Q1 2026 - Management’s Discussion and Analysis Download

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# Q1 2026 - Management’s Discussion and Analysis Download

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# Q1 2026 - Management’s Discussion and Analysis Download
LUNR ROYALTIES CORP.
(formerly 17156138 Canada Inc.)
Management’s Discussion and Analysis
For the three months ended to March 31, 2026
LunR Royalties Corp.
Management's Discussion & Analysis
For the three months ended March 31, 2026
INTRODUCTION
The following management’s discussion and analysis (“MD&A”) is an overview of the activities of LunR Royalties
Corp. (“LunR” or the “Company”). LunR was incorporated on July 14, 2025, under the laws of the Canada Business
Corporations Act (the “CBCA”) as a wholly-owned subsidiary of NGEx Minerals Ltd. (“NGEx”), under the name
“17156138 Canada Inc.”. LunR was incorporated for the purpose of undertaking a share capital reorganization with
NGEx by way of a statutory plan of arrangement under the CBCA (the “Arrangement”) pursuant to an arrangement
agreement between LunR and NGEx dated July 21, 2025, as amended (the “Arrangement Agreement”), which, upon
its completion on October 23, 2025, resulted in 80.1% of the common shares of LunR (“LunR Shares”) being
distributed to shareholders of NGEx (“NGEx Shareholders”), with NGEx retaining a then 19.9% interest in LunR.
This MD&A is intended to help the reader understand LunR’s operation and financial performance, along with its
present and future business environment. This MD&A should be read in conjunction with the Company’s condensed
interim financial statements for the three months ended March 31, 2026, and related notes therein, which have been
prepared in accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board (“IFRS Accounting Standards”).
All currency amounts are stated in United States dollars ($), unless otherwise stated. References to C$ are to
Canadian dollars.
The first, second, third and fourth quarters of the Company’s fiscal years are referred to as “Q1”, “Q2”, “Q3” and
“Q4”, respectively.
The date of this MD&A is May 14, 2026.
DESCRIPTION OF BUSINESS AND OVERVIEW
LunR is a royalty and streaming company which focuses on growing and diversifying a portfolio of royalties and
metals purchase agreements (“Streams”) in the mining and mineral resource industry through acquisitions and
strategic investments, leveraging deep industry knowledge and expertise of its board of directors (the “LunR Board”)
and management. LunR intends to accumulate and manage a portfolio of diversified royalty and Stream interests
that may be acquired directly from mineral exploration companies or mine operators, as well as third-party holders
of existing royalties and Streams, across the spectrum of project stages, from grassroots exploration to production.
As at the date of this MD&A, LunR holds a 1.38% net smelter return (“NSR”) royalty on the mineral concessions
underlying NGEx’s Los Helados Project in Chile, and a 1% NSR royalty on the concession underlying NGEx’s Lunahuasi
Project.
LunR was incorporated on July 14, 2025, as a wholly-owned subsidiary of NGEx, for the purpose of acquiring certain
royalty interests on NGEx’s mineral properties and spinning out such royalty interests to NGEx Shareholders by way
of a share capital reorganization with NGEx pursuant to the Arrangement.
On September 11, 2025, LunR changed its name from “17156138 Canada Inc.” to “LunR Royalties Corp.”.
Upon completion of the Arrangement, LunR became a reporting issuer in the provinces of British Columbia, Alberta,
Ontario and Québec.
Additional details with respect to the Arrangement, NGEx or LunR can be found on SEDAR+ at www.sedarplus.ca.
2
LunR Royalties Corp.
Management's Discussion & Analysis
For the three months ended March 31, 2026
LunR’s registered office is located at Suite 2200, 885 West Georgia Street, Vancouver, British Columbia, V6C 3E8,
Canada and its head office is located at Suite 2800, 1055 Dunsmuir Street, Vancouver, British Columbia V7X 1L2.
The Company is listed on the TSX Venture Exchange (the “TSXV”) under the symbol “LUNR”.
HIGHLIGHTS DURING AND SUBSEQUENT TO Q1 2026
• On February 22, 2026, the Company announced that it had entered into a binding term sheet (the "Term
Sheet") with Lundin Gold Inc. ("Lundin Gold") and Aureliean Resources Inc. (“ARI”), a wholly-owned
subsidiary of Lundin Gold, to acquire a life-of-mine silver stream (the "FDN Stream" or the “FDN
Transaction”) on the Fruta Del Norte gold mine ("FDN") in Ecuador, owned and operated by Lundin Gold.
The Company subsequently announced, on April 2, 2026, that it entered definitive agreements with
Lundin Gold in relation to the FDN Transaction.
• On January 21, 2026, Peter Hemstead stepped down from his position as Chief Financial Officer and
Corporate Secretary of the Company. Effective the same day, Connor Mackay was appointed as the Chief
Financial Officer of the Company, Nevin Lau as Corporate Controller of the Company, and Judy A. McCall as
Corporate Secretary of the Company.
Acquisition of the FDN Stream
On February 22, 2026, the Company entered into the Term Sheet with Lundin Gold and ARI to acquire the FDN
Stream. The FDN Stream will be effective as of March 1, 2026, and will initially encompass 100% of FDN's payable
silver production with staged reductions once certain delivery thresholds have been met. As consideration, subject
to the satisfaction of certain conditions as outlined below, the Company will issue 50,505,051 LunR Shares (the
"Consideration Shares") to Lundin Gold, having a value of approximately $670 million based on the 20-day
volume weighted average price of the LunR Shares on the TSXV of C$18.18 as of February 20, 2026. Upon closing
of the FDN Transaction, and subject to compliance with all applicable laws, Lundin Gold will distribute all of the
Consideration Shares to its shareholders on a pro rata basis as a dividend in kind (the “Distribution”) and will not
hold any LunR Shares following completion of the Distribution. The Company will make ongoing payments equal
to 10% of the spot price of silver at the time of each delivery for ounces delivered, and payments will increase
as a percentage of the spot price of silver once certain delivery thresholds have been met. Closing of the FDN
Transaction is expected to occur in Q2 2026.
Key terms of the FDN Transaction are as follows:
• Upfront Consideration: LunR will issue 50,505,051 Consideration Shares to Lundin Gold on closing of
the Transaction, having a value of approximately $670 million based on the 20-day VWAP of the
Company’s common shares on the TSXV as of February 20, 2026, subject to the satisfaction of certain
conditions as described below.
• Effective Date: The FDN Stream will be effective as of March 1, 2026, with the first delivery of silver to
be made following the closing of the FDN Transaction.
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LunR Royalties Corp.
Management's Discussion & Analysis
For the three months ended March 31, 2026
• Streamed Metal: LunR will purchase 100% of the payable silver production of FDN until 12,200,000
ounces have been delivered (the “First Dropdown Threshold”); LunR will then purchase 50% of FDN’s
payable silver until an additional 7,800,000 ounces have been delivered (the “Second Dropdown
Threshold”); and thereafter, LunR will purchase 7.5% of the payable silver for the remaining life-of-mine.
• Ongoing Payments: LunR will make payments equal to 10% of the spot price of silver at the time of
each delivery for ounces delivered up to the First Dropdown Threshold; payments will then increase to
20% of the spot price for deliveries up to the Second Dropdown Threshold; and thereafter, payments
will increase to 30% of the spot price for the remaining life-of-mine.
• Stream Area: All mining concessions related to FDN’s operations, totaling approximately 5,566 ha, are
subject to the FDN Stream. The FDN Stream area contains all Mineral Reserves and Mineral Resources
defined to date as well as the five copper-gold-silver porphyry discoveries that are in early stages of
exploration.
• Distribution of the Share Consideration: Subject to satisfactory completion of the closing conditions,
Lundin Gold will distribute the Consideration Shares to its shareholders as a dividend-in-kind upon closing
of the FDN Transaction. Lundin Gold will not hold any common shares of the Company following
completion of the Distribution.
As Lundin Gold and LunR are "related parties" within the meaning of Multilateral Instrument 61-101 – Protection
of Minority Security Holders in Special Transactions (“MI 61-101”), the FDN Transaction, including the issuance
of the Consideration Shares to Lundin Gold, constitutes a "related party transaction" and requires the approval
of a simple majority of votes cast by LunR shareholders, excluding votes from certain shareholders at a special
meeting to be held on May 21, 2026 to consider the FDN Transaction. The Company and Lundin Gold are also
considered non-arm's length parties in accordance with the policies of the TSXV.
In addition, the FDN Transaction remains conditional upon, among other things, the Company being issued a
final receipt by the British Columbia Securities Commission for a prospectus of the Company qualifying the
distribution of the Consideration Shares to Lundin Gold (the “Prospectus”), the Company obtaining minority
shareholder approval for the FDN Transaction in accordance with MI 61-101, the Company obtaining the
necessary approval of the TSXV for the FDN Transaction, including obtaining disinterested shareholder approval
in accordance with the TSXV’s policies and other customary conditions for a transaction of this nature.
Upon closing of the FDN Transaction, the Company will welcome Newmont Corporation (“Newmont”) as a new
major shareholder. Concurrently, the Company intends to appoint a representative from Newmont to the LunR
Board. Newmont holds an approximate 32% interest in Lundin Gold and is expected to have greater than 10%
ownership in the Company following the Distribution.
4
LunR Royalties Corp.
Management's Discussion & Analysis
For the three months ended March 31, 2026
SUMMARY OF QUARTERLY RESULTS
The following table summarizes selected financial data reported by the Company for the three months ended March
31, 2026, and the previous quarters since incorporation. The Company's interim financial statements are reported
under IFRS Accounting Standards applicable to interim financial reporting.
July 14, 2025 to
Q1 2026 Q4 2025 September 30, 2025
Net loss $1,840,740 $474,612 $3,628
Basic and diluted loss per share 0.03 0.01 3,628(1)
(1)
During the period from July 14, 2025 to September 30, 2025, one LunR Share was issued and outstanding.
Net loss increased in Q1 2026 compared to the previous quarters since incorporation due to corporate development
expenses relating to the FDN Transaction and a one-time severance payment.
RESULTS OF OPERATIONS
During Q1 2026, the Company recorded a net loss of $1,840,740 mainly relating to general and administrative costs,
and other comprehensive loss of $18,412 arising from foreign exchange translations. General and administrative
costs increased in Q1 2026 from Q4 2025 due to corporate development expenses relating to the FDN Transaction
and a one-time severance payment.
LIQUIDITY AND CAPITAL RESOURCES
Cash decreased $935,174 during Q1 2026. Cash used in operating activities during the period was $933,075 and was
for general and administrative expenses. Cash generated by financing activities during the period of $1,619 was from
the proceeds from stock option exercises.
As of March 31, 2026, the Company has a management services agreement (the “Agreement”) with a management
services company for the use of certain shared office facilities and ancillary corporate support services. As part of the
term

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