentation and Disclosure in Financial Statements*\n\nIn April 2024, IFRS 18 was issued to achieve comparability of the financial performance of similar entities. The standard, which replaces IAS 1, impacts the presentation of primary financial statements and notes, including the statement of earnings where companies will be required to present separate categories of income and expense for operating, investing, and financing activities with prescribed subtotals for each new category. The standard will also require management-defined performance measures to be explained and included in a separate note within the consolidated financial statements. The standard is effective for reporting periods beginning on or after January 1, 2027, including interim financial statements, and requires retrospective application. The Company is currently assessing the impact of the new standard.\n\n*IFRS 9 — Financial Instruments and IFRS 7 — Financial Instruments: Disclosures*\n\nIn May 2024, amendments to IFRS 9 and IFRS 7 were issued, which clarify the date of recognition and derecognition of certain financial assets and liabilities, and amended the requirements related to settling financial liabilities using an electronic payment system. The amendments also added disclosure requirements for financial instruments with contingent features that do not relate directly to basic lending risks and costs, and amended disclosures relating to equity instruments designated at fair value through other comprehensive income. These amendments are effective for annual reporting periods beginning on or after January 1, 2026. The Company is currently assessing the impact of the new standard.\n\n**Subsequent Events**\n\n*Common Shares Issued*\n\nIn February 2026, the Board of Directors approved the grant of 1,000,000 unrestricted share awards pursuant to the Company’s LTIP to a consultant of the Company. Accordingly, the Company issued 1,000,000 common shares of the Company at a deemed issue price of US$5.00 per share.\n\n59\n\n[Table of Contents](#TOC)\n\n*Share-Based Awards Granted*\n\nOn March 10, 2026, the Board of Directors approved, subject to shareholder approval, the CEO Performance Plan to authorize a single award of 3,000,000 PSUs to the Company’s CEO. The plan authorizes the issuance of up to 3,000,000 common shares and does not permit the grant of additional awards.\n\nThe PSUs vest upon achieving specific stock price thresholds of $30, $40, and $50 per share, measured based on a 20-trading day average closing price during a five-year performance period. Subject to the CEO’s continued service with the Company, one-third of the PSUs vest on achievement of $30 per share, one-third of the PSUs vest on achievement of $40 per share and the final one-third of the PSUs vest on achievement of $50 per share. PSUs that vested will be settled in either common shares or cash, at the Company’s discretion. Any common shares issued in settlement will be subject to a holding restriction through the end of the five-year performance period. On March 19, 2026, the shareholders approved the CEO Performance Plan.\n\n*Direct Listing*\n\nOn April 8, 2026, the Company completed its direct listing on the Nasdaq Capital Market, and its common shares commenced trading on Nasdaq under the ticker symbol TMCR.\n\n**Quantitative and Qualitative Disclosures About Market Risk**\n\nOur future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. Our revenue is directly tied to commodity prices and we are exposed to prevailing market prices which can impact our revenues and profits. In addition, the NORI Royalty is outside of the United States, which exposes us to additional jurisdictions."}