EMX Royalty Sees Royalty Revenue Growth Despite Tough Markets

• David Cole, CEO of EMX Royalty, discusses the resolution of the Timok royalty with Zijin Mining.
• EMX holds a 0.3625% gross smelter return royalty on the Timok property, which covers the copper producing Cukaru Peki mine in Serbia.
• EMX Royalty received a payment of $6.68 million USD, with an annualized estimate of $3.8 million USD based on the first half of 2023 numbers.
• The company has an organic business model where they generate and sell projects, averaging around 20 sales per year.
• Despite market challenges, Dave Cole emphasizes the importance of allocating capital when others aren't and mentions a joint venture with Franco Nevada to fund early-stage exploration in exchange for royalties.

About EMX Royalty Corp.

EMX Royalty Corp. (TSX-V, NYSE, Frankfurt: 6E9) generates royalty income, exploration upside, and strategic equity positions by identifying overlooked and underexplored mining assets. As a royalty company, EMX provides investors with exposure to the upside potential of precious, base, and battery metal discoveries while limiting typical mining risks. EMX advances projects through early-stage exploration and acquisition of royalty interests, while strategically retaining equity stakes in select projects. With a portfolio spanning North America, Turkey, Europe and Australia, EMX delivers discovery, development, and commodity price optionality to shareholders.

Interview with President & CEO, David Cole

Major Royalty Asset Starts Paying

A long-running dispute over EMX's 0.3625% gross smelter return royalty on the Timok property, which covers the producing Cukaru Peki mine in Serbia operated by China's Zijin Mining has been resolved, with EMX receiving its first royalty payment of $6.68 million in August 2023. This payment included back-royalties owed since production began in 2021 of $6.68 million.

The royalty covers one of the three mining licenses at Cukaru Peki. The mine is currently focused on mining high-grade copper ore from the upper zone while developing infrastructure to access the much larger lower zone mineralization. Zijin has estimated the upper zone will be mined for at least 10 more years. The lower zone is expected to come into production in 5-7 years and Zijin plans to drill it to 2km depth, with the potential to expand onto EMX's adjoining royalty ground.

Based on the $6.68 million payment, Cole estimates EMX Royalty's annual royalty revenue from Cukaru Peki's upper zone will be around $3.8 million at current production rates. However, he believes Zijin's planned $3.5-$3.8 billion further investment to expand the lower zone could increase EMX's royalty revenue substantially in the future, possibly into the hundreds of millions based on the currently defined resource.

EMX's Royalty Portfolio Delivers Revenue Growth

Beyond the Cukaru Peki royalty, EMX is seeing royalty revenue growth across its portfolio. This includes:

• The Gediktepe oxide gold mine in Turkey operated by Lidya Madencilik, a private Turkish company. EMX's 10% net smelter return royalty generated revenue of $4.2 million in the first half of 2023.
• The Leeville royalty on Nevada gold production from a portion of Newmont's underground mine, which delivered $1.2 million in H1 2023.
• The Balya lead-zinc-silver mine in Turkey operated by Esan Eczacibai Endüstriyel Hammaddeler San. ve Tic. A.S., a private Turkish company. EMX’s 4% net smelter return royalty generated over $1 million in the last 12 months.

EMX also has a 1.5% gross smelter return royalty on the Caserones copper mine in Chile operated by JX Nippon Mining and Metals. EMX is receiving around $10 million per year in royalty payments from this asset. Cole says EMX's diverse royalty portfolio aims to provide stable cash flow while limiting risk versus relying on a single major royalty. The company plans to continue growing its royalty revenue through new acquisitions in favorable jurisdictions close to existing assets, while avoiding excessive dilution or stock promotion.

Disciplined Project Generation and Royalty Creation

In addition to royalty acquisitions, EMX's project generation segment focuses on organically creating royalties through early-stage exploration. The company vends projects to partners, retaining royalty interests. This provides multiple benefits:

• Low-cost royalty creation with exploration costs borne by partners
• Enables royalty acquisitions by having technical teams on the ground
• Realizes revenue from project sales

EMX averages 20 project sales per year on this royalty generation model. It acts as a consistent revenue driver for the company. Recent sales include the Copperhole Creek copper project in Australia's Northern Territory.

Joint Venture with Franco-Nevada

To capitalize on stressed market conditions, EMX has formed an early-stage royalty generation joint venture with Franco-Nevada. The JV is focused on creating micro-royalties through small royalty financings of exploration companies. This aligns with EMX's counter-cyclical strategy of deploying capital when asset valuations are depressed.

Maintaining Financial Strength

EMX has focused on paying down debt and improving its balance sheet. The company plans to retire $10 million of fixed-rate bonds prior to maturity in late 2024 to reduce interest costs.

While not currently focused on dividends, EMX aims to deliver shareholder returns through disciplined asset growth and avoiding excessive stock dilution. With its first royalty payment from the world-class Cukaru Peki mine received, recurring revenue from a diverse royalty portfolio increasing, and a prudent growth strategy in place, EMX Royalty appears well positioned to continue growing royalty income despite volatile market conditions. The company's project generation expertise and strong balance sheet provide additional avenues to create value for investors through potential royalty acquisitions at depressed valuations.

The Investment Thesis

Growth Potential

• The Cukaru Peki royalty provides a significant upside as the lower zone comes into production. This large, high-grade asset could dramatically increase EMX's royalty revenue.
• Additional exploration and acquisitions have the potential to add more cash-flowing royalties to EMX's portfolio.
• Organic royalty creation through project generation adds royalties at a low cost.

Revenue Growth

• Royalty revenue is already growing across multiple assets. As mines ramp up, this growth should continue.
• A diverse portfolio limits risk versus relying on a single royalty asset.
• Increased production expected at Caserones mine under the new operator.

Strong Financial Position

• Debt reduction and working capital position provide financial flexibility.
• Allows potential acquisitions at low valuations during market downturns.
• Avoids excessive dilution or stock promotion.

Experienced Management

• Proven track record in royalty creation and portfolio building.
• Disciplined capital allocation even during challenging markets.
• Aligned with shareholders.

The royalty revenue growth, significant upside potential, strong balance sheet, experienced management, and disciplined business model make EMX Royalty an attractive investment opportunity, especially for investors looking for mining exposure outside of direct commodity price risk. The company's expertise in royalty creation also provides a competitive advantage.