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Item 2. Management’s Discussion and Analysis

2026-05-14 compared with 2025-11-12 · 56 added, 69 removed, 65 unchanged (66% of the section changed)

1 unchanged sentence

Plan of Operation

Idaho Strategic is a gold producer and critical minerals/rare earth element (“REE”) 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 REE-Thorium Belt located near the city of Salmon in central Idaho.

Idaho Strategic is a gold producer and critical minerals 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 REE-Th 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 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 Golden Chest (currently in production), and the New Jersey Mill (majority ownership interest), as well as the Little Baldy and Niagara exploration properties 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, the New Jersey Mill, and furthering its exploration efforts near the Golden Chest, as well as at its REE properties.

In addition to its gold properties, Idaho Strategic has three REE exploration properties in Idaho known as Lemhi Pass, Diamond Creek, and Mineral Hill.

Following observation of industry dynamics and in early response to events impacting long-term domestic critical mineral supply and demand trends, the Company’s strategic expansion into REE’s also aids in diversifying its holdings.

The Company believes the anticipated demand for these elements in the electrification of motorized vehicles, defense spending, and a renewed focus on the United States’ domestic critical minerals supply chain security may benefit domestic holders of such assets.

The Company also believes it has a first-mover advantage with its addition of recognized REE land holdings in Idaho.

To date, Idaho Strategic has conducted numerous exploration programs on its REE properties which include drilling, trenching, sampling, and mapping of certain areas within the Company’s 19,090-acre landholdings.

Idaho Strategic has been able to demonstrate and utilize its track record of operations and experience in mining, milling, and exploring at the Golden Chest to develop relationships with different state government agencies, universities, national labs, and other government and non-government entities to advance its REE exploration activities on multiple fronts.

In addition to its gold properties, Idaho Strategic has three REE exploration properties in Idaho known as Mineral Hill, Lemhi Pass, and Diamond Creek.

The Company’s expansion into REE’s came about in an effort to diversify its holdings towards the anticipated demand for these elements in advanced robotics, low-carbon technologies, and a renewed focus on the United States’ domestic critical minerals supply chain security for national defense.

To date, Idaho Strategic has conducted numerous exploration programs on its REE properties which include mapping, sampling, trenching, and drilling of certain areas within the Company’s 21,385-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 to develop relationships with different state government agencies, universities, national labs, and other government and non-government entities to advance its REE 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 REE supply chain.

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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 September 30, 2025, metals that had been sold but not finally settled included 9,533 ounces of which 8,384 ounces were sold at a predetermined price with the remaining 1,149 exposed to future price changes until prices are locked in based on the month of settlement.

At March 31, 2026, metals that had been sold but not finally settled included 7,819 ounces of which 7,102 ounces were sold at a predetermined price with the remaining 717 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 September 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 September 30, 2025 estimated costs would be $104,000 for the Golden Chest Mine property and $224,000 for the New Jersey Mine and Mill.

At March 31, 2026 the Company reviewed its December 31, 2025 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, 2026 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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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 23, 2026.

Highlights during the third quarter of 2025 include:

Highlights during the first quarter of 2026 include:

REE Exploration

The Company announced the discovery of a carbonatite with strong REE mineralization at the Lucky Horseshoe prospect within the Lemhi Pass project.

Initial samples taken from outcrop assayed up to 6.14% total rare earth oxides with ratios of 65% magnet rare earth oxides (Nd, Pr, Dy, Tb) and 11% SEG oxides (Sm, Eu, Gd).

Idaho Strategic sampled greater than 17.6% total REEs from its recently added Cardinal prospect.

The Cardinal prospect is the third identified carbonatite occurrence at the Company’s Mineral Hill project, known for its high grade monazite hosted REEs at surface.

Idaho Strategic initiated a large-scale geophysics program across its Mineral Hill and Lemhi Pass projects including LiDAR, magnetics, and radiometrics surveys.

The Company is interpreting and utilizing the data as it is received from the geophysics contractor to aid with additional exploration efforts and drill program planning.

The Company initiated a soil sampling program covering many key prospects across the Idaho portion of its Lemhi Pass project.

Initial success of the program at identifying areas of anomalous REEs in soils has led to an extension of the project scope.

Soil sampling work is ongoing and will be utilized to aid in the planning of drill programs and other future exploration work.

Exploration plans for the 2026 field season were finalized during the quarter.

The bulk of the Company’s REE exploration efforts are planned for high-grade prospects at both its Mineral Hill and Lemhi Pass projects.

To support these programs, IDR has retained the help of a seasoned REE exploration geologist following his successful initial consulting stint with the Company in 2025.

Golden Chest/Operations

At the Golden Chest, ore mined from underground stopes totaled approximately 11,290 tonnes with all of the tonnage coming from H-Vein stopes.

During the quarter, a total of 111 meters of development was completed in the MAR and associated workings including and escapeway/ventilation raise.

A total of 2,810 cubic meters of backfilling was completed during the quarter.

For the quarter ended September 30, 2025, a total of 10,570 dry metric tonnes (“dmt”) were processed at the Company’s New Jersey Mill with a flotation feed head grade of 9.94 gpt gold and gold recovery of 93.1%.

With the New Jersey Mill tailings filtration circuit construction completed, construction efforts transitioned to the fabrication of paste backfill equipment and support framework.

Electrical work was also completed on the paste backfill circuit.

Construction also continued on a new surface warehouse and dry building.

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

A total of 5,335 meters of drilling was completed at the Golden Chest targeting the Paymaster, the Red Star, and the H-vein.

A total of 3,747 meters of drilling was completed in the Murray Gold Belt at the King Mine, Argus, McComber and Butte Gulch prospects,

During the quarter, a total of 193 meters of development was completed in the MAR and associated workings including an escapeway/ventilation raise.

A quarterly record of 4,008 cubic meters of cemented rockfill (“CRF”) backfill was placed during the quarter.

For the quarter ended March 31, 2026, a total of 11,290 dry metric tonnes (“dmt”) were processed at the Company’s New Jersey Mill with a flotation feed head grade of 9.68 gpt gold and gold recovery of 92.1%.

Some long lead items for the new mill at the Golden Chest were delivered such as a jaw crusher and a cone crusher.

Additional underground mining equipment including two 4-yard LHDs were delivered to the mine during the first quarter.

An exploration program consisting of surface and underground core drilling was continued during the first quarter at the Golden Chest.

A total of 8,700 meters of drilling was completed at the Golden Chest targeting the Paymaster, the Red Star, Katie-Dora, and the H-vein.

Results of Operations

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

Revenue increased 80.1% for the three-month period ended September 30, 2025 when compared to the same period in the prior year.

For the nine-month period ended September 30, 2025, revenue increased 53.1% when compared to the same period in the prior year.

The increase in revenue for both the three and nine-month periods was primarily due to the increased average gold price realized on ounces sold which was $3,578.07 for the three-month period and $3,249.28 for the nine-month period ended September 30, 2025.

For the three and nine-month periods ended September 30, 2024 it was $2,411.16 and $2,178.79, respectively.

Gross profit as a percentage of sales showed an increase of 14.9% from 48.7% in the three-month period ended September 30, 2024 to 63.6% in the three-month period ended September 30, 2025.

When comparing the nine-month periods ended September 30, 2025 and 2024 gross profit as a percentage of sales increased from 49.0% to 58.3%.

Exploration expense increased $2,712,860 and $5,441,150 when comparing the three and nine-month periods ended September 30, 2025 and 2024, respectively.

The increase is due to increased core drilling activity this year compared to last as well as geophysics conducted on multiple properties which did not occur last year.

This quarterly exploration expense is expected to continue 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 September 30, 2025 was $2,593,970 which is an increase of 80.2% from the same period in 2024.

Operating income for the nine-month period ended September 30, 2025 was $6,512,098 which is an increase of 14.7%.

The increase in both the three and nine-month periods is due to the increase in revenue from the higher gold price on ounces sold.

Other income increased $234,396 and $594,924 for the three and nine-month periods ended September 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 having higher balances in the company’s short term investment account.

Net income for the three-month period ended September 30, 2025 was $2,960,340 which is an 88.4% increase compared to the same period in 2024.

Net income for the nine-month period ended September 30, 2025 was $7,292,163 which is a 24.4% increase compared to the same period in 2024.

The increase in net income is due to the increase in revenue from the higher gold price on ounces sold which overcame the planned increase in exploration expense seen in both periods.

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

depreciation and amortization of $1,694,427 ($1,443,232 in 2024), loss on sale of equipment of $308,840 ($1,431 in 2024), accretion of asset retirement obligation of $14,907 ($13,954 in 2024), loss on investment in equity securities of $0 ($453 in 2024), equity income on investment in Buckskin of $2,376 ($1,579 in 2024), stock-based compensation expense of $1,247,768 (none in 2024), debt payments made by 3 rd party of $44,951 (none in 2024) and amortization of discount on US treasury notes of $18,832 ($278 in 2024).

Cash cost per ounce for the three and nine-month periods ended September 30, 2025 increased $315.26 and $174.98 per ounce, respectively, compared to the same periods in 2024

All in sustaining cost per ounce increased during the three and nine-month periods ended September 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 $1,468.75 and $1,271.85 per ounce for the three and nine-month periods ended September 30, 2025, respectively and $1,108.41 and $1,126.19 for the three and nine-month periods ended September 30, 2024, respectively.

Revenue increased 99% to $14,482,286 from $7,278,536 for the three-month periods ended March 31, 2026 and 2025 respectively.

The increase in revenue was 97% due to the increased average gold price realized on ounces sold which was $4,702.04 in the first quarter of 2026 and $2,848.74 in the first quarter of 2025.

The remaining 3% of the increased revenue was from producing 334 more ounces of gold.

Gross profit as a percentage of sales increased from 50.8% in the first quarter of 2025 to 66.1% in the first quarter of 2026.

Exploration expense was almost unchanged in the first quarter of 2026 when compared to 2025.

In the current quarter, the Company capitalized $960,713 of core drilling costs at the Golden Chest, compared to $0 in the first quarter of 2025.

Operating income for the three-month period ended March 31, 2026 was $7,582,160 which is an increase of 441.1% from operating income of $1,401,254 in the first quarter of 2025.

The increase is due to the increase in realized gold prices on ounces sold, while keeping cost increases as low as possible.

Other income decreased $44,247 from income of $190,597 in the first quarter of 2025, to income of $146,350 in the same period in 2026.

The decrease was from one-time losses sustained when liquidating the Company’s equity and mutual fund investments, which was slightly offset by increased interest income from US treasuries.

Net income for the three-month period ended March 31, 2026 was $6,369,190 compared to $1,591,851 in 2025.

The increase in net income is largely due to the increased realized gold price on ounces sold while also producing 334 more ounces of gold.

The Company recognized a $1,359,320 tax provision in the current quarter compared to $0 in the first quarter of 2025.

The consolidated net income for the three-month periods ended March 31, 2026 and 2025 included non-cash charges as follows:

depreciation and amortization of $713,385 ($549,621 in 2025), gain on sale of equipment of $632 (loss of $239,898 in 2025), accretion of asset retirement obligation of $5,221 ($4,887 in 2025), loss on investment in equity securities of $304,241 ($0 in 2025), loss on investment in Buckskin of $168 (gain of $1,346 in 2025), stock-based compensation expense of $138,641 ($495,146 in 2025), accretion of discount on US treasury notes of $53,768 ($4,903 in 2025), and deferred tax liability of $794,591 ($0 in 2025).

Non-Generally Accepted Accounting Principles (“Non-GAAP”) Financial Measures

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

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 produced and AISC per ounce produced for the Company’s gold production for the three-month periods ended March 31, 2026, and 2025.

The cost per ounce calculations are based on ounces produced.

Upon sale, the Company typically receives payment at an average rate of 94% of ounces produced after smelting and refining charges are deducted.

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

AISC per ounce is an important measure that is utilized 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.

During 2024, the Company changed the method of calculating sustaining capital to better reflect actual costs required to sustain mining operations.

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

Current GAAP measures used in the mining industry, such as cost of goods sold do not capture all the expenditures incurred to discover, develop, and sustain gold production.

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.

September 30, 2025

September 30, 2024

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

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

Less depreciation, depletion, amortization and stock-based compensation

Change in inventory

Less non-gold exploration costs

Less non-gold exploration and stock-based compensation

Sustaining capital

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AISC per ounce

Financial Condition and Liquidity

For the Nine-Months Ended

September 30,

Cash cost per ounce for the three-month period ended March 31, 2026 increased $344.11 per ounce as input costs increased slightly.

All in sustaining cost per ounce increased $449.02 during the three-month period ended March 31, 2026 compared to the same period in 2025 due to an increase in sustaining capital related to core drilling at the Golden Chest Mine.

Adjusted AISC per ounce without exploration expenses were $1,527.00 and $1,002.93 for the three-month periods ended March 31, 2026 and 2025, respectively, and is calculated as follows:

Less gold exploration costs

Adjusted AISC

Divided by ounces produced

Adjusted AISC per ounce

Financial Liquidity and Capital Resources

For the Three-Months Ended March 31,

Net cash provided (used) by:

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Investing activities

(32,792,837 )

Financing activities

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The Company is currently producing profitably 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 profitable 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.

Cash flows provided by operations have been sufficient to fund capital projects necessary to sustain production capacity, as well as invest in future growth initiatives.

In the past, when cash flows from operations were not sufficient, the Company was successful in raising required capital from the sale of common stock.

With working capital of $50,311,812 at March 31, 2026, sufficient cash flows provided by operations, profitability, and potential equity sales and debt borrowings, management believes contractual obligations and capital requirements will be able to be met for the next 12 months.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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