Idaho Strategic Resources, Inc. 10-Q

njmc_10q.htm UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to ____________ Commission File No. 000-28837 IDAHO STRATEGIC RESOURCES, INC (Name of small business issuer in its charter) Idaho 82-0490295 (State or other jurisdiction of incorporation or organization) (I.R.S. employer identification No.) 201 N. Third Street , Coeur d’Alene , ID 83814 (Address of principal executive offices) (zip code) ( 208 ) 625-9001 Registrant’s telephone number, including area code Securities registered pursuant to Section 12(g) of the Act: Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered Common Stock, $0.00 par value IDR NYSE American Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act: Large Accelerated Filer ☐ Accelerated Filer ☐ Non-Accelerated Filer ☒ Small Reporting Company ☒ Emerging Growth Company ☐ Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒ APPLICABLE ONLY TO CORPORATE ISSUERS: At November 1, 2023, 12,256,523 shares of the registrant’s common stock were outstanding. IDAHO STRATEGIC RESOURCES, INC QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023 TABLE OF CONTENTS PART I -FINANCIAL INFORMATION 3 ITEM 1. Financial Statements 3 ITEM 2. Management’s Discussion and Analysis of financial Condition and Results of Operations 13 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 16 ITEM 4. Controls and Procedures 16 PART II OTHER INFORMATION 17 ITEM 1. Legal Proceedings 17 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 17 ITEM 3. Defaults upon Senior Securities 17 ITEM 4. Mine Safety Disclosures 17 ITEM 5. Other Information 17 ITEM 6. Exhibits 18 2 Table of Contents PART I - FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS Idaho Strategic Resources, Inc. Condensed Consolidated Balance Sheets (Unaudited) September 30, 2023 December 31, 2022 ASSETS Current assets: Cash and cash equivalents $ 1,971,845 $ 1,638,031 Gold sales receivable 1,127,604 909,997 Inventories 701,493 618,313 Joint venture receivable 1,637 1,926 Investment in equity securities 6,677 - Other current assets 333,459 192,025 Total current assets 4,142,715 3,360,292 Property, plant and equipment, net of accumulated depreciation 10,554,522 9,923,386 Mineral properties, net of accumulated amortization 7,154,092 6,527,561 Investment in Buckskin Gold and Silver 337,217 334,252 Investment in joint venture 435,000 435,000 Reclamation bond 251,310 327,020 Deposits 25,000 76,110 Total assets $ 22,899,856 $ 20,983,621 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 498,374 $ 579,541 Accrued payroll and related payroll expenses 253,696 179,149 Note payable related parties, current portion - 12,226 Notes payable, current portion 1,007,101 859,393 Total current liabilities 1,759,171 1,630,309 Asset retirement obligation 274,091 262,217 Note payable related parties, long term - 62,957 Notes payable, long term 1,511,383 1,315,068 Total long-term liabilities 1,785,474 1,640,242 Total liabilities 3,544,645 3,270,551 Commitments (Note 11) Stockholders’ equity: Preferred stock, no par value, 1,000,000 shares authorized; no shares issued or outstanding - - Common stock, no par value, 200,000,000 shares authorized; September 30, 2023- 12,256,523 and December 31, 2022- 12,098,070 shares issued and outstanding 34,124,125 33,245,622 Accumulated deficit ( 17,559,313 ) ( 18,368,384 ) Total Idaho Strategic Resources, Inc stockholders’ equity 16,564,812 14,877,238 Non-controlling interest 2,790,399 2,835,832 Total stockholders' equity 19,355,211 17,713,070 Total liabilities and stockholders’ equity $ 22,899,856 $ 20,983,621 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents Idaho Strategic Resources, Inc. Condensed Consolidated Statements of Operations (Unaudited) For the Three and Nine-Month Periods Ended September 30, 2023 and 2022 September 30, 2023 September 30, 2022 Three Months Nine Months Three Months Nine Months Revenue: Sales of products $ 3,301,221 $ 9,879,332 $ 1,745,278 $ 6,148,187 Total revenue 3,301,221 9,879,332 1,745,278 6,148,187 Costs of Sales: Cost of sales and other direct production costs 1,831,847 6,079,697 1,728,214 5,345,409 Depreciation and amortization 363,442 1,034,521 245,824 717,939 Total costs of sales 2,195,289 7,114,218 1,974,038 6,063,348 Gross profit (loss) 1,105,932 2,765,114 ( 228,760 ) 84,839 Other operating expenses: Exploration 435,439 916,250 747,217 1,530,122 Management 58,998 183,477 158,625 266,998 Professional services 80,856 444,899 85,429 301,446 General and administrative 117,178 504,241 603,274 1,078,563 (Gain) loss on disposal of equipment - ( 224 ) 64,739 68,641 Total other operating expenses 692,471 2,048,643 1,659,284 3,245,770 Operating income (loss) 413,461 716,471 ( 1,888,044 ) ( 3,160,931 ) Other (income) expense: Equity income on investment in Buckskin ( 1,608 ) ( 2,965 ) ( 542 ) ( 1,213 ) Timber revenue net of costs - ( 20,724 ) - - Gain on forgiveness of SBA loan - - - ( 10,000 ) Loss on investment in equity securities 1,543 4,423 - - Interest income ( 23,560 ) ( 61,253 ) ( 322 ) ( 878 ) Interest expense 33,103 52,999 22,244 85,902 Total other (income) expense 9,478 ( 27,520 ) 21,380 73,811 Net income (loss) 403,983 743,991 ( 1,909,424 ) ( 3,234,742 ) Net loss attributable to non-controlling interest ( 16,696 ) ( 65,080 ) ( 15,005 ) ( 66,123 ) Net income (loss) attributable to Idaho Strategic Resources, Inc. $ 420,679 $ 809,071 $ ( 1,894,419 ) $ ( 3,168,619 ) Net income (loss) per common share-basic $ 0.03 $ 0.07 $ ( 0.16 ) $ ( 0.27 ) Weighted average common share outstanding-basic 12,256,523 12,238,172 12,032,901 11,677,167 Net income (loss) per common share-diluted $ 0.03 $ 0.07 $ ( 0.16 ) $ ( 0.27 ) Weighted average common shares outstanding- diluted 12,263,318 12,243,055 12,032,901 11,677,167 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents Idaho Strategic Resources, Inc. Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) For the Three and Nine-Month Periods Ended September 30, 2023 and 2022 Common Stock Shares Common Stock Amount Accumulated Deficit Attributable to Idaho Strategic Resources, Inc Non-Controlling Interest Total Stockholders’ Equity Balance January 1, 2022 10,940,969 $ 26,004,756 $ ( 15,832,955 ) $ 2,892,001 $ 13,063,802 Contribution from non-controlling interest in New Jersey Mill Joint Venture - - - 2,828 2,828 Issuance of common stock for cash, net of offering costs 360,134 2,701,000 - - 2,701,000 Issuance of common stock for services 3,572 32,326 - - 32,326 Issuance of common stock for warrants exercised 23,057 68,006 - - 68,006 Issuance of common stock for cashless option exercise 28,981 - - - - Conversion of convertible debt to common stock 392,866 1,950,000 - - 1,950,000 Net loss - - ( 455,602 ) ( 17,467 ) ( 473,069 ) Balance March 31, 2022 11,749,579 30,756,088 ( 16,288,557 ) 2,877,362 17,344,893 Contribution from non-controlling interest in New Jersey Mill Joint Venture - - - 18,202 18,202 Issuance of common stock for cash, net of offering costs 138,665 980,107 - - 980,107 Issuance of common stock for warrants exercised 70,919 397,147 - - 397,147 Issuance of common stock for cashless option exercise 26,584 - - - - Net loss - - ( 818,598 ) ( 33,651 ) ( 852,249 ) Balance June 30, 2022 11,985,747 32,133,342 ( 17,107,155 ) 2,861,913 17,888,100 Contribution from non-controlling interest in New Jersey Mill Joint Venture - - - 1,682 1,682 Issuance of common stock for warrants exercised 100,893 565,005 - - 565,005 Options issued to management, directors, and employees - 547,275 - - 547,275 Issuance of common stock for cashless option exercise 11,430 - - - - Net loss - - ( 1,894,419 ) ( 15,005 ) ( 1,909,424 ) Balance September 30, 2022 12,098,070 $ 33,245,622 $ ( 19,001,574 ) $ 2,848,590 $ 17,092,638 Balance January 1, 2023 12,098,070 $ 33,245,622 $ ( 18,368,384 ) $ 2,835,832 $ 17,713,070 Contribution from non-controlling interest in New Jersey Mill Joint Venture - - - 1,601 1,601 Issuance of common stock for cash, net of offering costs 158,453 878,503 - - 878,503 Net income (loss) - - 60,599 (16,413 ) 44,186 Balance March 31, 2023 12,256,523 34,124,125 ( 18,307,785 ) 2,821,020 18,637,360 Contribution from non-controlling interest in New Jersey Mill Joint Venture - - - 16,409 16,409 Net income (loss) - - 327,793 ( 31,971 ) 295,822 Balance June 30, 2023 12,256,523 34,124,125 ( 17,979,992 ) 2,805,458 18,949,591 Contribution from non-controlling interest in New Jersey Mill Joint Venture - - - 1,637 1,637 Net income (loss) - - 420,679 ( 16,696 ) 403,983 Balance September 30, 2023 12,256,523 $ 34,124,125 $ ( 17,559,313 ) $ 2,790,399 $ 19,355,211 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents Idaho Strategic Resources, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) For the Nine-Month Periods Ended September 30, 2023 and 2022 September 30, 2023 2022 Cash flows from operating activities: Net income (loss) $ 743,991 $ ( 3,234,742 ) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 1,034,521 717,939 Loss (gain) on disposal of equipment ( 224 ) 68,641 Accretion of asset retirement obligation 11,874 11,342 Stock based compensation - 547,275 Issuance of common stock for services - 32,326 Gain on forgiveness of SBA loan - ( 10,000 ) Loss on investment in equity securities 4,423 - Equity income on investment in Buckskin ( 2,965 ) ( 1,213 ) Change in operating assets and liabilities: Gold sales receivable ( 217,607 ) ( 20,568 ) Inventories ( 83,180 ) ( 394,200 ) Joint venture receivable 289 2,760 Other current assets ( 141,434 ) 78,568 Accounts payable and accrued expenses ( 81,167 ) 169,590 Accrued payroll and related payroll expenses 74,547 25,127 Net cash provided (used) by operating activities 1,343,068 ( 2,007,155 ) Cash flows from investing activities: Purchases of property, plant, and equipment ( 467,655 ) ( 1,145,186 ) Deposits on equipment ( 25,000 ) ( 31,584 ) Proceeds from sale of equipment 8,500 - Purchase of reclamation bonds - ( 222,800 ) Refund of reclamation bonds 75,710 - Additions to mineral property ( 645,962 ) ( 451,012 ) Purchase of equity securities ( 11,100 ) - Net cash used by investing activities ( 1,065,507 ) ( 1,787,414 ) Cash flows from financing activities: Proceeds from sale of common stock, net of issuance cost 878,503 3,681,107 Proceeds from exercise of common stock warrants - 1,030,158 Principal payments on notes payable ( 766,714 ) ( 629,322 ) Principal payments on notes payable, related parties ( 75,183 ) ( 30,916 ) Contributions from non-controlling interest 19,647 22,712 Net cash provided by financing activities 56,253 4,073,739 Net change in cash and cash equivalents 333,814 279,170 Cash and cash equivalents, beginning of period 1,638,031 1,976,518 Cash and cash equivalents, end of period $ 1,971,845 $ 2,255,688 Non-cash investing and financing activities: Deposit on equipment applied to purchase $ 76,110 $ 96,000 Notes payable for equipment and land purchase $ 1,110,737 $ 1,189,056 Conversion of convertible debt to common stock $ - $ 1,950,000 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 1. The Company and Significant Accounting Policies These unaudited interim condensed consolidated financial statements have been prepared by the management of Idaho Strategic Resources, Inc (“IDR”) (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair statement of the interim condensed consolidated financial statements have been included. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company's consolidated financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of the Company's consolidated financial position and results of operations. Operating results for the three and nine-month periods ended September 30, 2023, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023. For further information refer to the financial statements and footnotes thereto in the Company’s audited consolidated financial statements for the year ended December 31, 2022, in the Company’s Form 10-K as filed with the Securities and Exchange Commission on March 31, 2023. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiary, the New Jersey Mill Joint Venture (“NJMJV”). Intercompany accounts and transactions are eliminated. The portion of entities owned by other investors is presented as non-controlling interests on the consolidated balance sheets and statements of operations. Revenue Recognition Gold Revenue Recognition and Receivables- Sales of gold sold directly to customers are recorded as revenues and receivables upon completion of the performance obligations and transfer of control of the product to the customer. For concentrate sales, the performance obligation is met, the transaction price can be reasonably estimated, and revenue is recognized generally at the time of shipment at estimated forward prices for the anticipated month of settlement. Due to the time elapsed from shipment to the customer and the final settlement with the customer, prices at which sales of concentrates will be settled are estimated. Previously recorded sales and accounts receivable are adjusted to estimated settlement metals prices until final settlement by the customer. For sales of doré and metals from doré, the performance obligation is met, the transaction price is known, and revenue is recognized at the time of transfer of control of the agreed-upon metal quantities to the customer by the refiner. Sales and accounts receivable for concentrate shipments are recorded net of charges by the customer for treatment, refining, smelting losses, and other charges negotiated with the customers. Charges are estimated upon shipment of concentrates based on contractual terms, and actual charges typically do not vary materially from estimates. Costs charged by customers include fixed costs per ton of concentrate and price escalators. Refining, selling, and shipping costs related to sales of doré and metals from doré are recorded to cost of sales as incurred. See Note 4 for more information on our sales of products. Other Revenue Recognition -Revenue from harvest of raw timber is recognized when the performance obligation under a contract and transfer of the timber have both been completed. Sales of timber found on the Company’s mineral properties are not a part of normal operations. Inventories Inventories are stated at the lower of full cost of production or estimated net realizable value based on current metal prices. Costs consist of mining, transportation, and milling costs including applicable overhead, depreciation, depletion, and amortization relating to the operations. Costs are allocated based on the stage at which the ore is in the production process. Supplies inventory is stated at the lower of cost or estimated net realizable value. Mine Exploration and Development Costs The Company expenses exploration costs as such in the period they occur. The mine development stage begins once the Company identifies ore reserves which is based on a determination whether an ore body can be economically developed. Expenditures incurred during the development stage are capitalized as deferred development costs and include such costs for drift, ramps, and infrastructure. Costs to improve, alter, or rehabilitate primary development assets which appreciably extend the life, increase capacity, or improve the efficiency or safety of such assets are also capitalized. The development stage ends when the production stage of ore reserves begins. Amortization of deferred development costs is calculated using the units-of-production method over the expected life of the operation based on the estimated recoverable mineral ounces. Fair Value Measurements When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period that are included in earnings are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. At September 30, 2023, the Company had equity securities measured at fair value using level 1 quoted prices and no liabilities required measurement at fair value. At December 31, 2022, the Company had no assets or liabilities that required measurement at fair value on a recurring basis. 7 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 1. The Company and Significant Accounting Policies (continued) Accounting for Investments in Joint Ventures and Equity Method Investments Investment in Joint Ventures -For joint ventures where the Company holds more than 50% of the voting interest and has significant influence, the joint venture is consolidated with the presentation of non-controlling interest. In determining whether significant influence exists, the Company considers its participation in policy-making decisions and its representation on the venture’s management committee. For joint ventures in which the Company does not have joint control or significant influence, the cost method is used. For those joint ventures in which there is joint control between the parties, the equity method is utilized whereby the Company’s share of the ventures’ earnings and losses is included in the statement of operations as earnings in joint ventures and its investments therein are adjusted by a similar amount. The Company periodically assesses its investments in joint ventures for impairment. If management determines that a decline in fair value is other than temporary it will write-down the investment and charge the impairment against operations. Equity Method Investments -Investments in companies and joint ventures in which the Company has the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting. In determining whether significant influence exists, the Company considers its participation in policy-making decisions and representation on governing bodies. Under the equity method of accounting, our share of the net earnings or losses of the investee are included in net income (loss) in the consolidated statements of operations. We evaluate equity method investments whenever events or changes in circumstance indicate the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period. At September 30, 2023, and December 31, 2022, the Company's 37 % common stock holding of Buckskin Gold and Silver, Inc. is accounted for using the equity method (Note 10). At September 30, 2023 and December 31, 2022, the Company’s percentage ownership and method of accounting for each joint venture and equity method investment is as follows: September 30, 2023 December 31, 2022 Joint Venture % Ownership Significant Influence? Accounting Method % Ownership Significant Influence? Accounting Method NJMJV 65 % Yes Consolidated 65 % Yes Consolidated Butte Highlands Joint Venture (“BHJV”) 50 % No Cost 50 % No Cost Buckskin Gold and Silver Inc. 37 % Yes Equity 37 % Yes Equity Reclassifications Certain prior period amounts have been reclassified to conform to the 2023 financial statement presentation. Reclassifications had no effect on net loss, stockholders’ equity, or cash flows as previously reported. Investments in Equity Securities Investments in equity securities are generally measured at fair value. Unrealized gains and losses for equity securities resulting from changes in fair value are recognized in current earnings. If an equity security does not have a readily determinable fair value, we may elect to measure the security at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment in the same issuer. At the end of each reporting period, we reassess whether an equity investment security without a readily determinable fair value qualifies to be measured at cost less impairment, consider whether impairment indicators exist to evaluate if an equity investment security is impaired and, if so, record an impairment loss. At the end of each reporting period, unrealized gains and losses resulting from changes in fair value are recognized in current earnings. Upon sale of an equity security, the realized gain or loss is recognized in current earnings. New Accounting Pronouncement Accounting standards that have been issued or proposed by the Financial Accounting Standards Board (“FASB”) that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. 2. Going Concern The Company is currently producing from underground at the Golden Chest Mine. In the past, the Company has been successful in raising required capital from sale of common stock, forward gold contracts, and debt. As a result of its planned production, equity sales and potential debt borrowings or restructurings, management believes cash flows from operations and existing cash are sufficient to conduct planned operations and meet contractual obligations for the next 12 months. 3. Inventories At September 30, 2023 and December 31, 2022, the Company’s inventories consisted of the following: September 30, 2023 December 31, 2022 Concentrate inventory In process $ 157,284 $ 111,741 Finished goods 44,185 111,574 Total concentrate inventory 201,469 223,315 Supplies inventory Mine parts and supplies 278,875 233,465 Mill parts and supplies 143,579 83,963 Core drilling supplies and materials 77,570 77,570 Total supplies inventory 500,024 394,998 Total $ 701,493 $ 618,313 8 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 4. Sales of Products Our products consist of both gold flotation concentrates which we sell to a single broker (H&H Metals), and an unrefined gold-silver product known as doré which we sell to a precious metal refinery. At September 30, 2023, metals that had been sold but not finally settled included 6,512 ounces of which 4,182 ounces were sold at a predetermined price with the remaining 2,330 exposed to future price changes. The Company has received provisional payments on the sale of these ounces with the remaining amount due reflected in gold sales receivable. Sales of products by metal type for the three and nine-month periods ended September 30, 2023 and 2022 were as follows: September 30, 2023 September 30, 2022 Three Months Nine Months Three Months Nine Months Gold $ 3,458,174 $ 10,347,001 $ 1,890,626 $ 6,620,745 Silver 14,283 37,630 3,034 9,992 Less: Smelter and refining charges ( 171,236 ) ( 505,299 ) ( 148,382 ) ( 482,550 ) Total $ 3,301,221 $ 9,879,332 $ 1,745,278 $ 6,148,187 Sales by significant product type for the three and nine-month periods ended June 30, 2023, and 2022 were as follows: September 30, 2023 September 30, 2022 Three Months Nine Months Three Months Nine Months Concentrate sales to H&H Metals $ 3,301,221 $ 9,741,227 $ 1,745,278 $ 5,844,571 Dore sales to refinery - 138,105 - 303,616 Total $ 3,301,221 $ 9,879,332 $ 1,745,278 $ 6,148,187 At September 30, 2023 and December 31, 2022, our gold sales receivable balance related to contracts with customers of $ 1,127,604 and $ 909,997 , respectively, consist only of amounts due from H&H Metals. There is no allowance for doubtful accounts. 5. Related Party Transactions At December 31, 2022, the Company had a note payable to Ophir Holdings, a company owned by two officers and one former officer of the Company, with a balance of $ 75,183 of which $ 12,226 was due within one year and the remaining $ 62,957 due thereafter. The Company paid the remaining amount due to Ophir Holdings on May 10, 2023. This payment resulted in a negative net interest charge for the nine-months ended September 30, 2023. Related party interest expense for the three and nine-months ended September 30, 2023 and 2022 is as follows. September 30, 2023 September 30, 2022 Three Months Nine Months Three Months Nine Months $ - $ ( 2,676 ) $ 924 $ 3,081 The Company leases office space from certain related parties on a month-to-month basis. $ 1,500 per month is paid to NP Depot, a company owned by the Company’s president, John Swallow and approximately $ 1,700 is paid quarterly to Mine Systems Design which is partially owned by the Company’s vice president, Grant Brackebusch. Payments under these short-term lease arrangements are included in general and administrative expenses on the Consolidated Statement of Operations and for the three and nine-months ended September 30, 2023 and 2022 are as follows: September 30, 2023 September 30, 2022 Three Months Nine Months Three Months Nine Months $ 6,120 $ 18,555 $ 6,217 $ 18,651 6. Joint Ventures New Jersey Mill Joint Venture Agreement The Company owns 65% of the New Jersey Mill Joint Venture (JV) and has significant influence in its operations . Thus, the venture is included in the consolidated financial statements along with presentation of the non-controlling interest. At September 30, 2023 and December 31, 2022, an account receivable existed with Crescent Silver, LLC, the other joint venture participant (“Crescent”), for $ 1,637 and $ 1,926 , respectively, for shared operating costs as defined in the JV agreement. Butte Highlands JV, LLC (“BHJV”) On January 29, 2016, the Company purchased a 50% interest in Butte Highlands JV, LLC (“BHJV”) for a total consideration of $ 435,000 . Highland Mining, LLC (“Highland”) is the other 50 % owner and manager of the joint venture. Under the agreement, Highland will fund all future project exploration and mine development costs. The agreement stipulates that Highland is manager of BHJV and will manage BHJV until such time as all mine development costs, less $ 2 million are distributed to Highland out of the proceeds from future mine production. The Company has determined that because it does not currently have significant influence over the joint venture’s activities, it accounts for its investment on a cost basis. 9 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 7. Earnings per Share Net income (loss) per share is computed by dividing the net amount excluding net income (loss) attributable to a non-controlling interest by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities. Such common stock equivalents are included or excluded from the calculation of diluted net income (loss) per share for each period as follows: September 30, 2023 September 30, 2022 Three Months Nine Months Three Months Nine Months Incremental shares included in diluted net income (loss) per share Stock options 6,795 4,883 - - Stock purchase warrants - - - - 6,795 4,883 - - Potentially dilutive shares excluded from diluted net income (loss) per share as inclusion would have an antidilutive effect: Stock options 321,449 321,449 542,525 542,525 Stock purchase warrants 289,294 289,294 289,294 289,294 610,743 610,743 831,819 831,819 8. Property, Plant, and Equipment Property, plant and equipment at September 30, 2023 and December 31, 2022 consisted of the following: September 30, 2023 December 31, 2022 Mill Land $ 225,289 $ 225,289 Building 536,193 536,193 Equipment 4,192,940 4,192,940 4,954,422 4,954,422 Less accumulated depreciation ( 1,381,865 ) ( 1,249,445 ) Total mill 3,572,557 3,704,977 Building and equipment Buildings 611,382 611,382 Equipment 8,535,801 6,927,474 9,147,183 7,538,856 Less accumulated depreciation ( 3,169,450 ) ( 2,324,679 ) Total building and equipment 5,977,733 5,214,177 Land Bear Creek 266,934 266,934 BOW 230,449 230,449 Eastern Star 250,817 250,817 Gillig 79,137 79,137 Highwater 40,133 40,133 Salmon property 136,762 136,762 Total land 1,004,232 1,004,232 Total $ 10,554,522 $ 9,923,386 9. Mineral Properties Mineral properties at September 30, 2023 and December 31, 2022 consisted of the following: September 30, 2023 December 31, 2022 Golden Chest Mineral Property $ 4,141,904 $ 4,088,462 Infrastructure 2,314,548 1,722,028 Total Golden Chest 6,456,452 5,810,490 New Jersey 248,289 248,289 McKinley-Monarch 200,000 200,000 Butte Gulch 124,055 124,055 Potosi 150,385 150,385 Park Copper 78,000 78,000 Less accumulated amortization ( 103,089 ) ( 83,658 ) Total $ 7,154,092 $ 6,527,561 10 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 9. Mineral Properties (continued) For the three and nine-month periods ended September 30, 2023 and 2022, interest expense was capitalized in association with the ramp access project at the Golden Chest as follows. September 30, 2023 September 30, 2022 Three Months Nine Months Three Months Nine Months $ 11,107 $ 53,442 $ 11,180 $ 32,097 10. Investment in Buckskin The investment in Buckskin is being accounted for using the equity method and resulted in recognition of equity income on the investment of $ 1,608 and $ 2,965 for the respective three and nine-month periods ended September 30, 2023, and $ 542 and $ 1,213 in 2022 for the respective three and nine-month periods ended September 30, 2022. The Company makes an annual payment of $ 12,000 to Buckskin per a mineral lease covering 218 acres of patented mining claims. As of September 30, 2023, the Company holds 37 % of Buckskin’s outstanding shares. 11. Notes Payable At September 30, 2023 and December 31, 2022, notes payable are as follows: September 30, 2023 December 31, 2022 Building in Salmon, Idaho, 60-month note payable, 7 .00% interest payable monthly through June 2027, monthly payments of $ 2,500 with a balloon payment of $ 260,886 in July 2027 $ 299,502 $ 306,084 Resemin Muki Bolter, 36-month note payable, 7 .00% interest payable monthly through January 2025, monthly payments of $ 14,821 227,279 345,268 Paus 2 yrd. LHD, 48-month note payable, 4.78 % interest rate payable through September 2024, monthly payments of $ 5,181 65,492 108,904 Paus 2 yrd. LHD, 60-month note payable, 3.45 % interest rate payable through July 2024, monthly payments of $ 4,847 47,711 89,493 CarryAll transport, 36-month note payable, 4.5 % interest rate payable monthly through June 2024, monthly payments of $ 627 5,537 10,891 CarryAll transport, 36-month note payable, 4.5 % interest rate payable monthly through February 2024, monthly payments of $ 303 1,501 4,130 Two CarryAll transports, 36-month note payable, 6.3 % interest rate payable monthly through May 2025, monthly payments of $ 1,515 28,710 40,687 CarryAll transport, 36-month note payable, 6.3 % interest rate payable monthly through June 2025, monthly payments of $ 866 17,183 23,987 Two CarryAll transports, 48-month note payable, 5.9% interest rate payable monthly through June 2027, monthly payments of $ 1,174 47,284 - Atlas Copco loader, 60-month note payable, 10.5 % interest rate payable monthly through June 2023, monthly payments of $ 3,550 - 20,660 Sandvik LH203 LHD, 36-month note payable, 4.5 % interest payable monthly through May 2024, monthly payments of $ 10,352 105,994 170,182 Sandvik LH202 LHD, 36-month note payable, 6.9 % interest payable monthly through August 2025, monthly payments of $ 4,933 81,435 143,812 Doosan Compressor, 36-month note payable, 6.99 % interest payable monthly through July 2024, monthly payments of $ 602 5,844 10,820 Caterpillar 306 excavator, 48-month note payable, 4.6 % interest payable monthly through November 2024, monthly payments of $ 1,512 20,565 33,216 Caterpillar 938 loader, 60-month note payable, 6.8 % interest rate payable monthly through August 2023, monthly payments of $ 3,751 - 29,256 Caterpillar R1600 LHD, 48-month note payable, 4.5 % interest rate payable through January 2025, monthly payments of $ 17,125 265,446 407,909 Caterpillar AD22 underground truck, 48-month note payable, 6.45 % interest rate payable through June 2023, monthly payments of $ 12,979 - 76,287 Caterpillar AD30 underground truck, 40-month note payable, 8.01 % interest rate payable through October 2026, monthly payments of $29,656 969,440 - Small Business Administration EIDL 30 year note payable, 3.75 % interest payable monthly through December 2054, monthly payments of $ 731 160,899 163,287 2022 Dodge Ram, 75-month note payable, 5.99 % interest rate payable monthly through June 2028, monthly payments of $ 1,152 57,033 64,648 2016 Dodge Ram, 75-month note payable, 5.99 % interest rate payable monthly through June 2028, monthly payments of $ 1,190 58,895 66,758 2020 Ford Transit Van, 72-month note payable, 9.24 % interest rate payable monthly through December 2028, monthly payments of $ 1,060 52,734 58,182 Total notes payable 2,518,484 2,174,461 Due within one year 1,007,101 859,393 Due after one year $ 1,511,383 $ 1,315,068 All notes are collateralized by the property or equipment purchased in connection with each note. Future principal payments of notes payable at September 30, 2023 are as follows: 12 months ended September 30, 2024 $ 1,007,101 2025 577,853 2026 399,778 2027 349,131 2028 35,624 2029 6,490 Thereafter 142,507 Total $ 2,518,484 11 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 12. Stockholders’ Equity Stock issuance activity The Company closed a private placement in February 2023. Under the private placement, the Company sold 123,365 shares of common stock at $ 5.50 per share and 35,088 shares of common stock at $ 5.70 per share for net proceeds of $ 878,503 . No shares were issued in the second or third quarter of 2023. The Company closed a private placement in February 2022. Under the private placement, the Company sold 360,134 shares of common stock at $ 7.50 per share for net proceeds of $ 2,701,000 . In the nine-months ended September 30, 2022, the Company sold 138,665 shares of common stock for net proceeds of $ 980,107 . In the nine-months ended September 30, 2022 the Company issued 3,572 shares of common stock at $ 9.05 per share for services provided for a total value of $ 32,326 . Also, in the nine-months ended September 30, 2022, the Company issued 392,866 shares of the Company’s common stock in exchange for $ 1,950,000 of debt at $ 4.96 per share. Stock Purchase Warrants Outstanding In the nine-months ended September 30, 2022, 194,869 shares of common stock were issued in exchange for outstanding warrants for net proceeds of $ 1,030,158 . The activity in stock purchase warrants is as follows: Number of Warrants Exercise Prices Balance December 31, 2021 669,467 $ 2.52 - 7 .00 Expired ( 185,304 ) $ 2.52 - 5.60 Exercised ( 194,869 ) $ 2.52 - 5.60 Balance December 31, 2022 and September 30, 2023 289,294 $ 5.60 - 7 .00 These warrants expire as follows: Shares Exercise Price Expiration Date 235,722 $ 5.60 October 15, 2023 53,572 $ 7 .00 November 12, 2023 289,294 These outstanding warrants were amended and extended on October 12, 2023, see note 14. 13. Stock Options There were no stock options granted during the nine-months ended September 30, 2023. In September 2022, the board granted 165,000 stock options to officers, board members, and employees. These options vested immediately and are exercisable at $ 5.25 for 3 years. Total stock-based compensation recognized on these options was $ 505,476 and was recognized in management, professional services, and general administrative expenses in the statement of operations. In September 2022, the board granted an additional 15,000 total stock options, 7,500 each to our independent board members. These options vested immediately and are exercisable at $ 4.75 for 3 years. Total stock-based compensation recognized on these options was $ 41,799 and was recognized in management expenses in the statement of operations. Activity in the Company’s stock options is as follows: Number of Options Weighted Average Exercise Prices Balance December 31, 2021 507,175 $ 5.25 Granted 180,000 $ 5.21 Exercised ( 116,078 ) $ 4.31 Expired ( 7,143 ) $ 1.96 Forfeited ( 28,001 ) $ 5.56 Balance December 31, 2022 535,953 $ 5.47 Forfeited ( 58,504 ) $ 5.47 Outstanding and exercisable at September 30, 2023 477,449 $ 5.47 At September 30, 2023, outstanding stock options have a weighted average remaining term of approximately 1.07 years and have an intrinsic value of $ 4,350 . There were no stock options exercised during the first nine months of 2023 14. Subsequent Events On October 12, 2023, IDR amended and restated warrants issued in private placements completed in October and November of 2021. The amended and restated warrants extended the exercise period of the warrants for an additional one year. The October 2021 private placement issued warrants gave the holders the right to purchase a total of 235,722 shares of common stock at an exercise price of $ 5.60 per share. The expiration date of the warrants was extended from October 15, 2023 to October 15, 2024. The November 2021 private placement issued warrants gave the holders the right to purchase a total of 53,572 shares of common stock at an exercise price of $ 7 .00 per share. The expiration date of the warrants was extended from November 12, 2023 to November 12, 2024. There were no other changes in the terms of the warrants. 12 Table of Contents ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF O PERATIONS Plan of Operation Idaho Strategic Resources, Inc is a gold producer and critical minerals/rare earth elements exploration company focused on a diversified asset base and cash flows from operations. Its portfolio of mineral properties are located in the historic producing silver and gold districts of the Coeur d’Alene Mining region of north Idaho and the Elk City region of north-central Idaho, as well as the historic Rare Earth Elements-Thorium Belt located near the city of Salmon in central Idaho. The Company’s plan of operation is to generate positive cash flow, increase its gold production and asset base over time while being mindful of corporate overhead. The Company’s management is focused on utilizing its in-house technical and operating skills to build a portfolio of producing mines and milling operations with a focus on gold production and exploration for rare earth elements (“REEs”). The Company’s gold properties include: the Golden Chest Mine (currently in production), and the New Jersey Mill (majority ownership interest), as well as the Eastern Star exploration property and other less advanced properties. The Company’s primary focus as it relates to its gold properties is to continue to grow production at the Golden Chest Mine and look to reinvest the cash flow into both the Golden Chest Mine, the New Jersey Mill, and furthering its exploration efforts near the Golden Chest - as well as at its rare earth elements properties. In addition to its gold properties, Idaho Strategic has three rare earth elements exploration properties in Idaho known as Lemhi Pass, Diamond Creek, and Mineral Hill. The Company’s expansion into rare earth elements came about in an effort to diversify its holdings towards the anticipated demand for these elements in the electrification of motorized vehicles and a renewed focus on the United States’ domestic critical minerals supply chain security. To date, Idaho Strategic has conducted numerous exploration programs on its rare earth elements landholdings which include drilling, trenching, sampling, and mapping of certain areas within the Company’s 18,030-acre landholdings. Idaho Strategic has been able to leverage its track record of operations and experience in mining, milling, and exploring at the Golden Chest Mine to develop relationships with different state government agencies, universities, national labs, and other government and non-government entities to advance its rare earth elements exploration activities on multiple fronts. Idaho Strategic plans to continue to look for additional partnerships to find mutually beneficial solutions to advance the U.S.' domestic rare earth elements supply chain. Critical Accounting Estimates We have, besides our estimates of the amount of depreciation on our assets, two critical accounting estimates. The ounces of gold contained in our process and concentrate inventory is based on assays taken at the time the ore is processed and the ounces of gold contained in shipped concentrate which is based upon assays taken prior to shipment however subject to final assays at the refinery, these shipments are also subject to the fluctuation in gold prices between our shipment date and estimated and actual final settlement date. Also, the reclamation bond obligation on our balance sheet is based on an estimate of the future cost to recover and remediate our properties as required by our permits upon cessation of our operations and may differ when we cease operations. Our concentrate sales sometimes involve variable consideration, as they can be subject to changes in metals prices between the time of shipment and their final settlement. However, we are able to reasonably estimate the transaction price for the concentrate sales at the time of shipment using forward prices for the estimated month of settlement, and previously recorded sales and accounts receivable are adjusted to estimated settlement metals prices until final settlement for financial reporting purposes. The embedded derivative contained in our concentrate sales is adjusted to fair value through earnings each period prior to final settlement. It is unlikely a significant reversal of revenue for the concentrate receivable as a whole will occur upon final settlement of the lots. As such, we use the expected value method to price the concentrate until the final settlement date occurs, at which time the final transaction price is known. At September 30, 2023, metals that had been sold but not finally settled included 6,512 ounces of which 4,182 ounces were sold at a predetermined price with the remaining 2,330 exposed to future price changes. The Company has received provisional payments on the sale of these ounces with the remaining amount due reflected in gold sales receivable. The asset retirement obligation and asset on our balance sheet is based on an estimate of the future cost to recover and remediate our properties as required by our permits upon cessation of our operations and may differ when we cease operations. At September 30, 2023 we reviewed our December 31, 2022 estimate that the cost of the machine and man hours probable to be needed to put our properties in the condition required by our permits once we cease operations. The September 30, 2023 estimated costs would be $103,320 for the Golden Chest property and $203,600 for the New Jersey Mine and Mill. For purposes of the estimate, we evaluated the expected life in years and costs that, initially, are comparable to rates that we would incur at the present. An expected present value technique is used to estimate the fair value of the liability. This includes inflating the estimated costs in today’s dollars using a reasonable inflation rate up to the date of expected retirement and discounting the inflated costs using a credit-adjusted risk-free rate. Upon initial recognition of the liability, the carrying amount of the related long-lived asset is increased by the same amount. The liability is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is amortized over the life of the related asset. We are adding to the liability each year, and amortizing the asset over the estimated life, which decreases our net income in total each year. Changes resulting from revisions to the timing or amount of the original estimate of undiscounted cash flows are recognized as either an increase or a decrease in the carrying amount of the liability for an asset retirement obligation and the related asset retirement cost capitalized as part of the carrying amount of the related long-lived asset. Upward revisions of the amount of undiscounted estimated cash flows are discounted using the current credit-adjusted risk-free rate. Downward revisions in the amount of undiscounted estimated cash flows are discounted using the credit-adjusted risk-free rate that existed when the original liability was recognized. The Company reviews, on an annual basis, unless otherwise deemed necessary, the asset retirement obligations. Separately, the Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable. Highlights during the third quarter of 2023 include: Rare Earth Elements · In addition to announcing greater than 23% total rare earth elements (TREE) at the Company’s Mineral Hill Project during the third quarter, IDR geologists have thus far traced that mineralization for over 0.5 miles of strike length, utilizing the Company’s X-Ray Fluorescence (XRF) machine to confirm the continuity and possibly build upon this already impressive REE grade and composition. Detailed geological mapping of the high-grade REE seam at the Roberts prospect in preparation for drill permitting is ongoing and mapping during the third quarter has led to additional carbonatite discoveries identified throughout the Company’s broader Mineral Hill project. Additional assay results from samples taken throughout the third quarter are still pending at the lab and expect to be announced during the fourth quarter. 13 Table of Contents · Simultaneous with the work at Mineral Hill, during the third quarter IDR began the first trenching program at its expansive Lemhi Pass Project with the goal of better understanding its structural geology and undertaking the sampling of prospective and known areas of REE mineralization. The Lemhi Pass Project is made up of numerous prospects spread across 10 square miles and this season IDR commenced trenching on three of its many prospects within the Company’s greater Lemhi Pass landholdings: Sparky, In-Trust, and Independence. Assay results are still pending on various samples collected from vastly different geological settings and REE mineralization. · At Diamond Creek, the Company advanced its USFS permit for a core drilling program in the Simer and Frank Burch prospects targeted for the summer of 2024. Additional summer geological mapping and sampling for REE’s in these areas returned results of up to 5% TREE, which enhanced drilling targets and planning. · During the third quarter, IDR geologists were excited to share highlights from the Company’s 2022 Diamond Creek drilling campaign with geologists of the Tobacco Root Geological Society at their 48 th Annual Field Conference hosted in Salmon, ID. Two areas of Idaho Strategic Resource’s projects, Diamond Creek and Mineral Hill, were given full day field trips and the ensuing discussions were productive and informational for both IDR and the attendees at the Tobacco Root Field Conference. Golden Chest/Operations · At the Golden Chest, ore mined from underground stopes totaled approximately 9,500 tonnes with about 90% of that coming from the H-Vein stopes and the remainder from an Idaho Vein stope. A total of 1,170 cubic meters of cemented rockfill (CRF) and 1,420 cubic meters of uncemented rockfill (gob) were placed during the quarter. The Main Access Ramp (“MAR”) and associated drifts were advanced by 73 meters during the quarter. · The Company completed exploration drifting on the Jumbo vein during the third quarter with a total of 89 meters. The Company suspended drifting on the Jumbo during the quarter to reallocate crews to H-vein development. No high-grade shoots were found by the drifting, but more drifting and longhole drilling is required to fully explore this area. · For the quarter ended September 30, 2023, a total of 10,430 dry metric tonnes (“dmt”) were processed at the Company’s New Jersey mill with a flotation feed head grade of 6.41 gpt gold and gold recovery of 92.1%. Results of Operations Our financial performance during the quarter is summarized below: · Revenue increased 89.15% from $1,745,278 in 2022 to $3,301,221 in 2023 for the three-month period ended September 30, 2023, and increased 60.69% from $6,148,187 to $9,879,332 for the nine-month period ended September 30, 2023. The increase in revenue is largely due to the increased gold production throughout the quarter as well as a higher average gold price recognized on ounces produced. Gold production is expected to remain at approximately this level for the remainder of the year as mining on the H-Vein continues. · Gross profit as a percentage of sales increased from negative 13.1% in the third quarter of 2022 to positive 33.5% in the second quarter of 2023. For the nine months ended September 30, 2022 gross profit as a percentage of sales was 1.4% compared to 28% in 2023 · Exploration expense decreased in 2023, when compared to 2022, primarily due to a decrease in drilling by the company owned and operated drill rig, and a reduction in overall exploration activity. · Professional services remained relatively consistent with the exception of the nine-month period where they increased significantly, compared to the same period in 2022. This was due to legal fees related to merger and acquisition activity in the first quarter of 2023. This was a one-time increase and is not expected to continue. · Operating income for the three-month period ended September 30, 2023, was $413,461 which is an increase of $2,301,505 from an operating loss of $1,888,044 in the third quarter of 2022. For the nine-month period ended September 30, 2023, operating income of $716,471 was an increase of $3,877,402 over the same period in 2022 which had an operating loss of $3,160,931. · Other (income) expense increased $11,902 from an expense of $21,380 in the nine-month period ended September 30, 2022, to an expense of $9,478 in the same period in 2023. Other (income) expense increased $101,331 from an expense of $73,811 in the nine months ended September 30, 2022, to income of $27,520 in the same period in 2023.The increase was from timber sales during the first quarter of 2023, as well as increased interest income from the company’s interest-bearing money market account that was not in place during 2022. · Net income increased $2,313,407 from a net loss of $1,909,424 for the three-month period ended September 30, 2022 to net income of $403,983 for the three-month period ended September 30, 2023. Net income increased $3,978,733 from a net loss of $3,234,742 in the nine months ended September 30, 2022, to net income of $743,991 in the same period in 2023. · The consolidated net income for the nine-month period ended September 30, 2023 and net loss for the nine-month period ended September 30, 2022 included non-cash charges as follows: depreciation and amortization of $1,034,521 ($717,939 in 2022), income on disposal of equipment of $224 (loss of $68,641 in 2022), accretion of asset retirement obligation of $11,874 ($11,342 in 2022), stock based compensation of $0 ($547,275 in 2022), issuance of common stock for services of $0 ($32,326 in 2022), gain on forgiveness of SBA loan of $0 in 2023 ($10,000 in 2022), loss on investment in equity securities $4,423 ($0 in 2022), and equity income on investment in Buckskin of $2,965 ($1,213 in 2022). · Cash cost and all-in sustaining cost per ounce decreased in 2023 compared to 2022 due to a higher ore grade mined. A core drilling exploration program is planned for the Golden Chest for the late third and early fourth quarter which may increase all-in sustaining costs in the last quarter of 2023. 14 Table of Contents Cash Costs and All-In Sustaining Costs Reconciliation to GAAP- Reconciliation of cost of sales and other direct production costs and depreciation, depletion, and amortization (“GAAP”) to cash cost per ounce and all-in sustaining costs (“AISC”) per ounce (“non-GAAP”). The table below presents reconciliations between the most comparable GAAP measure of cost of sales and other direct production costs and depreciation, depletion, and amortization to the non-GAAP measures of cash cost per ounce and all in sustaining costs per ounce for the Company’s gold production in the three and nine-month periods ended September 30, 2023, and 2022. Cash cost per ounce is an important operating measure that we utilize to measure operating performance. AISC per ounce is an important measure that we utilize to assess net cash flow after costs for pre-development, exploration, reclamation, and sustaining capital. Current GAAP measures used in the mining industry, such as cost of goods sold do not capture all of the expenditures incurred to discover, develop, and sustain gold production. September 30, 2023 September 30, 2022 Three Months Nine Months Three Months Nine Months Cost of sales and other direct production costs and depreciation and amortization $ 2,195,289 $ 7,114,218 $ 1,974,038 $ 6,063,348 Depreciation and amortization (363,442 ) (1,034,521 ) (245,824 ) (717,939 ) Change in concentrate inventory (46,201 ) (83,180 ) 38,380 (394,200 ) Cash Cost $ 1,785,646 $ 5,996,517 $ 1,766,594 $ 4,951,209 Exploration 435,439 916,250 747,217 1,530,122 Less rare earth exploration costs (150,693 ) (485,051 ) (120,407 ) (363,030 ) Sustaining capital 149,299 484,155 851,311 1,113,602 General and administrative 117,178 504,241 603,273 1,078,563 Less stock-based compensation and other non-cash items (3,953 ) (13,108 ) (617,745 ) (648,371 ) All in sustaining costs $ 2,332,916 $ 7,403,004 $ 3,230,243 $ 7,662,095 Divided by ounces produced 1,993 5,870 1,360 4,094 Cash cost per ounce $ 895.96 $ 1,021.55 $ 1,298.97 $ 1,209.38 All in sustaining cost (AISC) per ounce $ 1,170.55 $ 1,261.16 $ 2,375.18 $ 1,871.54 Financial Condition and Liquidity For the Nine Months Ended September 30, Net cash provided (used) by: 2023 2022 Operating activities $ 1,343,068 $ (2,007,155 ) Investing activities (1,065,507 ) (1,787,414 ) Financing activities 56,253 4,073,739 Net change in cash and cash equivalents 333,814 279,170 Cash and cash equivalents, beginning of period 1,638,031 1,976,518 Cash and cash equivalents, end of period $ 1,971,845 $ 2,255,688 The Company is currently producing from the underground mine at the Golden Chest. In the past, the Company has been successful in raising required capital from sale of common stock, forward gold contracts, and debt. As a result of its planned production, equity sales and potential debt borrowings or restructurings, management believes cash flows from operations and existing cash are sufficient to conduct planned operations and meet contractual obligations for the next 12 months. 15 Table of Contents ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not required for small reporting companies. ITEM 4: CONTROLS AND PROCEDURES Disclosure Controls and Procedures At September 30, 2023, our Vice President who also serves as our Chief Accounting Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), which disclosure controls and procedures are designed to insure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized, and reported within required time periods specified by the Securities & Exchange Commission rules and forms. Based upon that evaluation, it was concluded that our disclosure controls were effective as of September 30, 2023, to ensure timely reporting with the Securities and Exchange Commission. Specifically, the Company’s corporate governance and disclosure controls and procedures provided reasonable assurance that required reports were timely and accurately reported in our periodic reports filed with the Securities and Exchange Commission. Changes in internal control over financial reporting There was no material change in internal control over financial reporting in the quarter ended September 30, 2023. 16 Table of Contents PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Neither the constituent instruments defining the rights of the Company’s securities filers nor the rights evidenced by the Company’s outstanding common stock have been modified, limited or qualified. The Company closed a private placement in February 2023. Under the private placement, the Company sold 123,365 shares at $5.50 per share and 35,088 shares at $5.70 per share for net proceeds of $878,503. The Company closed a private placement in February 2022. Under the private placement, the Company sold 360,134 shares at $7.50 per share for net proceeds of $2,701,000. In the first quarter of 2022 the Company issued 3,572 shares of common stock at $9.05 per share for services provided for a total value of $32,326. In the first 9 months of 2022 the Company issued 392,866 shares of the Company’s Stock in exchange for $1,950,000 of debt at $4.96 per share. The Company relied on the transaction exemption afforded by Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D Rule 506(b). The common shares are restricted securities which may not be publicly sold unless registered for resale with the Securities and Exchange Commission or exempt from the registration requirements of the Securities Act of 1933, as amended. ITEM 3. DEFAULTS UPON SENIOR SECURITIES The Company has no outstanding senior securities. ITEM 4. MINE SAFETY DISCLOSURES The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in exhibit 95 to this report. ITEM 5. OTHER INFORMATION None. 17 Table of Contents ITEM 6. EXHIBITS Exhibits 3.1 Amended and Restated Articles of Incorporation, incorporated by reference to the Company’s Form 8-K as filed with the Securities and Exchange Commission on October 27, 2021 3.2 Amended and Restated By-laws of Idaho Strategic Resources, Inc., incorporated by reference to the Company’s Form 8-K as filed with the Securities and Exchange Commission on October 27, 2021 10.1 Registrant’s 2023 Equity Incentive Compensation Plan approved at the June 12, 2023, Annual Meeting of Shareholders, incorporated by reference Appendix B to the Company’s Schedule DEF14A (Proxy Statement) as filed with the Securities and Exchange Commission 31.1**** Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2**** Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1**** Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2**** Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 95**** Mine safety information listed in Section 1503 of the Dodd-Frank Act. 101.INS**** XBRL Instance Document 101.SCH**** XBRL Taxonomy Extension Schema Document 101.CAL**** XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF**** XBRL Taxonomy Extension Definition Linkbase Document 101.LAB**** XBRL Taxonomy Extension Label Linkbase Document 101.PRE**** XBRL Taxonomy Extension Presentation Linkbase Document **** Filed herewith. 18 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. IDAHO STRATEGIC RESOURCES, INC By: /s/ John Swallow John Swallow, its: President and Chief Executive Officer Date November 6, 2023 By: /s/ Grant Brackebusch Grant Brackebusch, its: Vice President and Chief Financial Officer Date: November 6, 2023 19