Exhibit 4.9


 


Gold Royalties Corporation


 


Consolidated Financial Statements


For the year ended December 31, 2014 and December 31, 2013



(expressed in Canadian dollars)


(Audited)


  




     

     


    

 


 


 


INDEPENDENT AUDITORS' REPORT


 


To the Shareholders of


Gold Royalties Corporation


 


We have audited the accompanying consolidated
financial statements of Gold Royalties Corporation, which comprise the consolidated statements of financial position as at December
31, 2014 and 2013, and the consolidated statements of loss and comprehensive loss, changes in shareholders’ equity and cash
flows for the years then ended, and a summary of significant accounting policies and other explanatory information.


 


Management’s Responsibility
for the Consolidated Financial Statements


 


Management is responsible for the preparation
and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards,
and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.


 


Auditors’ Responsibility 


 


Our responsibility is to express an opinion
on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted
auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free from material misstatement.


 


An audit involves performing procedures
to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend
on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements.


 


We believe that the audit evidence we have
obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.


 


Opinion


 


In our opinion, these consolidated financial
statements present fairly, in all material respects, the financial position of Gold Royalties Corporation as at December 31, 2014
and 2013 and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting
Standards.


 


 


 




     

     


    

 


Emphasis of Matter


 


Without qualifying our opinion, we draw
attention to Note 1 in the consolidated financial statements which describes conditions and matters that indicate the existence
of a material uncertainty that may cast significant doubt about Gold Royalties Corporation’s ability to continue as a going
concern.


 


“DAVIDSON & COMPANY LLP”


 


	Vancouver, Canada 	Chartered Accountants
	 	 
	April 24, 2015	 


 


 




     

     


    

 


	Gold Royalties Corporation
	Consolidated Statement of Financial Position
	As at December 31, 2014 and December 31, 2013
	(Audited)


 


	 	 	December 31, 2014
 $	 	 	December 31, 2013
 $	 
	Assets	 	 	 	 	 	 	 	 
	Current assets	 	 	 	 	 	 	 	 
	Cash	 	 	634,801	 	 	 	589,847	 
	Accounts receivable	 	 	73,393	 	 	 	70,797	 
	Prepaid expenses and deposits	 	 	1,865	 	 	 	1,865	 
	Assets held for sale (note 6)	 	 	8,349,608	 	 	 	-	 
	Total current assets	 	 	9,059,667	 	 	 	662,509	 
	 	 	 	 	 	 	 	 	 
	Non-current assets	 	 	 	 	 	 	 	 
	Royalty interests (note 7)	 	 	1,657,194	 	 	 	15,085,022	 
	Total assets	 	 	10,716,861	 	 	 	15,747,531	 
	 	 	 	 	 	 	 	 	 
	Liabilities	 	 	 	 	 	 	 	 
	Current liabilities	 	 	 	 	 	 	 	 
	Accounts payable and accrued liabilities	 	 	66,130	 	 	 	104,103	 
	Total current liabilities	 	 	66,130	 	 	 	104,103	 
	 	 	 	 	 	 	 	 	 
	Non-current liabilities	 	 	 	 	 	 	 	 
	Convertible debenture (note 8)	 	 	6,490,411	 	 	 	5,602,302	 
	Total liabilities	 	 	6,556,541	 	 	 	5,706,405	 
	 	 	 	 	 	 	 	 	 
	Shareholders’ Equity	 	 	 	 	 	 	 	 
	Share capital (note 9(b))	 	 	12,085,980	 	 	 	11,832,793	 
	Contributed surplus (note 9(e))	 	 	1,849,354	 	 	 	616,263	 
	Warrants (note 9 (f))	 	 	607,447	 	 	 	1,622,854	 
	Other equity (note 8)	 	 	713,991	 	 	 	713,991	 
	Deficit	 	 	(11,096,452	)	 	 	(4,744,775	)
	Total equity	 	 	4,160,320	 	 	 	10,041,126	 
	 	 	 	 	 	 	 	 	 
	Total liabilities and equity	 	 	10,716,861	 	 	 	15,747,531	 
	 	 	 	 	 	 	 	 	 
	Going concern (note 2)	 	 	 	 	 	 	 	 
	Subsequent events (note 6, 8, 9, and 14)	 	 	 	 	 	 	 	 



 


	Approved on behalf of the Board of Directors
	 	 	 
	“Brian Hearst”	 	 
	Director 	 	 
	 	 	 
	“Steve King”	 	 
	Director	 	 


 


The notes are an integral part of these consolidated financial statements.


 




    	 	 	4



     


    

 


	Gold Royalties Corporation
	Consolidated Statement of Loss and Comprehensive Loss
	For the years ended December 31, 2014 and 2013
	(Audited)


 


	 	 	December 31, 2014
 $	 	 	December 31, 2013
 $	 
	Royalty revenue	 	 	331,764	 	 	 	254,091	 
	 	 	 	 	 	 	 	 	 
	Expenses	 	 	 	 	 	 	 	 
	Salary and benefits	 	 	330,790	 	 	 	358,468	 
	Share based expense (note 9 (d))	 	 	144,903	 	 	 	232,887	 
	Professional fees	 	 	93,172	 	 	 	199,941	 
	Office and general	 	 	76,352	 	 	 	163,548	 
	Depletion expense (note 7)	 	 	176,234	 	 	 	132,195	 
	Impairment of GST receivable	 	 	-	 	 	 	46,509	 
	Rent	 	 	18,569	 	 	 	20,013	 
	 	 	 	840,020	 	 	 	1,153,561	 
	 	 	 	 	 	 	 	 	 
	Net operating loss	 	 	(508,256	)	 	 	(899,470	)
	 	 	 	 	 	 	 	 	 
	Financing expenses	 	 	 	 	 	 	 	 
	Accretion of convertible debenture (note 8)	 	 	237,996	 	 	 	237,996	 
	Interest on convertible debenture (note 8)	 	 	650,113	 	 	 	588,969	 
	Net financing expenses	 	 	(888,109	)	 	 	(826,965	)
	 	 	 	 	 	 	 	 	 
	Other expenses	 	 	 	 	 	 	 	 
	Royalty interest impairment (note 7)	 	 	4,955,312	 	 	 	414,684	 
	Loss on disposal of royalty interest (note 7)	 	 	-	 	 	 	228,514	 
	 	 	 	(4,955,312	)	 	 	643,198	 
	 	 	 	 	 	 	 	 	 
	Loss and comprehensive loss	 	 	(6,351,677	)	 	 	(2,369,633	)
	 	 	 	 	 	 	 	 	 
	Basic and diluted loss per share	 	 	(0.25	)	 	 	(0.11	)
	Weighted average number of common shares outstanding during the year	 	 	25,468,227	 	 	 	21,246,976	 



 


The notes are an integral part of these consolidated financial statements.


 




    	 	 	5



     


    

 


	Gold Royalties Corporation
	Consolidated Statement of Changes in Shareholders’ Equity
	For the years ended December 31, 2014 and 2013
	(Audited)


 


	 	 	Share capital

    $	 	 	Contributed surplus

    $	 	 	Warrants
 $	 	 	Other Equity

    $	 	 	Deficit
 $	 	 	Total equity

    $	 
	Balance, December 31, 2012	 	 	10,150,106	 	 	 	367,424	 	 	 	1,268,288	 	 	 	713,991	 	 	 	(2,375,142	)	 	 	10,124,667	 
	Private placements, less issue costs	 	 	364,838	 	 	 	-	 	 	 	362,517	 	 	 	-	 	 	 	-	 	 	 	727,355	 
	Broker units issued pursuant
    to private placement	 	 	(8,001	)	 	 	15,952	 	 	 	(7,951	)	 	 	-	 	 	 	-	 	 	 	-	 
	Common shares issued in
    asset acquisition	 	 	1,315,000	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,315,000	 
	Loss for the year	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(2,369,633	)	 	 	(2,369,633	)
	Share based expense	 	 	-	 	 	 	232,887	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	232,887	 
	Shares issued on exercise
    of broker warrants	 	 	10,850	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	10,850	 
	Balance, December 31, 2013	 	 	11,832,793	 	 	 	616,263	 	 	 	1,622,854	 	 	 	713,991	 	 	 	(4,744,775	)	 	 	10,041,126	 
	Shares issued to acquire
    royalty interest	 	 	85,526	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	85,526	 
	Shares issued pursuant
    to private placement, net of share issue costs	 	 	167,661	 	 	 	-	 	 	 	72,781	 	 	 	-	 	 	 	-	 	 	 	240,442	 
	Loss for the year	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(6,351,677	)	 	 	(6,351,677	)
	Reclassification of
    warrant fair value upon expiry	 	 	-	 	 	 	1,088,188	 	 	 	(1,088,188	)	 	 	-	 	 	 	-	 	 	 	-	 
	Share-based payment expense	 	 	-	 	 	 	144,903	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	144,903	 
	Balance, December 31, 2014	 	 	12,085,980	 	 	 	1,849,354	 	 	 	607,447	 	 	 	713,991	 	 	 	(11,096,452	)	 	 	4,160,320	 



 


The notes are an integral part of these consolidated financial statements.


 




    	 	 	6



     


    

 


	Gold Royalties Corporation
	Consolidated Statement of Cash Flows
	For the years ended December 31, 2014 and 2013
	(Audited)


 


	 	 	December 31, 2014
 $	 	 	December 31, 2013
 $	 
	Cash (used in) provided by:	 	 	 	 	 	 	 	 
	Operating activities	 	 	 	 	 	 	 	 
	Loss for the year	 	 	(6,351,677	)	 	 	(2,369,633	)
	Adjustments for:	 	 	 	 	 	 	 	 
	Share based payments	 	 	144,903	 	 	 	232,887	 
	Accretion of convertible debenture	 	 	237,996	 	 	 	237,996	 
	Depletion expense	 	 	176,234	 	 	 	132,195	 
	Loss on disposal of royalty interest	 	 	-	 	 	 	228,514	 
	Impairment of GST receivable	 	 	-	 	 	 	46,509	 
	Accrued interest on convertible debt	 	 	650,113	 	 	 	-	 
	Royalty interest impairment	 	 	4,955,312	 	 	 	414,684	 
	 	 	 	(187,119	)	 	 	(1,076,848	)
	 	 	 	 	 	 	 	 	 
	Change in accounts receivable	 	 	(2,596	)	 	 	20,299	 
	Change in prepaid expenses and deposits	 	 	-	 	 	 	(237	)
	Change in accounts payable and accrued liabilities	 	 	(37,973	)	 	 	59	 
	 	 	 	(227,688	)	 	 	(1,056,727	)
	 	 	 	 	 	 	 	 	 
	Investing activities	 	 	 	 	 	 	 	 
	Acquisition of royalty interests	 	 	(2,800	)	 	 	(1,238,703	)
	Disposal of royalty interests	 	 	-	 	 	 	500,000	 
	Royalty advance payments	 	 	35,000	 	 	 	35,000	 
	 	 	 	32,200	 	 	 	(703,703	)
	 	 	 	 	 	 	 	 	 
	Financing activities	 	 	 	 	 	 	 	 
	Proceeds from issuance of common shares and common share purchase warrants, net of issue costs	 	 	240,442	 	 	 	727,355	 
	Exercise of broker warrants	 	 	-	 	 	 	10,850	 
	Accrued interest on convertible debt	 	 	-	 	 	 	588,969	 
	 	 	 	240,442	 	 	 	1,327,174	 
	 	 	 	 	 	 	 	 	 
	Change in cash	 	 	44,954	 	 	 	(433,256	)
	Cash, beginning of year	 	 	589,847	 	 	 	1,023,103	 
	Cash, end of year	 	 	634,801	 	 	 	589,847	 



 


The notes are an integral part of these consolidated financial statements.


 




    	 	 	7



     


    

 


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


		1	Reporting entity 



 


Gold Royalties Corporation (the
“Company”), is incorporated under the Alberta Business Corporations Act. The Company’s operations focus primarily
on precious metals mining royalties, particularly gold net smelter returns and gold metal stream royalties. The Company’s
head office is located at Suite 200, 638 11th Avenue SW, Calgary, Alberta, T2R 0E2.


 


		2	Going concern



 


These consolidated financial
statements have been prepared on a going concern basis which assumes that the Company will realize the carrying value of its assets
and discharge its liabilities in the normal course of business. Currently, the Company holds twenty royalty interests on properties
within Canada, the majority of which have yet to start production. As a royalty company, there are limited requirements for capital
expenditures.


 


During the year ended December
31, 2014, the Company incurred a loss totaling $6,351,677 (2013 – 2,369,633) and used funds in operations totaling $187,119
(2013 – 1,076,848). The ability of the Company to continue as a going concern including meeting its obligations, funding
future operations and recovering the carrying value of the royalty interests is dependent upon the successful extraction of minerals
and receipt of royalty revenue in relation to its royalty interests. There can be no assurance that the extraction of minerals
will be successful or that sufficient royalty revenues will be earned to meet the Company’s ongoing cash outflows, and these
material uncertainties may cast significant doubt over the Company’s ability to continue as a going concern. If unsuccessful,
the Company may be required to curtail operations unless additional financing arrangements are completed or support from shareholders
is received. The outcome of these matters cannot be determined at this time.


 


Subsequent to December 31, 2014,
the Company closed a transaction to dispose of a significant royalty interest. A portion of the proceeds were used to extinguish
the convertible debenture.


 


These consolidated financial
statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern
and therefore, be required to realize its assets and discharge its liabilities in other than the normal course of business and
at amounts different from those reflected in the accompanying consolidated financial statements.


 




    	 	 	8



     


    

 


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


		3	Basis of presentation



 


The annual consolidated financial
statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting
Interpretation Committee (“IFRIC”).


 


The policies applied in these
annual financial statements are based on IFRS issued as of April 24, 2015, the date the Board of Directors approved the statements.


 


		4	Significant accounting policies



 


The accounting policies set out
below have been applied consistently to all periods presented in these financial statements.


 


Basis of measurement and currency


 


The financial statements have
been prepared on a historical cost basis except for share based payment transactions and financial assets or liabilities classified
or designated as held for trading, available-for-sale financial assets or derivative financial instruments, which are measured
at fair value.


 


These financial statements are
presented in Canadian dollars, which is the Company’s functional currency.


 


Significant
accounting judgments, estimates and assumptions


 


The preparation of financial
statements in conformity with IFRS requires the Company to make judgments, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets, liabilities, income and expenses. Estimates and underlying assumptions
are reviewed on an ongoing basis and are based on management’s best knowledge of the relevant facts and circumstances, having
regard to previous experience. However, actual outcomes may differ from these estimates. Revisions to accounting estimates are
recognized in the period in which the estimates are revised and in any future periods affected.


 




    	 	 	9



     


    

 


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


In particular, significant areas
of judgments, estimates and assumptions considered by management include:


 


		(a)	Mineral reserves:



 


Amounts recorded for depreciation,
depletion and amortization and amounts used for impairment calculations are based on estimates of mineral reserves by the operators
of the mineral properties where the Company has a royalty interest. By their nature, the estimates of reserves, including the estimates
of future prices, costs, discount rates and the related future cash flows are subject to measurement uncertainty.


 


			Assessment of the impairment of royalty interests requires the use of judgments, assumptions and
estimates when assessing whether there are any indicators that could give rise to the requirement to conduct a formal impairment
test on the Company’s royalty interests. The assessment of fair values requires the use of estimates and assumptions for
recoverable production, long-term commodity prices, discount rates, reserve/resource conversion, net asset value multiples and
the associated production implications. Changes in any of the assumptions and estimates used in determining the fair value of the
royalty interests could impact the impairment analysis.



 


		(b)	Share-based compensation:



 


Compensation costs accrued for
share-based compensation plans are subject to the estimation of what the ultimate payout will be using pricing models such as the
Black-Scholes model which is based on significant assumptions such as the future volatility of the market price of the Company’s
shares and the expected term of the issued stock option.


 




    	 	 	10



     


    

 


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


Financial instruments


 


Financial assets and liabilities
are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognized
when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially
all risk and rewards of ownership. Financial assets and liabilities are offset and the net amount reported in the statement of
financial position when there is a legally enforceable right to offset the recognized amount and there is an intention to settle
on a net basis, or realize the asset and settle the liability simultaneously.


 


Non-derivative financial instruments


 


Non-derivative financial instruments
include cash, accounts receivable, accounts payable and accrued liabilities, and the convertible debenture. Non-derivative financial
instruments are recognized initially at fair value. Subsequent to the initial recognition, non-derivative financial instruments
are designated into one of the following categories and measured as described below. Interest, dividends, losses and gains relating
to financial assets and liabilities are recognized in net income, other comprehensive income and within the statement of cash flows.


 


		(i)	Financial assets and liabilities at fair value through profit or loss: A financial asset or liability
is classified in this category if acquired principally for the purpose of selling or repurchasing in the short-term. The Company
has classified cash as financial assets and liabilities at fair value through profit or loss.



 


		(ii)	Held to maturity investments (“HTM”): HTM investments are measured at amortized cost
using the effective interest method, less any impairment losses.



 


As at December 31, 2014 and 2013,
the Company does not have any held to maturity investments.


 


		(iii)	Available for sale investments (“AFS”): AFS investments are non-derivatives that are
either designated in this category or not classified in any of the other categories.



 


AFS investments are recognized
initially at fair value plus transaction costs and are subsequently carried at fair value. Gains or losses arising from changes
in fair value are recognized in other comprehensive income/(loss). AFS investments are classified as non-current, unless the investment
matures within twelve months, or management expects to dispose of them within twelve months.


 


Interest on AFS investments, calculated
using the effective interest method, is recognized in the statement of loss and comprehensive loss as part of finance income. Dividends
on AFS equity instruments are recognized in the statement of loss and comprehensive loss as part of other income and expenses when
the Company’s right to receive payment is established. When an AFS investment is sold or impaired, the accumulated gains
or losses are moved from accumulated other comprehensive income to the statement of loss and comprehensive loss and included in
other income and expenses.


 




    	 	 	11



     


    

 


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


As at December 31, 2014 and 2013,
the Company does not have any AFS investments.


 


		(iv)	Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. The Company’s loans and receivables are comprised of accounts
receivable which are included in current assets due to their short-term nature. Loans and receivables are initially recognized
at the amount expected to be received less, when material, a discount to reduce the loans and receivables to fair value. Subsequently,
loans and receivables are measured at amortized cost using the effective interest method less a provision for impairment.



 


		(v)	Financial liabilities at amortized cost: Financial liabilities at amortized cost include accounts
payable and accrued liabilities and the convertible debenture. Accounts payable and accrued liabilities are initially recognized
at the amount required to be paid less, when material, a discount to reduce the payables to fair value.



 


Financial liabilities are classified
as current liabilities if payment is due within twelve months or if the liability is expected to be settled within twelve months.
Otherwise, they are presented as non-current liabilities.


 


Share
capital


 


Common shares are classified
as equity. Incremental costs directly attributable to the issue of common shares and share options are recognized as a deduction
from equity, net of any tax effects.


 


Royalty
interest


 


Royalty interests are capitalized
at cost. All direct costs related to the acquisition of royalty interests are capitalized until the royalty interest is ready for
its intended use, sold or determined to be impaired. Acquisition costs of development and exploration stage royalty interests are
not depleted until such time as royalty-generating production begins. The royalty interest are depleted on a unit-of-production
basis where the denominator is the estimated proven and probable reserves, which is estimated using available estimates of proven
and probable reserves specifically associated with the mineral properties. Management relies on public disclosure for information
on proven and probable reserves from the third-party of the producing mineral interests. The Company may receive advanced minimum
payments prior to the commencement of production on some of its royalty interests. In these circumstances, the Company would record
depletion expense on a units-of-production method, as described above, up to a maximum of the total of the advanced minimum payment
received.


 




    	 	 	12



     


    

 


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


Impairment


 


Financial assets


 


A financial asset is assessed
at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered
to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash
flows of that asset. Objective evidence that financial assets are impaired can include: significant financial difficulty of the
issuer or counterparty; the potential loss is significant; a prolonged decline in value (defined as a decline in value lasting
longer than one year); default or delinquency of payments; or it is probable that the borrower will enter bankruptcy or financial
re-organization.


 


		(i)	Financial assets carried at amortized cost: An impairment loss in respect of a financial asset
measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future
cash flows discounted at the original effective interest rate. The carrying amount of the asset is reduced by this amount and losses
are recognized in profit or loss and through the use of an allowance account.



 


		(ii)	Available for sale financial assets: The impairment loss is the difference between the original
cost of the asset and its fair value at the measurement date, less any impairment losses previously recognized in profit or loss.
This amount represents the cumulative loss in accumulated other comprehensive income that is reclassified to the statement of loss
and comprehensive loss.



 


Impairment losses on financial
assets carried at amortized cost are reversed in subsequent periods if the reversal can be related objectively to an event occurring
after the impairment loss was recognized. The reversal is recognized in profit or loss or credited against the allowance account.
Impairment losses on available for sale equity instruments are not reversed.


 




    	 	 	13



     


    

 


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


Non-financial assets


 


The carrying amounts of the Company’s
non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such
indication exists, then the asset’s recoverable amount is estimated.


 


Royalty interests are reviewed
for impairment if there is any indication that the carrying amount may not be recoverable. Impairment is assessed at the level
of cash-generating units ("CGUs") which are identified as the smallest identifiable group of assets that generate cash
inflows, which are largely independent of the cash inflows from other assets. This is usually at the individual royalty interest
level for each property from which cash inflows are generated.


 


An impairment loss is recognized
for the amount by which the asset's carrying value exceeds its recoverable amount, which is the higher of fair value less costs
to sell and value-in-use. The future cash flow expected is derived using estimates of proven and probable reserves and information
regarding the mineral properties that could affect the future recoverability of the Company's interests. Discount factors are determined
individually for each asset and reflect their respective risk profiles. Any impairment loss is charged to the statement of loss
and comprehensive loss. The royalty interest is subsequently reassessed for indications that an impairment loss previously recognized
may no longer exist and an impairment charge is reversed if the royalty interest's recoverable amount exceeds its carrying amount.


 


Revenue
recognition


 


Revenue from royalty interests
is measured at the fair value of the consideration received or receivable when management can reliably estimate the receivable,
pursuant to the terms of the royalty agreements, and collection is reasonably assured. In some instances, the Company will not
have access to sufficient information to make a reasonable estimate of revenue and, accordingly, revenue recognition is deferred
until management can make a reasonable estimate. Differences between estimates of royalty revenue and actual amounts are adjusted
and recorded in the period that the actual amounts are known.


 


			Share based expense



 


The Company issues stock options
to directors, officers and consultants. The fair value of options granted to employees is measured at grant date, using the Black-Scholes
option pricing model, and is recognized over the vesting period, using a graded vesting model. The fair value is recognized as
an expense within operations with a corresponding increase in contributed surplus. A forfeiture rate is estimated on the grant
date and is adjusted to reflect the actual number of options that vest.


 




    	 	 	14



     


    

 


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


The fair value of the warrants
issued as part of the private placements is measured at the closing date of the private placement, using the Black-Scholes option
pricing model. The fair value is recognized as a deduction against share capital with a corresponding increase in contributed surplus.


 


If and when
the stock options and/or warrants are ultimately exercised, the applicable amounts of contributed surplus are transferred to share
capital.


 


Earnings per share


 


Basic earnings per share is calculated
by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares
outstanding during the period. Diluted earnings per share is determined by adjusting the profit or loss attributable to common
shareholders and the weighted average number of common shares outstanding for the effects of dilutive instruments such as options
granted to employees.


 


Finance income and expenses


 


Finance expense comprises interest
expense on borrowings and accretion of the discount on provisions.


 


Interest income is recognized
as it accrues in profit or loss, using the effective interest rate method.


 


			Provisions



 


A provision is recognized if,
as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the liability.


 


Assets held for sale


 


Assets are classified as held
for sale if the carrying amount will be recovered principally through a sale transaction rather than through continued use. The
sale of these assets must be considered highly probable. A sale is considered highly probable if the assets are available for immediate
sale, and management has stated their intention to sell the properties within one year. Assets classified as held for sale are measured at the lower of the carrying value and the fair value less costs to sell,
and are no longer depreciated.


 




    	 	 	15



     


    

 


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


Income taxes


 


Income tax expense comprises
current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized
directly in equity, in which case it is recognized in equity.


 


Current tax is the expected tax
payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment
to tax payable in respect of previous years.


 


Deferred tax is recognized by
providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for taxation purposes. Deferred tax is not recognized on the initial recognition of assets or liabilities in a
transaction that is not a business combination. In addition, deferred tax is not recognized for taxable temporary differences arising
on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary
differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred
tax assets and liabilities are offset if there is a legally enforceable right to offset, and they relate to income taxes levied
by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities
and assets on a net basis or their tax assets and liabilities will be realized simultaneously.


 


A deferred tax asset is recognized
to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related
tax benefit will be realized.


 


Deferred income taxes are presented
as non-current.


 


		5	Recent accounting pronouncements



 


The following pronouncements
and amendments became effective for annual periods beginning on or after January 1, 2014.  Adopting these standards has had
minimal or no impact on the Company’s financial statements.


 


IAS 32 – “Financial
Instruments: Presentation”, the amendments clarify that the right to offset financial assets and liabilities must be available
on the current date and cannot be contingent on a future event. The adoption of IAS 32 did not impact the Consolidated Financial
Statements.


 




    	 	 	16



     


    

 


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


IAS 36 – “Impairment
of Assets” which reduces the circumstances in which the recoverable amount of CGUs is required to be disclosed and clarify
the disclosures required when an impairment loss has been recognized or revered in the period. The adoption of IAS 36 did not impact
the consolidated financial statements.


 


IFRIC 21 – “Levies”
which clarifies that an entity recognizes a liability for a levy when the activity that triggers payment, as identified by the
relevant legislation, occurs. The interpretation also clarifies that no liability should be recognized before the specified minimum
threshold to trigger that levy is reached. The adoption of this interpretation did not have an impact on the Company’s consolidated
financial statements.


 


The Company has reviewed the
new and revised accounting pronouncements that have been issued but are not yet effective and determined that the following may
have an impact on the Company. The Company has not quantified the effect of the following:


 


IFRS 15 – “Revenue
from contracts with customers”, replaces International Accounting Standard 11, “Construction Contracts” (“IAS
11”), IAS 18, “Revenue” (“IAS 18”), and several revenue-related interpretations. IFRS 15 establishes
a single revenue recognition framework that applies to contracts with customers. The standard requires an entity to recognize revenue
to reflect the transfer of goods and services for the amount it expects to receive, when control is transferred to the purchaser.
Disclosure requirements have also been expanded. This IFRS becomes effective for annual periods beginning on or after January 1,
2017 with earlier adoption permitted. The standard may be applied retrospectively or using a modified retrospective approach.
The Company is currently evaluating the impact of adopting IFRS 15 on the Consolidated Financial Statements.


 


IFRS 9 – “Financial
Instruments”, which is the result of the first phase of the IASB’s project to replace IAS 39 – “Financial
Instruments: Recognition and Measurement”. The new standard replaces the current multiple classification and measurement
models for financial assets and liabilities with a single model that has only two classification categories: amortized cost and
fair value. This IFRS becomes effective for periods beginning on or after January 1, 2018. The Company has not yet begun the process
of assessing the impact that the new standard will have on its financial statements


 




    	 	 	17



     


    

 


 


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


		6	Assets held for sale



 


On December 23, 2014, the Company
announced that it had entered into an agreement with an unrelated party to dispose of its Eagle and Lynx royalties (the “Royalties”),
and accordingly these Royalties were classified as held for sale at December 31, 2014. On January 14, 2015, the Company closed
the transaction selling the Royalties for gross proceeds of $7,000,000 USD ($8,349,608 CDN). The carrying value of the Royalties
exceeded the proceeds received and consequently an impairment of $674,312 was recorded in the statement of comprehensive loss as
at December 31, 2014.


 


		7	Royalty interests



 


For the years presented, the
Company had the following royalty interests:


 


	

Royalty
    Interest	 	December
    31, 2013
 Net book
    value
 $	 	 	Acquisition

    Purchase Price
 $	 	 	Acquisition

    Costs
 $	 	 	Royalty
    Advance
 Payments

    $	 	 	Depletion
    &
 Impairment

    $	 	 	Transfer
    to Assets
 Held
    for Sale
 $	 	 	December
    31, 2014
 Net
    book value
 $	 
	Bachelor Lake	 	 	596,319	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(176,234	)	 	 	-	 	 	 	420,085	 
	Blende	 	 	1,012,527	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,012,527	 
	KM61	 	 	55,323	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	55,323	 
	Seymour Lake	 	 	78,548	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	78,548	 
	Hart	 	 	1,492,368	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,492,368	 
	Eagle/Lynx (note 6)	 	 	9,058,929	 	 	 	-	 	 	 	-	 	 	 	(35,000	)	 	 	(674,312	)	 	 	(8,349,608	)	 	 	-	 
	Justin/Hit	 	 	516,240	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	516,240	 
	Barry Project	 	 	452,365	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	452,365	 
	Iron Horse Project	 	 	609,947	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	609,947	 
	Eastern Extension Gold Deposit	 	 	450,446	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	450,446	 
	Bradshaw Gold Deposit	 	 	762,009	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	762,009	 
	Barry/Windfall/Waconichi Royalties	 	 	-	 	 	 	85,526	 	 	 	2,800	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	88,326	 
	Royalty impairment	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(4,281,000	)	 	 	-	 	 	 	(4,281,000	)
	 	 	 	15,085,022	 	 	 	85,526	 	 	 	2,800	 	 	 	(35,000	)	 	 	(5,131,546	)	 	 	(8,349,608	)	 	 	1,657,194	 



 


	

Royalty
    Interest	 	December
    31, 2012
 Net book
    value
 $	 	 	Acquisition

    Purchase Price
 $	 	 	Acquisition

    Costs
 $	 	 	Royalty
    Advance
 Payments

    $	 	 	
Disposals

    $	 	 	Depletion
    &
 Impairment

    $	 	 	December
    31, 2013
 Net
    book value
 $	 
	Bachelor Lake	 	 	1,457,028	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(728,514	)	 	 	(132,195	)	 	 	596,319	 
	Blende	 	 	1,012,527	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,012,527	 
	Bermuda & Bermuda Project	 	 	135,748	 	 	 	275,000	 	 	 	3,936	 	 	 	-	 	 	 	-	 	 	 	(414,684	)	 	 	-	 
	KM61	 	 	55,323	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	55,323	 
	Seymour Lake	 	 	78,548	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	78,548	 
	Yellowjacket	 	 	568,224	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(568,224	)	 	 	-	 	 	 	-	 
	Hart	 	 	1,492,368	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	1,492,368	 
	Eagle/Lynx	 	 	9,093,929	 	 	 	-	 	 	 	-	 	 	 	(35,000	)	 	 	-	 	 	 	-	 	 	 	9,058,929	 
	Justin/Hit	 	 	516,240	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	516,240	 
	Barry Project	 	 	-	 	 	 	450,000	 	 	 	2,365	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	452,365	 
	Iron Horse Project	 	 	-	 	 	 	600,000	 	 	 	9,947	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	609,947	 
	Eastern Extension Gold Deposit	 	 	-	 	 	 	440,000	 	 	 	10,446	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	450,446	 
	Bradshaw Gold Deposit	 	 	-	 	 	 	750,000	 	 	 	12,009	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	762,009	 
	 	 	 	14,409,935	 	 	 	2,515,000	 	 	 	38,703	 	 	 	(35,000	)	 	 	(1,296,738	)	 	 	(546,879	)	 	 	15,085,022	 



 




    	 	 	18



     


    

  


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


On September 17, 2012, the Company
entered into a royalty acquisition partnership (the “Partnership”) with Franco-Nevada Corporation (“Franco-Nevada”),
an arms-length party. Under the terms of the Partnership, the Company has provided Franco-Nevada a participation right to acquire,
at the time of purchase, a 50% asset-level ownership position in any future royalty transaction which the Company has a signed
letter of intent or binding agreement to acquire. The Partnership applies to any new smelter return, net profits interest or metal
stream royalty acquisition where the total consideration paid for the royalty is up to $15,000,000. The terms of the Partnership
extend until September 17, 2014. The Partnership was not renewed and accordingly has expired as at December 31, 2014.


 


Impairment – royalty
interests


 


On February 18, 2015, the Company
entered into an arrangement agreement (the “Arrangement Agreement”) whereby all of the outstanding common shares of
the Company will be acquired by an unrelated party (the “Acquirer”) by way of a statutory plan of arrangement (the
“Arrangement”). Pursuant to the Arrangement, shareholders of the Company will receive common shares of the Acquirer
on the basis of 0.045 common shares of the Acquirer for each 1 common share of the Company. The net asset position of the Company
at December 31, 2014, adjusted for the subsequent sale of the Eagle and Lynx royalty (note 6) and the repayment of the convertible
debenture (note 8), was in excess of the fair value of the Company and accordingly an impairment of $4,281,000 was taken over the
royalty interests. In addition to the impairment of Eagle and Lynx royalty of $674,312 (note 6), the total impairment expense was
$4,955,312.


 


Barry/Windfall/Waconichi
Royalties


 


On May 1, 2014, the Company closed
a transaction (the “Acquisition”) to acquire a portfolio of net smelter return (“NSR”) interests (the “Assets”)
from an unrelated party. The Assets consist of five NSR interests on Quebec-based gold projects. As consideration for the Acquisition,
the Company issued 328,948 common shares at a value of $0.26 per common share, for total proceeds of $85,526.


 


The Barry Royalties


 


Two of the five NSR interests
include claims surrounding the Barry Gold Deposit being advanced by Metanor Resources Inc. (“Metanor”). The first of
these is a 1% NSR on claims immediately north of the Barry Gold Deposit, which Metanor may repurchase one half of for a cash payment
of $500,000; the second of which is a 0.5% NSR on claims surrounding the Barry Gold Deposit, which Metanor may repurchase one half
of for a cash payment of $250,000.


 




    	 	 	19



     


    

  


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


The Windfall Royalties


 


Two of the five NSR interests
are claims adjacent to the Windfall Lake Gold Deposit (“Windfall Lake”) being advanced by Eagle Hill Exploration Corp.
(“Eagle Hill”). The first of these is a 1% NSR on 184 claims north of Windfall Lake, which Eagle Hill may repurchase
for a cash payment of $500,000; the second of which is a 0.5% NSR on claims immediately north of Windfall Lake, which Eagle Hill
may repurchase for a cash payment of $500,000.


 


The Waconichi Royalty


 


One of the five NSR interests
is a 1% NSR on claims comprising the Waconichi property (the “Waconichi NSR”) operated by Northern Superior Resources
Inc. (“Northern Superior”). Northern Superior may repurchase one half of the Waconichi NSR for a cash payment of $1,000,000.


 


Bradshaw Gold Deposit


 


On December 13, 2013, the Company
closed a purchase agreement pursuant to which the Company acquired royalty interests on the Bradshaw Gold Deposit located in Ontario.
The Company acquired a 1% gross royalty on the Bradshaw Gold Deposit, a 1% gross royalty interest on a portfolio of mineral claims
surrounding the Bradshaw Gold Deposit, and a right-of-first-refusal with respect to the future gold streams associated with the
Bradshaw Gold Deposit (collectively, the “Assets”). As consideration for the Assets, the Company paid cash of $750,000.


 


Eastern Extension Gold
Deposit 


 


On November 7, 2013, the Company
closed a purchase agreement pursuant to which the Company acquired a royalty interest on the Eastern Extension Gold Deposit located
in Quebec from the operator of the project. The royalty interest provides a 1% NSR for total consideration of $440,000, paid through
the issuance of 1,000,000 common shares of the Company at a value of $0.44 per common share. One-half of the shares issued are
subject to an escrow period expiring 10 months from the date of closing of the transaction.


 


Iron Horse Project


 


On August 2, 2013, the Company
entered into an assumption agreement pursuant to which the Company acquired a royalty interest in the Iron Horse Project located
in Newfoundland for total consideration of $600,000, paid through the issuance of 1,333,333 common shares of the Company at a
value of $0.45 per common share. The royalty interest provides a 1% NSR. The shares provided to Metals Creek are subject to an
escrow period whereby 25% of the shares will be released every 6 months from the date of closing of the transaction.


 




    	 	 	20



     


    

  


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


Barry Project


 


On March 25, 2013, the Company
entered into an assumption agreement pursuant to which the Company acquired a royalty interest in the Barry Gold Deposit located
in Quebec for total cash consideration of $450,000. The royalty interest acquired is a 1% NSR and covers two property segments
with stand-alone royalty obligations. As part of the royalty agreement, the operating entity has the right to purchase one-half
of the 1% NSR on one of the property segments for an amount of $500,000.


 


Bachelor Lake


 


On March 31, 2011, the Company
entered into an assumption agreement pursuant to which the Company acquired a royalty interest in the Bachelor Lake Property located
in Quebec for $1,200,000. The royalty interest acquired is a 1% NSR on all minerals produced from all or any part of this property
as outlined in the royalty agreement with the operating entity. Pursuant to the assumption agreement, the Company will be entitled
to all royalties paid on the first 200,000 ounces of gold or gold equivalent ounces of other minerals and that royalty payments
for minerals extracted in excess of 200,000 ounces will be split such that the Company will receive 60% of these royalty payments.


 


On March 22, 2012, the Company
entered into an amendment to purchase agreement in exchange for cash consideration of $300,000. The amendment to purchase agreement
changed the assumption agreement dated March 31, 2011 and provided that the Company would receive 100% of royalty payments in excess
of 200,000 ounces of gold or gold equivalent ounces of other minerals. During the period ended December 31, 2012, commercial production
began on the Bachelor Lake property, and accordingly the Company has recorded a depletion expense.


 


As part of the royalty agreement,
the operating entity had the right to re-purchase the royalty for an amount of $1,000,000 subject to the right of the Company to
limit the sale to half of the royalty for an amount of $500,000. The operating entity was entitled to exercise its right to re-purchase
the royalty at any time within eighteen months from the date of the commencement of the commercial production, as defined in the
royalty agreement. On February 5, 2013, the Company accepted the contractual re-purchase right of one half of the Bachelor Lake
NSR royalty in exchange for a cash payment of $500,000 and a declaration by the operator of commercial production. The Company
now retains a 0.5% NSR on all life-of-mine production from the Bachelor Lake properties. The Company recorded a loss on the re-purchase
of the royalty of $228,514.


 




    	 	 	21



     


    

  


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


Bermuda & Bermuda Project


 


On December 13, 2011, the Company
entered into an assumption agreement pursuant to which the Company acquired a royalty interest in the Bermuda Property located
in Ontario for $125,000. The royalty interest acquired is a 0.5% NSR on all minerals produced from all or any part of this property
as outlined in a royalty agreement with the operating entity.


 


On March 1, 2013, the Company
entered into an assumption agreement pursuant to which the Company acquired a royalty interest in the Bermuda Project located in
Ontario for total consideration of $275,000, paid through the issuance of 352,565 common shares of the Company at a value of $0.78
per common share. The royalty interest provides an NSR of 1%.


 


Subsequent to December 31, 2013,
the Company determined that the carrying value of the Bermuda and Bermuda project royalties exceeded the recoverable amount and
accordingly impaired the value to $nil as at December 31, 2013.


 


Yellowjacket


 


On January 10, 2012, the Company
entered into a purchase agreement pursuant to which the Company acquired a 1.5% NSR interest in the Yellowjacket property located
in British Columbia. The acquisition cost of the royalty interest is $700,000 and is held by way of an escrow agreement between
the vendor and the Company. Pursuant to the escrow agreement, the Company paid $100,000 to the vendor on the closing date of the
transaction and was required to pay the additional $600,000 by way of six annual payments of $100,000 due on or before each of
the annual anniversary dates of January 10.


 


The present value of the future
annual payments of $600,000 was recorded as a liability in the consolidated statement of financial position. Through a non-cash
accretion expense, the liability was being increased to its face value of $600,000 over the 6 year life of the liability.


 


On January 10, 2013, upon review
of the operator’s strategic announcement indicating the operator was sourcing opportunities to increase the value from the
mining property, the Company elected to discontinue all remaining and future obligations toward the acquisition price. The remaining
cost of the royalty interest recorded and the offsetting current and long-term portion of the royalty interest payable were removed
upon the disposition date.


 


A director and CEO of the Company
was a director of Athabasca Nuclear Corporation (formerly Yellowjacket Resources Ltd) at the time of the above, the owner of the
Yellowjacket Property.


 




    	 	 	22



     


    

  


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


Eagle and Lynx 


 


On July 30, 2012, the Company
entered into an agreement to acquire two royalty interests in the Eagle and Lynx zones for total consideration of $9,000,000. The
Eagle zone interest acquired provides a gross returns royalty of 2%, whereby the production royalty is to be calculated upon commencement
of production. The royalty rate of 2% of gross returns received from the sale of metals produced will be reduced to 1% of the gross
returns after the Company has received $1,000,000 in royalty payments of which $580,000 has been received to date. The operator
has no buy-back rights on this royalty. The Lynx zone interest acquired provides a net smelter royalty of 1.5%, which may be repurchased
by the operator at a rate of $100,000 per 0.1% for a total of $1,500,000, less advance royalty payments received by either the
royalty’s vendor or the Company, as the cumulative case may be. During the year ended December 31, 2014, the Company received
the second annual advance royalty payment of $35,000, which has been recorded as an offset to the cost of the royalty.


 


The Company issued 200,000 share
purchase warrants to those who facilitated the acquisition of the royalty interests and entitles the holders thereof to purchase
one common share of the Company at a price of $0.80 per common share until July 14, 2014. The share purchase warrants were valued
at $68,698 and recorded as an acquisition cost with an offsetting credit to warrants. The share purchase warrants expired unexercised
during the year ended December 31, 2014.


 


On January 14, 2015, the Company
sold its interest in Eagle and Lynx (note 6).


 




    	 	 	23



     


    

  


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


		8	Convertible debenture



 


On July 30, 2012, the Company
issued a non-brokered convertible debenture in the amount of $5,400,000 (the “Debenture”) to Callinan Royalties Corporation.
The Debenture bears an interest rate of 10% per annum, compounded quarterly, and has a maturity date of July 30, 2016. As of December
31, 2014, the Company has accrued $1,239,082 (December 31, 2013 - $817,344) of interest expense. The Debenture is convertible into
units of the Company at the option of the holder at any time up to the date of maturity. The conversion price is $0.80 per unit.
Each unit consists of one common share of the Company and one common share purchase warrant. Each common share purchase warrant
entitles the holder thereof to purchase one common share of the Company at a price of $1.20 per common share until July 30, 2016.
The interest can be deferred in full to the maturity date and can be paid in common shares of the Company at the then 5-day weighted-average
market share price. The Debenture can also be redeemed in either cash, or for a 60% ownership position in royalties on the Eagle
Zone and Lynx Zone mining properties. The Company has the right to redeem the Debenture for a cash payment of $8,600,000 at any
point up to the maturity date, subject to the holder first having a pre-emptive right to convert the amount then outstanding into
equity of the Company. The Debenture is secured by a general security agreement over the Company’s assets.


 


The Debenture is a compound financial
instrument and as such has been bifurcated into a liability and equity component. The residual valuation method was used to determine
the equity portion of the Debenture. Under this approach, the liability component was valued first, and the difference between
the proceeds of the Debenture and the fair value of the liability was assigned to the equity component. The Company allocated $4,448,012
to the liability component and $951,988 to the equity component upon issuance of the Debenture.


 


The present value of the liability
component was calculated using a discount rate of 15% per annum which approximated the interest rate that would have been applicable
to non-convertible debt of the Company at the time the Debenture was issued. Through a non-cash interest expense, the liability
component of the Debenture will be increased to its face value of $5,400,000 over the 4 year life of the Debenture using the effective
yield method.


 




    	 	 	24



     


    

  


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


The following table summarizes
the accounting of the Debenture:


 


	 	 	Debenture
 $	 
	Balance, December 31, 2012	 	 	4,775,337	 
	Accretion of liability component	 	 	237,996	 
	Accrued interest expense	 	 	588,969	 
	Balance, December 31, 2013	 	 	5,602,302	 
	Accretion of liability component	 	 	237,996	 
	Accrued interest expense	 	 	650,113	 
	Balance, December 31, 2014	 	 	6,490,411	 



 


On January 12, 2015, the Company
sold its Eagle and Lynx royalty interests for gross proceeds of $7,000,000 USD ($8,349,608 CDN) (note 6). The proceeds were used
to extinguish the principal balance and accrued interest owing under the Debenture, pursuant to the Company’s right to repay
the Debenture prior to its maturity date of July 2016 for a one-time cash payment of $8,600,000 CDN. The Company made a one-time
cash payment of $6,882,484 CDN and issued 2,836,603 common shares to Callinan Royalties (the “Lender”) at a fair value
of $255,294, which is $0.09 per share. The Lender accepted the cash payment and common shares as settlement for the original principal
and its accrued interest through to the closing date of the settlement of January 12, 2015.


 


		9	Share capital



 


		a)	Authorized



 


Unlimited number of common shares, no par value


Unlimited number of voting convertible, redeemable,
preferred shares, no par value


 


		b)	Issued



 


	 	 	Number of 

Common Shares	 	 	Amount
 $	 
	Balance, December 31, 2012	 	 	20,099,414	 	 	 	10,150,106	 
	Royalty interest acquisition (note 7)	 	 	2,685,898	 	 	 	1,315,000	 
	Private placement (i)	 	 	1,960,000	 	 	 	393,251	 
	Share issue costs (i)	 	 	-	 	 	 	(36,414	)
	Exercise of broker warrants (note 9(g))	 	 	21,700	 	 	 	10,850	 
	Balance, December 31, 2013	 	 	24,767,012	 	 	 	11,832,793	 
	Royalty interest acquisition (note 7)	 	 	328,948	 	 	 	85,526	 
	Private placement (ii)	 	 	720,000	 	 	 	177,309	 
	Share issue costs (ii)	 	 	-	 	 	 	(9,648	)
	Balance, December 31, 2014	 	 	25,815,960	 	 	 	12,085,980	 



 




    	 	 	25



     


    

  


	Gold Royalties Corporation
	Notes to the Consolidated Financial Statements
	For the year ended December 31, 2014 and December 31, 2013 
	(Audited)


 


		i)	On December 6, 2013, the Company completed a private placement (the “Private Placement”),
issuing 1,960,000 units (“Units”) for total proceeds of $784,000 ($0.40/unit). Each unit consisted of one common share
of the Company and one common share purchase warrant, with each whole warrant entitling the holder thereof to purchase one common
share of the Company for $0.50 per common share until December 6, 2015, which was valued at $390,749 (note 9 (f)).



 


In connection with the private
placement, cash commissions of $56,645 were paid to facilitators of the private placement of which $28,413 was allocated to share
capital and $28,232 was allocated to warrants. 38,625 broker units were also issued, valued at $15,952 on the same basis as the
Unit (note 9(g)). The broker units are exercisable until December 6, 2015. $8,001 of the broker unit option value was allocated
to share capital and $7,951 was allocated to warrants, with an offsetting credit to contributed surplus totaling $15,952.


 


		ii)	On May 1, 2014, the Company completed a private placement, issuing 720,000 units for total proceeds
of $252,000 ($0.35/unit). Each unit consisted of one common share of the Company and one common share purchase warrant, with each
whole warrant entitling the holder thereof to purchase one common share of the Company for $0.50 per common share until May 1,
2016, which was valued at $74,691 (note 9 (f)).



 


In connection with the private
placement, cash commissions of $11,558 were paid to facilitators of the private placement of which $9,648 was allocated to share
capital and $1,910 was allocated to warrants.


 


		iii)	As at December 31, 2014, there is 578,400 common shares (2013 – 1,156,800) held in escrow



 


		c)	Stock options



 


The Company established a stock
option plan (the “Plan”) for the benefit of employees, directors, officers and consultants of the Company. The maximum
number of options available under the Plan is limited to 10% of the issued and outstanding common shares on the date the option
is granted. The terms of each grant, including the price, vesting period and the exercisable period are determined by the Board
of Directors.


 




    	 	 	26



     


    

 


 


Gold Royalties Corporation


Notes to the Consolidated Financial Statements


For the year ended December
31, 2014 and December 31, 2013 


(Audited)


 


During the year ended December 31,
2014, there were 375,000 options granted, 70,000 options were cancelled, 140,000 options were forfeited and there were no exercises
or expiries. The following table summarizes information about the Company’s stock options outstanding at December 31, 2014:


 


	 	 	December 31, 2014	 	 	December 31, 2013	 
	 	 	Number of Options
 Exercisable and
 Outstanding	 	 	Weighted Avg.
 Exercise Price
 $
	 	 	Number of Options
 Exercisable and
 Outstanding	 	 	Weighted Avg.
 Exercise Price 
$	 
	Outstanding, beginning of year	 	 	1,150,000	 	 	 	0.79	 	 	 	900,000	 	 	 	0.78	 
	Granted	 	 	375,000	 	 	 	0.40	 	 	 	250,000	 	 	 	0.825	 
	Cancelled	 	 	(70,000	)	 	 	0.825	 	 	 	-	 	 	 	-	 
	Forfeitures	 	 	(140,000	)	 	 	0.825	 	 	 	-	 	 	 	-	 
	Outstanding, end of year	 	 	1,315,000	 	 	 	0.68	 	 	 	1,150,000	 	 	 	0.79	 



 


The total stock options outstanding at December 31, 2014
are as follows:


 


	Exercise
 prices ($)	 	Options
 outstanding	 	 	Weighted average
 remaining term
 (years)	 	 	Weighted
 average exercise
 price ($)	 	 	Options
 exercisable	 	 	Weighted
 average exercise
 price ($)	 
	0.00-1.00	 	 	1,315,000	 	 	 	3.51	 	 	 	0.68	 	 	 	1,167,500	 	 	 	0.66	 



 


On October 4, 2012, the Company announced
its intent to grant 250,000 stock options to officers and employees of the Company. On August 13, 2013, the grant received regulatory
and shareholder approval, and accordingly the stock options were valued as of the approval date. Each option had an exercise price
of $0.825 per option and each has a term of 5 years from the original grant date. The stock options were re-priced to $0.30 on
August 29, 2014. All options vest 1/3 on each of the first, second and third anniversaries of the original grant date.


 


On December 13, 2013, the Company
announced its intent to grant 450,000 stock options to officers and employees of the Company. On August 29, 2014, the grant received
regulatory and shareholder approval, accordingly the stock options were valued as of the approval date. 375,000 stock options were
granted as 75,000 options were granted to officers and employees who resigned prior to the approval date of August 29, 2014. Each
option has an exercise price of $0.40 per option and each has a term of 5 years from the original grant date.


 


		d)	Share based payment expense



 


The stock options granted during
the year ended December 31, 2014 are all exercisable at $0.40 per option and expire 5 years after the grant date. All options vested
immediately on the approval date. Share-based payment expense, being the estimated fair value of the options granted was calculated
using the Black-Scholes option pricing model.


 




    	 	 	27



     


    

 


Gold Royalties Corporation


Notes to the Consolidated Financial Statements


For the year ended December
31, 2014 and December 31, 2013 


(Audited)


 


The stock options granted during
the year ended December 31, 2013 are all exercisable at $0.825 per option and expire 5 years after the grant date. All options
vest 1/3 on each of the first, second and third anniversaries of the grant date. Share-based payment expense, being the estimated
fair value of the options granted was calculated using the Black-Scholes option pricing model.


 


The weighted average assumptions
used in the calculation are noted below:


 


	 	 	December 31, 2014	 	 	December 31, 2013	 
	Risk-free interest rate	 	 	1.35	%	 	 	1.71	%
	Expected life	 	 	5
                                         years	 	 	 	3 years	 
	Volatility	 	 	103.87	%	 	 	103.87	%
	Fair value per option	 	$	0.20	 	 	$	0.27	 
	Forfeiture rate	 	 	0.00	%	 	 	0.00	%



 


Compensation expense recognized during
the year ended December 31, 2014 was $144,903 (year ended December 31, 2013 - $232,887).


 


		e)	Contributed surplus



 


	 	 	December
                                         31, 2014
 $
	 	 	December
                                         31, 2013
 $
	 
	Balance, beginning of year	 	 	616,263	 	 	 	367,424	 
	Share based payment expense	 	 	175,293	 	 	 	232,887	 
	Broker warrants issued under Private Placement (note 9(g))	 	 	-	 	 	 	15,952	 
	Fair value reallocation on expiry of warrants	 	 	1,088,188	 	 	 	-	 
	Fair value reallocation on stock option forfeitures	 	 	(30,390	)	 	 	-	 
	Balance, end of year	 	 	1,849,354	 	 	 	616,263	 



 




    	 	 	28



     


    

 


Gold Royalties Corporation


Notes to the Consolidated Financial Statements


For the year ended December
31, 2014 and December 31, 2013 


(Audited)


 


		f)	Warrants



 


Warrants to acquire common shares outstanding
at December 31, 2014 are as follows:


 


	 	 	Number of
 warrants issued
 and exercisable	 	 	 
Amount
 $
	 	 	Weighted average
 exercise price
 $
	 	 	Weighted average
 Remaining life
 (years)
	 
	Balance, December 31, 2012	 	 	9,851,114	 	 	 	1,268,288	 	 	 	0.74	 	 	 	2.31	 
	Private placement (note 9 (b)(i))	 	 	1,960,000	 	 	 	390,749	 	 	 	0.50	 	 	 	1.93	 
	Share issue costs (note 9(b)(i) and 9(g))	 	 	-	 	 	 	(36,183	)	 	 	-	 	 	 	-	 
	Balance, December 31, 2013	 	 	11,811,114	 	 	 	1,622,854	 	 	 	0.70	 	 	 	1.42	 
	Private placement (note 9(b)(ii))	 	 	720,000	 	 	 	74,691	 	 	 	0.50	 	 	 	1.33	 
	Share issue costs (note 9(b)(ii))	 	 	-	 	 	 	(1,910	)	 	 	-	 	 	 	-	 
	Reallocation of warrant fair value upon expiry	 	 	(4,391,112	)	 	 	(1,088,188	)	 	 	(0.48	)	 	 	-	 
	Balance, December 31, 2014	 	 	8,140,002	 	 	 	607,447	 	 	 	0.50	 	 	 	0.92	 



 


The fair value of the warrants are
estimated as at the grant date using the Black-Scholes option pricing model. The weighted average assumptions used in the calculation
are noted below:


 


	 	 	December 31, 2014	 	 	December 31, 2013	 
	Risk-free interest rate	 	 	1.05	%	 	 	1.06	%
	Expected life	 	 	2
                                         years	 	 	 	2 years	 
	Expected volatility	 	 	105.61	%	 	 	105.61	%
	Fair value per warrant	 	 	0.10	 	 	 	0.20	 



 


		g)	Broker warrants



 


	 	 	 
 
Number of Broker
 Warrants
	 	 	Weighted
 Average Exercise
 Price
 $
	 	 	 
 
Amount
 $
	 	 	 
Weighted
 Average Life
 (years)
	 
	Balance, December 31, 2012	 	 	647,500	 	 	 	0.79	 	 	 	222,910	 	 	 	1.61	 
	Exercise of broker warrants acquired on Acquisition	 	 	(21,700	)	 	 	-	 	 	 	-	 	 	 	-	 
	Broker Unit – common share portion (i)	 	 	38,625	 	 	 	0.40	 	 	 	8,001	 	 	 	1.93	 
	Broker Unit – warrant portion (i)	 	 	38,625	 	 	 	0.50	 	 	 	7,951	 	 	 	1.93	 
	Balance, December 31, 2013	 	 	703,050	 	 	 	0.76	 	 	 	238,862	 	 	 	0.78	 
	Expiry of broker warrants	 	 	(625,800	)	 	 	0.80	 	 	 	(222,910	)	 	 	-	 
	Balance, December 31, 2014	 	 	77,250	 	 	 	0.40	 	 	 	15,952	 	 	 	0.93	 



 


		i)	Those who facilitated the private placement received an aggregate of 38,625 broker units on the
same basis as the Unit. Each Broker Unit, exercisable until December 6, 2015, consisted of one common share of the Company and
one common share purchase warrant, with each whole warrant entitling the holder thereof to purchase one common share of the Company
for $0.50 per common share until December 6, 2015.



 




    	 	 	29



     


    

 


Gold Royalties Corporation


Notes to the Consolidated Financial Statements


For the year ended December
31, 2014 and December 31, 2013 


(Audited)


 


The common share portion of the
broker unit was valued at $8,001 and the warrant portion of the broker unit was valued at $7,951, for an aggregate value of $15,952.
The aggregate value of the Broker Unit was included in share issue costs, allocated between share capital and warrants (note 9(b)(i)),
with a corresponding credit to contributed surplus.


 


The fair value of the broker units
granted was estimated as at the grant date using the Black-Scholes option pricing model. The weighted average assumptions used
in the calculation are noted below:


 


	 	 	December 31, 2013	 
	Risk-free interest rate	 	 	1.06	%
	Expected life	 	 	2 years	 
	Expected volatility	 	 	105.61	%
	Fair value per warrant	 	$	0.20	 



 


		10	Income taxes



 


Income tax expense differs from that which
would be expected from applying the combined effective Canadian federal and provincial corporate tax rates of 25.95% (December
31, 2013 – 25.95%) to income before income taxes as follows:


 


	 	 	December
31, 2014

$
	 	 	December 31, 2013 
$	 
	Loss per statement of comprehensive loss	 	 	(6,351,677	)	 	 	(2,369,633	)
	Tax rate	 	 	25.95	%	 	 	25.95	%
	Expected income tax provision	 	 	(1,648,000	)	 	 	(614,920	)
	Increase (decrease) resulting from:	 	 	 	 	 	 	 	 
	Share-based payments	 	 	40,000	 	 	 	60,434	 
	Other	 	 	207,000	 	 	 	16,451	 
	Items through statement of financial position	 	 	(19,000	)	 	 	(18,839	)
	Change in deferred tax asset not recognized	 	 	1,420,000	 	 	 	556,874	 
	Deferred income tax recovery	 	 	-	 	 	 	-	 



 




    	 	 	30



     


    

 


Gold Royalties Corporation


Notes to the Consolidated Financial Statements


For the year ended December
31, 2014 and December 31, 2013 


(Audited)


 


Significant components of deferred
tax assets related to temporary differences and tax loss carry forwards, which have not been recognized in these financial statements,
are as follows:


 


	 	 	December 31, 2014
 $
	 	 	December 31, 2013 
$	 
	Royalty interests	 	 	1,571,344	 	 	 	239,708	 
	Non-capital tax losses carried forward	 	 	829,194	 	 	 	646,294	 
	Share issue costs	 	 	145,295	 	 	 	219,468	 



 


Significant components of deferred
tax liabilities related to temporary differences and tax loss carry forwards, which have been recognized in these financial statements,
are as follows:


 


	 	 	December 31, 2014
 $
	 	 	December 31, 2013 
$	 
	Convertible debenture	 	 	(95,000	)	 	 	(160,000	)
	Non-capital tax losses carried forward	 	 	95,000	 	 	 	160,000	 



 


The accumulated non-capital loss carry
forwards expire as follows:


 


	2034	 	 	454,333	 
	2033	 	 	1,320,167	 
	2032	 	 	450,073	 
	2031	 	 	478,111	 
	2030	 	 	647,613	 
	2029	 	 	211,143	 



 


		11	Related party transactions



 


The Company considers its directors
and executives to be key management personnel. Compensation attributed to the directors and key management personnel, consisting
of the president and chief executive officer and the chief financial officer, is as follows:


 


	 	 	December 31, 2014
 $
	 	 	December 31, 2013 
$	 
	Salaries and benefits	 	 	325,945	 	 	 	358,468	 
	Share based expense	 	 	144,903	 	 	 	232,887	 
	Total	 	 	470,848	 	 	 	591,355	 



 




    	 	 	31



     


    

 


Gold Royalties Corporation


Notes to the Consolidated Financial Statements


For the year ended December
31, 2014 and December 31, 2013 


(Audited)


 


		12	Financial instruments and risk management



 


The Board of Directors oversees managements’
establishment and execution of the Company’s risk management framework. Management has implemented and monitors compliance
with risk management policies. The Company’s risk management policies are established to identify and analyze the risks faced
by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to market conditions and the Company’s
activities.


 


		a)	Fair values 



 


The Company’s financial instruments
consist of cash, accounts receivable, accounts payable and accrued liabilities, and the convertible debenture. The fair value of
all the financial instruments, other than cash and the convertible debenture, approximate their carrying value due to their short-term
nature.


 


The significance of inputs used in
making fair value measurements are examined and classified according to a fair value hierarchy. Fair values of assets and liabilities
included in Level 1 are determined by reference to quoted prices in active markets for identical assets and liabilities. Assets
and liabilities in Level 2 include valuations using inputs other than quoted prices for which all significant outputs are observable,
either directly or indirectly. Level 3 valuations are based on inputs that are unobservable and significant to the overall fair
value measurement.


 


At December 31, 2014, the Company’s
cash has been subject to Level 1 valuation.


 


		b)	Credit risk



 


Credit risk is the risk that a third
party might fail to fulfill its performance obligations under the terms of a financial instrument. Credit risk arises from cash
and accounts receivables. The Company closely monitors its financial assets and maintains its cash deposits in high quality financial
institutions. The maximum credit risk exposure for all of the Company's current financial assets is the carrying value of those
assets. As at December 31, 2014, $61,589 (December 31, 2013 - $66,954) of the Company’s accounts receivable was held with
one party and was collected subsequent to December 31, 2014.


 


As at December 31, 2014, the Company
had cash of $634,801 (December 31, 2013 - $589,847) deposited with one major Canadian financial institution. As the amounts are
deposited with a Canadian chartered bank, management has assessed the risk of loss to be minimal.


 




    	 	 	32



     


    

 


Gold Royalties Corporation


Notes to the Consolidated Financial Statements


For the year ended December
31, 2014 and December 31, 2013 


(Audited)


 


		c)	Market risk



 


Market risk is the risk that changes
in market factors, such as commodity prices or interest rates, will affect the value of the Company’s financial instruments.
The Company manages market risk by either accepting it or mitigating it through the use of economic strategies.


 


		(i)	Commodity price risk



 


The Company’s royalty interest
revenue is subject to fluctuations from changes in market prices of the underlying minerals. The market prices are the primary
drivers of the Company’s profitability and ability to generate free cash flow. All of the Company’s future revenue
is un-hedged.


 


		(ii)	Interest rate risk



 


Interest rate risk refers to the risk
that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest
rates. Currently, the Company’s interest rate exposure arises mainly from the interest receipts on cash and the fixed interest
rate on the convertible debenture.


 


		d)	Liquidity risk



 


Liquidity risk is the risk that the
Company will not be able to meet its financial obligations as they come due. The Company ensures, as far as possible, that it will
have sufficient liquidity to meet its liabilities when due, without incurring unacceptable losses or harm to the Company’s
reputation. The Company’s financial liabilities consist of accounts payable and accrued liabilities, and convertible debenture.
As at December 31, 2014, the Company has sufficient cash resources to meet all of its current liabilities as they become due.


 


		13	Capital management



 


The Company defines capital to be
components of shareholders' equity. The Company's objective in managing capital is to ensure its ability to maintain its operations
and achieve its growth objectives (note 1). The Company does not have any externally imposed capital management requirements. Management
reviews its capital management approach on an ongoing basis and believes its current approach is reasonable given the size of the
Company. There has been no change in management’s approach to capital management during the year.


 




    	 	 	33



     


    

 


Gold Royalties Corporation


Notes to the Consolidated Financial Statements


For the year ended December
31, 2014 and December 31, 2013 


(Audited)


 


		14	Subsequent event



 


Subsequent to December 31, 2014,
the Company entered into the following transactions:


 


On February 17, 2015, the Company
entered into an arrangement agreement (the “Arrangement Agreement”) pursuant to which all of the outstanding common
shares of the Company will be acquired by an unrelated party (the “Acquirer”) by way of a statutory plan of arrangement
(the “Arrangement”). Pursuant to the Arrangement, shareholders of the Company will receive common shares of the Acquirer
on the basis of 0.045 common shares of the Acquirer for each 1 common share of the Company. All warrants and stock options outstanding
within the Company as of the Arrangement date will receive, on subsequent exercise of such warrants and options in accordance with
its terms and for the same aggregate exercise price, 0.045 of an Acquirer common share.


 


The Arrangement received shareholder
approval on April 23, 2015.


 


The Arrangement is subject to certain
regulatory approval. In the event the Arrangement is not completed under certain circumstances, the Company has agreed to pay the
Acquirer a termination fee of $200,000.


 




    	 	 	34