Dakota Gold Corp.: Form 10-Q for the period ended Mar 31, 2025

You should read the following discussion and analysis of the Company's financial condition and results of operations together with the Company's financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q and the exhibits attached hereto contain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, including statements related to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects," "anticipates," "plans," "estimates" or "intends," the negatives thereof, variations thereon and similar expressions, or stating that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements in this quarterly report relate to, among other things:

our businesses and prospects and our overall strategy;

the progress, potential and uncertainties of the Company's exploration program;

our planned exploration activities across our portfolio of exploration targets;

our planned or estimated capital expenditures for exploration and general and administrative costs;

government regulations, including our ability to obtain, and the timing of, necessary government permits and approvals;

expectations regarding the availability of our liquidity and capital resources, and our ability to scale down spending if sufficient resources are not available;

our ability to obtain financing as needed and the terms of such financing transactions;

progress in developing our projects and the timing of that progress; and

attributes and future values of the Company's projects or other interests, operations or rights.

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation, risks associated with or related to:

lack of defined mineral reserve estimates prepared in accordance with Subpart 1300 of Regulation S-K ("S-K 1300");

the failure to successfully execute management's strategy and manage our growth;

our limited operating history and history of losses, including the potential for future losses;

uncertainty as to future production at our mineral exploration and development properties;

our ability to maintain sufficient liquidity and attract sufficient capital resources to implement our projects;

ownership of surface rights at our Black Hills Property;

mining exploration and development risks, including risks related to regulatory approvals, operational hazards and accidents, equipment breakdowns, labor and contractor disputes, contractual disputes related to exploration properties, unanticipated or increased operating costs and other unanticipated difficulties;

potential health risks associated with mining and mineral exploration;

fluctuations in commodity prices;

future adverse legislation regarding the mining industry and climate change;

uncertainties associated with potential litigation matters, including environmental lawsuits;

our land reclamation requirements;

our ability to maintain the adequacy of internal control over financial reporting;

adverse technological changes and cybersecurity threats;

title in our properties;

competition in the gold and silver mining industries;

economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices and the value of financial assets;

economic uncertainty and market volatility due to potential new tariffs on imported and exported goods;

our ability to attract and retain key management and mining personnel necessary to successfully operate and grow our business;

volatility in the market price of our listed securities; and

other factors set forth under "Item 1A. Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the "Annual Report").

This list is not exhaustive of the factors that may affect the Company's forward-looking statements. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Except as required by law, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. The Company qualifies all the forward-looking statements contained in this Quarterly Report on Form 10-Q by the foregoing cautionary statements.

This management's discussion and analysis ("MD&A") should be read in conjunction with the Company's financial statements and notes thereto as set forth herein and the Company's annual audited financial statements. Readers are also urged to carefully review and consider the various disclosures made by the Company, which attempt to advise interested parties of the factors that affect our business, including without limitation, the disclosures made under "Risk Factors" of the Annual Report.

The Company's unaudited financial statements are stated in United States dollars and are prepared in accordance with U.S. GAAP.

As the Company is an exploration stage company as defined under S-K 1300 and has not generated revenues to date, our business is subject to numerous contingencies and risk factors beyond our control, including exploration and development risks, competition from well-funded competitors, and our ability to manage growth.

Overview

The Company's goal is to create stockholder value through the acquisition, responsible exploration, and future development of high caliber gold properties in the Homestake District of South Dakota. Management and the technical teams cumulatively have several hundred years of international mining and exploration experience and key personnel have more than 50 combined years in the Homestake District, mostly with the Homestake Mining Company, as well as other exploration companies that have operated in the region. We believe that this experience uniquely positions the Company and will allow us to leverage our direct experience and knowledge of past exploration and mining activities in the Homestake District. Combined with the use of modern exploration and mining techniques, and new geologic understanding from experience in other mines, new research and information extracted from our new geophysical surveys, we hope to focus our programs and build upon where the historic Homestake Mining Company left off in the 1990s.

The Homestake District has historically yielded approximately 45 million ounces of gold production as of March 31, 2025 with most of it coming from within a small geographic area. The production ledges of the Homestake Mine define a cumulative surface projection area of less than three square miles. Homestake Mining Company's historic gold production and exploration in the Homestake District was overwhelmingly focused on the underground mine. Outside of the mine area, the Homestake District has been underexplored and heretofore has not been the subject of modern exploration efforts required to search for other deposits, especially under the cover of younger rocks that dominate the surface.

We have consistently pursued a strategy of expanding our portfolio of brownfield properties located exclusively within the Homestake District to build a strong land position with the goal of consolidating possible mineral potential. Property acquisitions are focused and based on past exploration, the access to proprietary data sets the Company has assembled over the years, new research and remote data acquisition (Magnetics, Gravity and Radiometric) that was recently conducted over the Homestake District that hosts the Homestake Gold Deposit.

Other than our mineral resource estimate with an effective date of February 3, 2025 contained in our Richmond Hill Initial Assessment, none of our other properties are sufficiently drilled to prepare an estimate of mineral resources under S-K 1300. The Company believes the Homestake District is in a safe, low-cost jurisdiction with well-developed infrastructure and is in a favorable regulatory environment in which authorities have consistently demonstrated a willingness to work with responsible operators to permit well-planned compliant projects.

Drill Programs and Results

Permitting and site preparations were completed for the Company's first drilling program in the Maitland Project and drilling commenced in early 2022. We expanded our drilling operations to the Richmond Hill Project and have varied between zero to four drill rigs operating at any point in time. Dakota Gold has completed permit applications and environmental field work and currently has thirteen active permits in place with two further permits budgeted in the remainder of 2025. Of the thirteen existing permits, five are on the Maitland Project, six are on the Richmond Hill Project, one is on the City Creek Project and one is on the Cambrian Unconformity Project. Permitting for other targets may be advanced for drilling as exploration activities continue throughout the year.

In total, Dakota Gold has completed over 250 holes for over 400,000 feet (125,000 meters) since drilling started in 2022. The Company completed 25 holes for 70,181 feet (21,391 meters) of core drilling on three projects in 2022. The areas drilled in 2022 were the Maitland Project (39,231 feet; 11,958 meters), the Richmond Hill Project (24,865 feet; 7,579 meters), and the Cambrian Unconformity Project (6,084 feet; 1,854 meters). The Company then completed 89 holes for 180,727 feet (55,086 meters) of core on two projects in 2023; the areas drilled were the Maitland Project (88,626 feet; 27,013 meters) and the Richmond Hill Project (92,101 feet; 24,184 meters). The Company completed 117 holes for 146,691 feet (44,711 meters) of core on two projects during 2024; the areas drilled were the Maitland Project (102,755 feet; 31,320 meters) and the Richmond Hill Project (43,936 feet; 13,392 meters). The Company began drilling again at Richmond Hill on April 1, 2025.

Significant Developments

On January 12, 2024, the Company closed an agreement to purchase various databases, mining permits and real properties in Lawrence County, South Dakota from VMC, LLC (“VMC”) for total consideration of $3.3 million, as well as a contingent payment of $2.1 million upon the first of either of the following triggering events: (i) the first commercial gold production or (ii) a change of control, if the Company still owns the real property.

On March 20, 2024, the Company announced a 2,000-foot extension of the Unionville Zone to the North with results from hole MA23C-023.

On April 30, 2024, the Company announced the maiden S-K 1300 Initial Assessment for the Richmond Hill Project, which was filed as an exhibit to the Company's Current Report on Form 8-K on April 30, 2024.

On June 26, 2024, the Company announced the 2024 Orion Equity Investment.

On October 30, 2024, the Company announced a leadership transition with Robert Quartermain appointed President and Chief Executive Officer as well as Co-Chairman of the Board of Directors of Dakota Gold.

On December 3, 2024, the Company announced that step-out drilling north of the JB Gold Zone has nearly doubled the known strike-length of the Homestake iron-formation hosted gold mineralization (49 intercepts from 73 holes at an average grade of 10.11 grams per tonne gold (g/t Au) over an average thickness of 3.8 meters) at the Maitland Project.

On February 6, 2025, the Company announced that Barrick Gold agreed to extend the option period for both the Richmond Hill option and the Homestake option agreements until December 31, 2028, in return for additional annual cash payments of $170,000 and $340,000, respectively, on each of March 1, 2026, March 1, 2027, and March 1, 2028.

On February 6, 2025, the Company announced the updated Richmond Hill Initial Assessment, which was filed as an exhibit to the Company's Current Report on Form 8-K on February 6, 2025. This report does not include the results for the drilling program at the Unionville Zone or JB Zone on the Maitland Project.

On March 25, 2025, the Company announced the successful closing of the Offering, whereby we raised net proceeds of approximately $32.7 million by issuing 12,400,000 shares of our common stock at a price of $2.83 per share.

Planned Activities

The Company's initial activities in fiscal 2025 will be to complete an S-K 1300 Initial Resource with Cash Flow analysis on the heap leachable portion of the Richmond Hill updated resource estimate announced February 6, 2025. The Company has also begun drilling within the potential heap leachable resource boundaries for resource infill and conversion, infrastructure condemnation, detailed geometallurgical characterization, process recovery estimation, and geotechnical characterization for pit walls and infrastructure siting. In addition, the Company has contracted various consultant groups to update historical baseline information to be compliant with current permitting standards. This includes drilling new water monitoring wells throughout the property and generating a more detailed and updated geometallurgical and geohydrologic model for the Richmond Hill Project area. This work will be incorporated into a future Feasibility Study, targeted for completion in 2027, which will be used to fast-track future mine permitting processes.

At the Maitland project, additional geological modeling will be completed for the JB and Unionville zones. The geological modelling will allow the Company to understand whether the existing drill density is sufficient for a S-K 1300 compliant resource or the amount of additional drilling that would be required for a compliant resource. Drilling at Maitland may be conducted later in the year depending on the outcome of these preliminary technical analyses and management's ongoing analysis of best use of proceeds.

We continue to utilize our proprietary geophysical data sets to evaluate both regional and project specific targets and continue to locate and compile historic data sets useful to the Company's exploration programs.

Additional land acquisition will be pursued on an opportunistic basis to enhance the Company's ongoing exploration efforts.

The Company's projects are all in the exploration stage and do not generate revenues. Other than the mineral resource estimate for the Richmond Hill Project contained in the Richmond Hill Initial Assessment, we have not established that any of our other properties or projects contain mineral resources or mineral reserves, as defined under S-K 1300. Expenditure projections are subject to numerous contingencies and risk factors beyond the Company's control, including exploration and development risks, competition from well-funded competitors, and the Company's ability to manage growth and assessments of ongoing exploration activities and results. The Company cannot offer assurance that our budgeted expenses will fall within our projections.

Liquidity and Capital Resources

The Company is in the exploration stage and currently does not generate revenue. As such, we finance our operations and the acquisition and exploration of our mineral properties through the issuance of common stock, and the Company could be materially adversely affected if we are unable to raise capital because of market or other factors.

As of March 31, 2025, the Company had working capital of approximately $45.5 million and an accumulated deficit of approximately $80.3 million. The Company had a net loss of approximately $3.7 million for the three months ended March 31, 2025.

On March 25, 2025, the Company announced the Offering, whereby we raised net proceeds of approximately $32.7 million by issuing 12,400,000 shares of our common stock at a price of $2.83 per share.

During the twelve months ending December 31, 2025, the Company anticipates cash expenditures of approximately $25.0 million, including approximately $3.9 million that has already been incurred through March 31, 2025.

Based on the Company’s cash balance at March 31, 2025 of approximately $46.6 million and the ability to scale down our exploration program, if needed, we believe that we will have sufficient funds to fund our activities for the next twelve months. The actual timing of expected expenditures and fundraising is dependent upon several factors, including the management of variable exploration expenditures.

Results of Operations

Comparison of Three months ended March 31, 2025 and 2024

The Company had losses from operations for the three months ended March 31, 2025 and 2024 totaling approximately $3.8 million and $8.8 million, respectively, and losses before income tax of approximately $3.7 million and $8.6 million, respectively, leading to net losses of approximately $3.7 million and $8.6 million, respectively.

Exploration Expenses

During the three months ended March 31, 2025 and 2024, exploration expenses totaled approximately $1.9 million and $6.5 million, respectively. The period-over-period decrease primarily related to (i) the reduced level of activity associated with drilling, which resulted in a decrease of approximately $3.7 million compared to same period in 2024. In addition, payroll, assay costs, construction costs and equipment also decreased by approximately $1.0 million because of the lower level of drilling. Included in exploration costs were non-cash exploration-related stock-based compensation expenses of approximately $0.1 million for each of the three months ended March 31, 2025 and 2024.

General and Administrative Expenses

Our general and administrative expenses for the three months ended March 31, 2025 and 2024, were approximately $1.9 million and $2.2 million, respectively, a decrease of approximately $0.3 million. These expenditures were primarily for legal, accounting, and professional fees, investor relations, and other general and administrative expenses necessary for our operations. The period-over-period decrease is primarily related to decreases in legal and other professional fees during the two quarters.

Other Income and Expense

We earned interest income from bank accounts of approximately $0.1 million and $0.2 million for the three months ended March 31, 2025 and 2024, respectively.

Cash Flows Used in Operating Activities

Cash used in operations for the three months ended March 31, 2025 was approximately $3.9 million compared to approximately $10.2 million in the prior year. The Company was not drilling in the first quarter of 2025, the primary driver of higher operating expenses, as the Company was focused on the Richmond Hill Initial Assessment.

Cash Flows Used in Investing Activities

Cash used in investing activities for the three months ended March 31, 2025 was $nil compared to approximately $0.2 million in the prior year comparable period, when there were purchases of property and equipment.

Cash Flows from Financing Activities

During the three months ended March 31, 2025, cash from financing activities totaled approximately $41.1 million, as the Company issued 2,548,713 shares of common stock under the ATM Program for net proceeds of approximately $7.3 million, 12,400,000 shares of common stock for net proceeds of approximately $32.7 million pursuant to the Offering and 780,048 shares of common stock for the exercise of warrants for proceeds of approximately $1.6 million.

Critical Accounting Estimates

This MD&A of the Company's financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. Preparation of financial statements requires management to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and the related disclosures of contingencies. Management bases its estimates on various assumptions and historical experience, which are believed to be reasonable; however, due to the inherent nature of estimates, actual results may differ significantly due to changed conditions or assumptions. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that the Company's consolidated financial statements are fairly presented in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from the Company's assumptions and estimates, and such differences could be material. Management believes that the following critical accounting estimates and judgments have a significant impact on the Company's consolidated financial statements; valuation of options granted to directors and officers using Black-Scholes and Monte Carlo models. The Company's accounting policies are described in greater detail in Note 2 to the Company's audited annual consolidated financial statements for the year ended December 31, 2024. There have been no material changes to the Company's critical accounting policies and estimates as compared to the Company's critical accounting policies and estimates described in the Annual Report.

Disclosure Controls and Procedures

At the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision of and with the participation of the Company's management, including our chief executive officer ("CEO") and chief financial officer ("CFO"), of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act). Based on that evaluation, the CEO and the CFO have concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company's disclosure controls and procedures were effective as of March 31, 2025.

Changes to Internal Controls and Procedures over Financial Reporting

Management, with the participation of the CEO and CFO, concluded that there were no changes in our internal control over financial reporting during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.