What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-08 · 59 added, 34 removed, 72 unchanged (56% of the section changed)

16 unchanged sentences

Critical Accounting Estimates

The Company has, besides its estimates of the amount of depreciation on its assets, two critical accounting estimates.

The Company has three critical accounting estimates.

The ounces of gold contained in 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 shipment date and estimated and actual final settlement date.

Also, the reclamation bond obligation on the Company’s balance sheet is based on an estimate of the future cost to recover and remediate its properties as required by permits upon cessation of operations and may differ when operations are actually ceased.

Additionally, the reclamation bond obligation on the Company’s balance sheet is based on an estimate of the future cost to recover and remediate its properties as required by permits upon cessation of operations and may differ when operations are actually ceased.

Finally, the amortization of development costs at the Golden Chest Mine is based on an estimate of reserves and measured and indicated resources calculated annually by the Company’s mine engineers.

The Company’s 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.

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As such, the Company uses the expected value method to price the concentrate until the final settlement date occurs, at which time the final transaction price is known.

At March 31, 2025, metals that had been sold but not finally settled included 6,768 ounces of which 1,543 ounces were sold at a predetermined price with the remaining 5,225 exposed to future price changes until prices are locked in based on the month of settlement.

At June 30, 2025, metals that had been sold but not finally settled included 9,244 ounces of which 2,258 ounces were sold at a predetermined price with the remaining 6,986 exposed to future price changes until prices are locked in based on the month of settlement.

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 the Company’s balance sheet is based on an estimate of the future cost to recover and remediate its properties as required by permits upon cessation of operations and may differ when operations are actually ceased.

At March 31, 2025 the Company reviewed its December 31, 2024 estimate that the cost of the machine and man hours probable to be needed to put its properties in the condition required by permits once operations are ceased.

The March 31, 2025 estimated costs would be $104,000 for the Golden Chest Mine property and $224,000 for the New Jersey Mine and Mill.

At June 30, 2025 the Company reviewed its December 31, 2024 estimate that the cost of the machine and man hours probable to be needed to put its properties in the condition required by permits once operations are ceased.

The June 30, 2025 estimated costs would be $104,000 for the Golden Chest Mine property and $224,000 for the New Jersey Mine and Mill.

For purposes of the estimate, the Company evaluated the expected life in years and costs that, initially, are comparable to rates that it would incur at the present.

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Separately, the Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred and able to be reasonably estimated.

Highlights during the first quarter of 2025 include:

Amortization of development costs is calculated using the units-of-production method over the expected life as per the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 360-10-35-4.

This includes the cost to define proven and probable reserves and measured and indicated resources accessible via the Main Access Ramp (“MAR”).

Measured resources are 90-100% interpolated, and indicated resources 75-80% interpolated, using a 2 grams per tonne gold cut-off grade at the diluted minimum mining width.

Conservative estimation parameters (three samples within 25 meters for measured, two within 50 meters for indicated) and economic factors ensure viability.

Inferred resources are excluded to reduce uncertainty, and therefore, the volumes are risk-adjusted.

Assumptions are regularly evaluated, with material deviations disclosed to ensure a systematic and rational cost allocation.

More information on the Company’s reserves and resources can be found in the Technical Report Summary For the Golden Chest Mine which was included as Exhibit 96.1 to the Company’s Form 10-K filed with the Securities and Exchange Commission on March 31, 2025.

Highlights during the second quarter of 2025 include:

REE Exploration

During the quarter the Company announced its REE exploration plans for the 2025 field season.

During the quarter the Company executed a long-term lease agreement for the mineral claims comprising approximately 1,500 acres of various in-holdings within the Company’s Mineral Hill and Lemhi Pass REE projects.

Key prospects covered by the mineral claims leased by the Company include Cardinal (Mineral Hill), Lucky Horseshoe (Lemhi Pass, Idaho), Silver Queen (Lemhi Pass, Idaho), Last Chance (Lemhi Pass, Montana), Trapper (Lemhi Pass, Montana), and other prospects.

The Company announced the signing of a Memorandum of Understanding with Clean Core Thorium Energy, Inc.

(“CCTE”) to evaluate the feasibility of thorium mining, processing, and fuel fabrication the facilitate a “Made in America” thorium-based nuclear fuel supply chain utilizing thorium from the Company’s Lemhi Pass project and CCTE’s ANEEL fuel- an advanced nuclear fuel comprised of thorium and high assay low-enriched uranium for use in existing nuclear reactors.

Golden Chest/Operations

At the Golden Chest, ore mined from underground stopes totaled approximately 10,240 tonnes with all of the tonnage coming from H-Vein stopes.

A total of 176 meters of exploration drifting were completed during the first quarter.

Once that was complete, the development crews moved to the Main Access Ramp (“MAR”) and completed 77 meters of ramping and started a ventilation/escapeway raise.

A total of 3,430 cubic meters of backfilling was also completed during the quarter.

For the quarter ended March 31, 2025, a total of 11,337 dry metric tonnes (“dmt”) were processed at the Company’s New Jersey Mill with a flotation feed head grade of 8.67 gpt gold and gold recovery of 91.7%.

Significant progress was made at the New Jersey Mill in the construction of the new tailings filtration circuit which was 80% complete at the end of the first quarter.

Commissioning of the tailings filtration circuit will take place in the second quarter.

An exploration program consisting of primarily surface core drilling was continued during the first quarter.

A total of 4,230 meters of drilling was completed on various targets including the Paymaster, the Jumbo, and the H-vein..

Underground drilling was restarted near the end of quarter with drilling focused on exploring the Klondike area and targeting the newly found Red Star zone and northerly projections of the H-vein.

During the quarter, a total of 92 meters of development was completed in the MAR while most of the development effort was spent driving attack ramps to the 754 and 742 stopes.

A total of 3,460 cubic meters of backfilling was completed during the quarter and operational improvements made by the miners significantly reduced the time to fill a stope from 20 shifts to 10 shifts.

Four boreholes designed to deliver paste backfill from the surface to various areas within the mine were completed during the quarter as work continued on the paste backfill plant.

For the quarter ended June 30, 2025, a total of 10,240 dry metric tonnes (“dmt”) were processed at the Company’s New Jersey Mill with a flotation feed head grade of 9.97 gpt gold and gold recovery of 92.6%.

The construction of the tailings filtration circuit at the New Jersey Mill was completed and commissioning of the circuit was also completed.

The haulage of tailings back to the Golden Chest mine commenced in the second quarter as well.

An exploration program consisting of surface and underground core drilling was continued during the second quarter at the Golden Chest and a surface core drilling program commenced in the Murray Gold Belt.

A total of 2,176 meters of drilling was completed at the Golden Chest targeting the Paymaster, the Red Star, and the H-vein.

A total of 1,687 meters of drilling was completed in the Murray Gold Belt targeting two prospects, the Buckskin and the King Mine.

The Company completed its first core drilling program at the Eastern Star project near Elk City, Idaho.

A total of 1,956 meters were drilled in April and May targeting three areas, the Carter, the Bema Zone, and the Alberta.

Quartz veining was intercepted in many of the holes with assays pending from the laboratory, and some core remaining to be logged.

Results of Operations

Idaho Strategic’s financial performance during the quarter is summarized below:

Revenue increased 23.4% to $7,278,536 from $5,898,938 for the three-month periods ended March 31, 2025 and 2024 respectively.

The increase in revenue was due to the increased average gold price realized on ounces sold which was $1,968.28 in the first quarter of 2024 and $2,848.74 in the first quarter of 2025.

Gross profit as a percentage of sales increased slightly from 48.1% in the first quarter of 2024 to 50.8% in the first quarter of 2025.

Exploration expense increased significantly in the first quarter of 2025 when compared to the same period in the prior year due to core drilling that ran through the entire first quarter this year versus none in the first quarter last year.

Revenue increased 54.7% for the three-month period ended June 30, 2025 when compared to the same period in the prior year.

For the six-month period ended June 30, 2025, revenue increased 39.3% when compared to the same period in the prior year.

The increase in revenue for both the three and six-month periods was due to the increased average gold price realized on ounces sold which was $3,223.38 for the three-month period and $3,049.19 for the six-month period ended June 30,2025.

For the three and six-month periods ended June 30, 2024 it was $2,043.84 and $2,102.89, respectively.

Gross profit as a percentage of sales increased slightly from 50.2% in the three-month period ended June 30, 2024 to 57.8% in the three-month period ended June 30, 2025.

When comparing the six-month periods ended June 30, 2025 and 2024 gross profit as a percentage of sales increased from 49.2% to 54.8%.

Exploration expense increased $1,624,705 and $2,728,290 when comparing the three and six-month periods ended June 30, 2025 and 2024, respectively.

The increase is due to increased core drilling activity this year compared to last.

This quarterly exploration expense is expected to continue, and may increase, throughout the remainder of 2025 as the Company continues to invest in the future of the Golden Chest and advance other exploration properties.

Operating income for the three-month period ended March 31, 2025 was $1,401,254 which is a decrease of $740,719 from operating income of $2,141,973 in the first quarter of 2024.

The decrease is due to the increase in exploration expense when compared to the three-month period ended March 31, 2024.

Other income increased $176,756 from income of $13,841 in the first quarter of 2024, to income of $190,597 in the same period in 2025.

The increase was from increased interest income and gains on US treasuries from the company’s short term investment account which was not in place yet in the first quarter of 2024.

Net income for the three-month period ended March 31, 2025 was $1,591,851 compared to $2,155,814 in 2024.

The decrease in net income is due to the large increase in exploration expense, as well as the stock-based compensation expense of $495,146 in this period and none in the same period in 2024.

The consolidated net income for the three-month periods ended March 31, 2025 and 2024 included non-cash charges as follows:

Operating income for the three-month period ended June 30, 2025 was $2,516,874 which is an increase of 20.1% from the same period in 2024.

Operating income for the six-month period ended June 30, 2025 was $3,918,128 which is a decrease of 7.5%.

The small increase in the three-month period and decrease in the six-month period is due to the planned increase in exploration expense this year compared to last.

Other income increased $183,772 and $360,528 for the three and six-month periods ended June 30, 2025, respectively, when compared to the same periods in the prior year.

The increase was from increased interest income and gains on US treasuries from the company’s short term investment account which was opened mid Q2 2024.

Net income for the three-month period ended June 30, 2025 was $2,739,972 which is a 28.3% increase compared to the same period in 2024.

Net income for the six-month period ended June 30, 2025 was $4,331,823 which is a 1.0% increase compared to the same period in 2024.

The small increase in net income is due to the large increase in exploration expense, as well as the stock-based compensation expense of $495,146 and $990,292 in the three and six-month periods ended June 30, 2025 and none in the same periods in 2024.

The consolidated net income for the six-month periods ended June 30, 2025 and 2024 included non-cash charges as follows:

depreciation and amortization of $1,091,359 ($957,718 in 2024), loss on sale of equipment of $308,840 ($7,431 in 2024), accretion of asset retirement obligation of $9,855 ($9,226 in 2024), loss on investment in equity securities of $0 ($453 in 2024), equity income on investment in Buckskin of $1,187 ($278 in 2024), and stock-based compensation expense of $990,292 (none in 2024).

Cash cost per ounce for the three-month period ended March 31, 2025 remained flat compared to the same period in 2024 as the Company continues to stay diligent in keeping production costs low.

All in sustaining cost per ounce increased during the three-month period ended March 31, 2025 compared to the same period in 2024 due to an increase in exploration costs from underground and surface drilling at the Golden Chest Mine.

Adjusted all in sustaining costs without exploration expenses were $993.74 and $1,115.11 per ounce for the three-month periods ended March, 31 2025 and 2024, respectively.

Cash cost per ounce for the three and six-month periods ended June 30, 2025 increased $160.01 and $82.75 per ounce, respectively, compared to the same periods in 2024.

All in sustaining cost per ounce increased during the three and six-month periods ended June 30, 2025 compared to the same periods in 2024 due to an increase in exploration costs from underground and surface drilling at the Golden Chest Mine as well as increased exploration costs across many of the Company’s projects.

Adjusted all in sustaining costs without exploration expenses were $1,313.31 and $1,156.50 per ounce for the three and six-month periods ended June 30, 2025, respectively and $1,197.99 and $1,155.08 for the three and six-month periods ended June 30, 2024, respectively.

Cash Costs and All In Sustaining Costs (“AISC”) Reconciliation to Generally Accepted Accounting Principles (“GAAP”)

Reconciliation of cost of sales and other direct production costs and depreciation, depletion, and amortization (GAAP) to cash cost per ounce and 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-month periods ended March 31, 2025, and 2024.

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 AISC per ounce for the Company’s gold production in the three and six-month periods ended June 30, 2025, and 2024.

Cash cost per ounce is an important operating measure that is utilized to measure operating performance.

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Prior periods have been restated in the table below to reflect this change.

Cost of sales and other direct production costs and depreciation, depletion, and amortization

Idaho Strategic calculates sustaining capital by including depreciation and amortization as an estimate of property, plant, and equipment wear and tear necessary to maintain production capacity, plus Golden Chest capitalized development costs, net of current period amortization, to reflect expenses for sustaining mine access and gold production.

June 30, 2025

June 30, 2024

Cost of sales and other direct production costs and depreciation and amortization

Less depreciation, depletion, amortization and stock-based compensation

Change in inventory

Change in concentrate inventory

Less REE exploration costs

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Financial Condition and Liquidity

For the Three-Months Ended

For the Six-Months

Ended June 30,

Net cash provided (used) by:

1 unchanged sentence

Investing activities

(10,312,403 )

Financing activities

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis